Cheektowaga NY Employee Retention Erc

 
Can you take the employee retention credit on the incomes paid of your S corporation to you, the 100% owner? Now, this is a huge dispute in the tax professional community today. I'm not going to hang my hat on any one position till we get more information from the IRS on this, but if I needed to lean one method or the other, I would lean in the instructions of saying that owner incomes in so far as we're talking about somebody who owns more than 50 percent of business, do not certify.
  
 
Exactly How It Works
I do not wish to get too technical here, but Area 2301(e) of the CARES Act -- which created the employee retention credit -- states that for purposes of the employee retention credit, "guidelines comparable to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Profits Code of 1986 will use," do not get captured up on the 1986, that's just the last time the Internal Income Code had a major overhaul, so it's simply described as the Internal Profits Code of 1986. The essential part here is those other code sections reference.

Since that's the easy one, let's begin with 280C(a). That is simply stating that if you get a credit on some incomes you pay in your business, you can't double dip and take a deduction for those exact same wages. Now let's talk about section 51(i)( 1 ), which says, "No salaries shall be taken into account ...

with respect to an individual who bears any of the relationships described in explained (A) through (G) of section 152Aread)( 2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who owns, directly or straight, more than 50 percent in value of worth outstanding stock impressive the corporation, or, if the taxpayer is an entity other than a corporation, to any individual who owns, directly or straight, more than 50 percent of the capital and profits interests in the entity." So let's focus on the provision that states "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.Let's focus on the clause that states "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.That is simply stating that if you get a credit on some earnings you pay in your company, you can't double dip and take a reduction for those same incomes. Let's focus on the stipulation that states "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.

So this is stating that you do not take into consideration salaries with regard to an individual who owns, directly or indirectly, more than 50 percent in value of the impressive stock of the corporation. This is stating that you do not take into account earnings with regard to an individual who owns, directly or indirectly, more than 50 percent in worth of the outstanding stock of the corporation. That appears clear to me that owner earnings do not certify. Now, some tax experts are looking at the employee retention credit qualified earnings FAQs on the IRS site, and they're looking at FAQ 59, which states, "Are salaries paid by a company to staff members who are related individuals thought about certified incomes?

" and they're stating, "Look at the answer here. It's only these relatives whose wages do not count. And the IRS didn't specifically state owner earnings or spouse wages do not count here, so bad-a-boo, bad-a-bing, therefore owner salaries must count." To that, I would state, "Look. The IRS site is not the tax code. That seems clear to me that owner salaries do not qualify. It's just these relatives whose salaries don't count. The IRS website is not the tax code.