Just how It Works

I don't wish to get too technical here, however Section 2301(e) of the CARES Act -- which developed the employee retention credit -- says that for purposes of the employee retention credit, "guidelines comparable to the guideline of areas 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 shall use," do not get caught up on the 1986, that's just the last time the Internal Income Code had a significant overhaul, so it's simply described as the Internal Earnings Code of 1986. The important part here is those other code sections reference.

That is just saying that if you get a credit on some salaries you pay in your organization, you can't double dip and take a deduction for those exact same incomes. Let's focus on the provision that states "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.

This is saying that you do not take into account salaries with regard to a person who owns, straight or indirectly, more than 50 percent in worth of the exceptional stock of the corporation. That seems clear to me that owner earnings do not certify. Now, some tax specialists are taking a look at the employee retention credit qualified wages FAQs on the IRS site, and they're looking at FAQ 59, which states, "Are salaries paid by a company to workers who relate people thought about qualified wages?

" and they're stating, "Look at the response here. It's only these relatives whose incomes don't count. And the IRS didn't particularly state owner wages or partner earnings don't count here, so bad-a-boo, bad-a-bing, therefore owner wages should count." To that, I would state, "Look. The IRS website is not the tax code.

 


 

Related Posts