Cheektowaga NY Employee Retention Program

 
Can you take the employee retention credit on the salaries paid out of your S corporation to you, the 100% owner? Now, this is a huge debate in the tax professional community right now. I'm not going to hang my hat on any one position till we get more information from the IRS on this, however if I needed to lean one method or the other, I would lean in the instructions of stating that owner salaries in so far as we're speaking about somebody who owns more than 50 percent of business, do not certify.
  
 
Exactly How It Works
I don't wish to get too technical here, however Area 2301(e) of the CARES Act -- which produced the employee retention credit -- says that for purposes of the employee retention credit, "rules comparable to the rule of areas 51(i)( 1) and 280C(a) of the Internal Income Code of 1986 shall use," do not get caught up on the 1986, that's simply the last time the Internal Income Code had a significant overhaul, so it's simply referred to as the Internal Income Code of 1986. The vital part here is those other code areas reference.

Let's start with 280C(a) since that's the easy one. That is just stating that if you get a credit on some wages you pay in your business, you can't double dip and take a reduction for those same incomes. And now let's speak about area 51(i)( 1 ), which states, "No wages shall be taken into account ...

with regard to a person who bears any of the relationships explained in subparagraphs (A) through (G) of area 152(d)( 2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who owns, straight or indirectly, more than 50 percent in value of the impressive stock of the corporation, or, if the taxpayer is an entity besides a corporation, to any person who owns, directly or indirectly, more than 50 percent of the capital and profits interests in the entity." So let's concentrate on the stipulation that states "if the taxpayer is a corporation" due to the fact that we're assuming an S corp taxpayer here.Let's focus on the provision that states "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.That is just saying that if you get a credit on some wages you pay in your service, you can't double dip and take a reduction for those very same wages. Let's focus on the stipulation that says "if the taxpayer is a corporation" due to the fact that we're assuming an S corp taxpayer here.

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

" and they're saying, "Look at the response here. It's only these loved ones whose wages don't count. And the IRS didn't specifically say owner incomes or spouse wages don't count here, so bad-a-boo, bad-a-bing, therefore owner wages must count." To that, I would say, "Look. The IRS site is not the tax code. That appears clear to me that owner incomes do not certify. It's just these family members whose wages do not count. The IRS site is not the tax code.