Cheektowaga NY Employee Retention Qualifications

 
Can you take the employee retention credit on the wages paid out of your S corporation to you, the 100% owner? Now, this is a big argument in the tax professional neighborhood right now. I'm not going to hang my hat on any one position until we get more clarification from the IRS on this, however if I needed to lean one way or the other, I would lean in the direction of stating that owner salaries in so far as we're speaking about someone who owns more than 50 percent of business, do not qualify.
  
 
How It Functions
I don't desire 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 rule of sections 51(i)( 1) and 280C(a) of the Internal Earnings Code of 1986 shall apply," do not get caught up on the 1986, that's simply the last time the Internal Earnings Code had a significant overhaul, so it's simply described as the Internal Profits Code of 1986. The fundamental part here is those other code sections referral.

Let's begin with 280C(a) since that's the simple one. That is simply saying that if you get a credit on some wages you pay in your organization, you can't double dip and take a deduction for those very same salaries. However now let's discuss area 51(i)( 1 ), which says, "No salaries shall be taken into consideration ...

with regard to an individual 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 worth of the exceptional stock of the corporation, or, if the taxpayer is an entity besides a corporation, to any individual who owns, straight or indirectly, more than 50 percent of the capital and profits interests in the entity." So let's focus on the stipulation that says "if the taxpayer is a corporation" due to the fact that we're presuming an S corp taxpayer here.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.That is just stating that if you get a credit on some salaries you pay in your business, you can't double dip and take a deduction for those very same wages. Let's focus on the clause that states "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.

So this is saying that you don't take into consideration incomes with respect to an individual who owns, directly or indirectly, more than 50 percent in worth of the impressive stock of the corporation. This is saying that you do not take into account wages with regard to an individual who owns, directly or indirectly, more than 50 percent in value of the exceptional stock of the corporation. That appears clear to me that owner incomes do not certify. Now, some tax professionals are looking at the employee retention credit certified salaries FAQs on the IRS website, and they're taking a look at FAQ 59, which states, "Are earnings paid by an employer to employees who are related individuals considered certified wages?

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