Cheektowaga NY Employee Retention Tax Credit And Ppp

 
Can you take the employee retention credit on the earnings paid out of your S corporation to you, the 100% owner? Now, this is a huge dispute in the tax expert neighborhood right now. I'm not going to hang my hat on any one position till we get more clarification from the IRS on this, however if I had to lean one way or the other, I would lean in the direction of stating that owner wages in so far as we're discussing someone who owns more than 50 percent of business, do not certify.
  
 
How It Works
I do not want to get too technical here, but Section 2301(e) of the CARES Act -- which created the employee retention credit -- states that for functions of the employee retention credit, "rules comparable to the rule 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 Earnings Code had a significant overhaul, so it's simply described as the Internal Revenue Code of 1986. The vital part here is those other code sections recommendation.

Since that's the simple one, let's begin with 280C(a). That is simply stating that if you get a credit on some salaries you pay in your service, you can't double dip and take a deduction for those very same earnings. However now let's speak about section 51(i)( 1 ), which says, "No salaries shall be taken into account ...

with respect 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 a person who owns, straight or indirectly, more than 50 percent in worth of the impressive stock of the corporation, or, if the taxpayer is an entity other than a corporation, to any individual who owns, directly or indirectly, more than 50 percent of the capital and earnings interests in the entity." So let's concentrate on the stipulation that states "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.Let's focus on the stipulation that says "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.That is simply stating that if you get a credit on some incomes you pay in your organization, you can't double dip and take a reduction for those very same salaries. Let's focus on the provision 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 consider salaries with respect to a person who owns, directly or indirectly, more than 50 percent in worth of the impressive stock of the corporation. This is stating that you don't take into account wages with regard to an individual who owns, straight or indirectly, more than 50 percent in worth of the impressive stock of the corporation. That seems clear to me that owner earnings do not qualify. Now, some tax specialists are taking a look at the employee retention credit qualified wages FAQs on the IRS website, and they're taking a look at FAQ 59, which states, "Are wages paid by a company to employees who belong individuals thought about qualified earnings?

" and they're saying, "Look at the response here. It's just these loved ones whose salaries don't count. And the IRS didn't particularly say owner salaries or partner salaries don't count here, so bad-a-boo, bad-a-bing, for that reason owner salaries should count." To that, I would say, "Look. The IRS site is not the tax code. That appears clear to me that owner salaries do not certify. It's just these family members whose earnings don't count. The IRS site is not the tax code.