Clarkstown NY Employee Retention 2021 Erc Qualifications

 
Can you take the employee retention credit on the incomes paid out 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 up until we get more explanation from the IRS on this, however if I had to lean one way or the other, I would lean in the instructions of stating that owner wages in so far as we're talking about someone who owns more than 50 percent of business, do not qualify.
  
 
Exactly How It Functions
I don't desire to get too technical here, but Section 2301(e) of the CARES Act -- which created the employee retention credit -- says that for purposes of the employee retention credit, "rules similar to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Profits Code of 1986 will use," do not get caught up on the 1986, that's just the last time the Internal Income Code had a major overhaul, so it's just referred to as the Internal Profits Code of 1986. The crucial part here is those other code sections referral.

Because that's the easy one, let's start with 280C(a). That is just saying 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 same earnings. But now let's talk about area 51(i)( 1 ), which says, "No incomes shall be taken into consideration ...

with regard to an individual who bears any of the relationships described 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, directly or indirectly, more than 50 percent in value of the exceptional 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 revenues interests in the entity." So let's focus on the clause that states "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.Let's focus on the provision that says "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.That is simply saying that if you get a credit on some wages you pay in your business, you can't double dip and take a deduction for those exact same incomes. Let's focus on the stipulation that states "if the taxpayer is a corporation" due to the fact that we're presuming an S corp taxpayer here.

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

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