How It Functions

I don't wish to get too technical here, however Area 2301(e) of the CARES Act -- which developed the employee retention credit -- states that for purposes of the employee retention credit, "guidelines similar to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Earnings Code of 1986 will use," do not get caught up on the 1986, that's simply the last time the Internal Income Code had a major overhaul, so it's simply referred to as the Internal Profits Code of 1986. The fundamental part here is those other code sections reference.

That is simply saying that if you get a credit on some incomes you pay in your company, you can't double dip and take a reduction for those same wages. Let's focus on the stipulation that states "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.

This is stating that you don't take into account wages with respect to a person who owns, straight or indirectly, more than 50 percent in value of the exceptional stock of the corporation. That appears clear to me that owner salaries do not qualify. 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 says, "Are salaries paid by an employer to staff members who are associated people thought about certified wages?

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

 


 

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