Clarkstown NY Employee Retention Ertc 2021

 
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 dispute in the tax expert community right now. 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 needed to lean one way or the other, I would lean in the direction of saying that owner earnings in so far as we're discussing someone who owns more than 50 percent of the organization, do not certify.
  
 
Exactly How It Functions
I do not wish to get too technical here, but Section 2301(e) of the CARES Act -- which developed the employee retention credit -- says that for functions of the employee retention credit, "rules comparable to the guideline of areas 51(i)( 1) and 280C(a) of the Internal Earnings Code of 1986 will apply," don't get caught up on the 1986, that's just the last time the Internal Earnings Code had a significant overhaul, so it's just described as the Internal Profits Code of 1986. The important part here is those other code areas recommendation.

Let's begin with 280C(a) since that's the easy one. That is simply saying that if you get a credit on some salaries you pay in your organization, you can't double dip and take a deduction for those same incomes. Now let's talk about section 51(i)( 1 ), which says, "No wages shall be taken into account ...

with respect to regard individual who person any of the relationships described in subparagraphs (A) through (G) of section 152Aread)( 2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who person, directly or straight, more than 50 percent in value of worth outstanding stock of the corporation, or, if the taxpayer is an entity other than a corporation, to any individual who owns, directly or straight, more than 50 percent of the capital and profits interests in the entity." So let's focus on the provision 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 clause that states "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.That is simply saying that if you get a credit on some incomes you pay in your business, you can't double dip and take a deduction for those very same salaries. 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 saying that you do not consider wages with regard to an individual who owns, directly or indirectly, more than 50 percent in value of the outstanding stock of the corporation. This is saying that you don't take into account earnings with respect to an individual who owns, straight or indirectly, more than 50 percent in worth of the outstanding 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 salaries FAQs on the IRS site, and they're looking at FAQ 59, which says, "Are incomes paid by a company to employees who relate individuals thought about qualified earnings?

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