Clarkstown NY Employee Retention Specialists

 
Can you take the employee retention credit on the wages paid 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 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 salaries in so far as we're speaking about somebody who owns more than 50 percent of business, do not qualify.
  
 
Exactly How It Functions
I do not wish to get too technical here, but Area 2301(e) of the CARES Act -- which developed the employee retention credit -- says that for purposes of the employee retention credit, "rules comparable to the rule of sections 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 will apply," do not get captured up on the 1986, that's simply the last time the Internal Income Code had a major overhaul, so it's simply described as the Internal Income Code of 1986. The important part here is those other code sections reference.

Because that's the easy one, let's begin with 280C(a). 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 deduction for those same incomes. But now let's talk about section 51(i)( 1 ), which says, "No salaries will be considered ...

with regard to a person who bears any of the relationships described in subparagraphs (A) through (G) of section 152(d)( 2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who owns, directly or indirectly, more than 50 percent in worth of the outstanding stock of the corporation, or, if the taxpayer is an entity aside from a corporation, to any individual who owns, straight or indirectly, more than 50 percent of the capital and earnings interests in the entity." So let's focus on the clause 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 just saying 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 same wages. Let's focus on the clause that says "if the taxpayer is a corporation" due to the fact that we're presuming an S corp taxpayer here.

So this is stating that you do not take into consideration incomes with respect to a person who owns, straight 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 respect to an individual 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 specialists are looking at the employee retention credit certified earnings FAQs on the IRS site, and they're taking a look at FAQ 59, which states, "Are wages paid by a company to workers who relate individuals thought about qualified earnings?

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