Clay NY Employee Retention Credit 2020

 
Can you take the employee retention credit on the incomes paid of your S corporation to you, the 100% owner? Now, this is a big 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 instructions of stating that owner salaries in so far as we're speaking about someone who owns more than 50 percent of business, do not certify.
  
 
Exactly How It Functions
I do not desire to get too technical here, but Area 2301(e) of the CARES Act -- which developed the employee retention credit -- states that for functions of the employee retention credit, "guidelines similar to the rule of sections 51(i)( 1) and 280C(a) of the Internal Profits Code of 1986 shall apply," do not get captured up on the 1986, that's just the last time the Internal Earnings Code had a major overhaul, so it's just described as the Internal Earnings Code of 1986. The vital part here is those other code areas reference.

Let's begin with 280C(a) since that's the easy one. That is simply stating that if you get a credit on some earnings you pay in your organization, you can't double dip and take a deduction for those very same salaries. Now let's discuss area 51(i)( 1 ), which says, "No salaries shall be considered ...

with respect to an individual who bears any of the relationships explained in subparagraphs (A) through (G) of section 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 exceptional 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 concentrate on the clause that says "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.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.That is simply saying that if you get a credit on some incomes you pay in your service, you can't double dip and take a deduction for those very same salaries. Let's focus on the stipulation 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 take into account incomes with respect 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 do not take into account wages with respect to a person who owns, directly or indirectly, more than 50 percent in value of the impressive stock of the corporation. That seems clear to me that owner salaries do not certify. Now, some tax specialists are taking a look at the employee retention credit certified incomes FAQs on the IRS website, and they're taking a look at FAQ 59, which states, "Are incomes paid by an employer to employees who relate individuals considered certified salaries?

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