Exactly How It Functions

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

That is just stating that if you get a credit on some wages you pay in your service, you can't double dip and take a reduction for those same salaries. Let's focus on the provision that states "if the taxpayer is a corporation" due to the fact that we're assuming an S corp taxpayer here.

So this is stating that you don't take into consideration incomes with regard to an individual who owns, straight or indirectly, more than 50 percent in worth of the exceptional stock of the corporation. That seems clear to me that owner salaries do not certify. Now, some tax experts are looking at the employee retention credit certified salaries FAQs on the IRS site, and they're taking a look at FAQ 59, which says, "Are incomes paid by a company to workers who relate people thought about certified incomes?

" 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 earnings or spouse wages do not count here, so bad-a-boo, bad-a-bing, therefore owner salaries need to count." To that, I would say, "Look. The IRS website is not the tax code.

 


 

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