Forest Hills NY Employee Retention Erc

 
Can you take the employee retention credit on the wages paid out of your S corporation to you, the 100% owner? Now, this is a huge debate in the tax expert neighborhood right now. I'm not going to hang my hat on any one position until we get more information 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 wages in so far as we're speaking about somebody who owns more than 50 percent of the organization, do not qualify.
  
 
Exactly How It Works
I don't desire 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 similar to the rule of areas 51(i)( 1) and 280C(a) of the Internal Profits Code of 1986 will apply," don't get caught up on the 1986, that's just the last time the Internal Revenue Code had a major overhaul, so it's simply described as the Internal Earnings Code of 1986. The essential part here is those other code areas reference.

Since that's the simple one, let's begin with 280C(a). That is simply stating that if you get a credit on some wages you pay in your organization, you can't double dip and take a reduction for those exact same wages. However now let's talk about section 51(i)( 1 ), which says, "No incomes shall be taken into consideration ...

with regard to a person 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 value of the impressive stock of the corporation, or, if the taxpayer is an entity besides a corporation, to any person who owns, directly or indirectly, more than 50 percent of the capital and earnings interests in the entity." So let's focus on the clause that says "if the taxpayer is a corporation" due to the fact that we're assuming an S corp taxpayer here.Let's focus on the stipulation that says "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.That is just saying that if you get a credit on some wages you pay in your business, you can't double dip and take a deduction for those same wages. Let's focus on the provision that states "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.

So this is stating that you do not consider incomes with respect to a person who owns, straight or indirectly, more than 50 percent in value of the exceptional stock of the corporation. This is saying that you do not take into account incomes with regard 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 wages do not certify. Now, some tax experts are looking at the employee retention credit certified earnings FAQs on the IRS website, and they're looking at FAQ 59, which says, "Are earnings paid by an employer to workers who relate individuals thought about qualified incomes?

" and they're saying, "Look at the response here. It's just these loved ones whose earnings don't count. And the IRS didn't specifically say owner earnings or spouse wages do not count here, so bad-a-boo, bad-a-bing, for that reason owner wages should count." To that, I would state, "Look. The IRS site is not the tax code. That appears clear to me that owner wages do not certify. It's just these loved ones whose wages do not count. The IRS website is not the tax code.