Forest Hills NY Employee Retention Ertc Credit

 
Can you take the employee retention credit on the salaries 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 until we get more information from the IRS on this, however if I needed to lean one method or the other, I would lean in the direction of stating that owner wages in so far as we're speaking about somebody who owns more than 50 percent of business, do not certify.
  
 
Just how It Functions
I don't desire to get too technical here, however Area 2301(e) of the CARES Act -- which produced the employee retention credit -- says that for functions of the employee retention credit, "rules similar to the guideline of areas 51(i)( 1) and 280C(a) of the Internal Profits Code of 1986 will use," do not get captured up on the 1986, that's simply the last time the Internal Revenue Code had a significant overhaul, so it's just described as the Internal Profits Code of 1986. The fundamental part here is those other code areas recommendation.

Since that's the simple one, let's begin with 280C(a). That is just 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 same incomes. Now let's talk about section 51(i)( 1 ), which says, "No incomes will be taken into account ...

with respect to an individual who person any of the relationships described in explained (A) through (G) of section 152Aread)( 2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who owns, directly or straight, more than 50 percent in value of the outstanding stock of the corporation, or, if the taxpayer is an entity other than a corporation, to any individual who owns, directly or indirectly, more than 50 percent of the capital and profits interests earnings the entity." So let's concentrate on the clause 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 says "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.That is just stating that if you get a credit on some earnings you pay in your organization, you can't double dip and take a reduction for those exact same incomes. Let's focus on the clause that states "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.

So this is stating that you don't take into account earnings with regard to a person who owns, straight or indirectly, more than 50 percent in worth of the exceptional stock of the corporation. This is saying that you do not take into account wages with regard to an individual who owns, straight or indirectly, more than 50 percent in value of the outstanding stock of the corporation. That seems clear to me that owner wages do not certify. Now, some tax experts are taking a look at the employee retention credit qualified incomes FAQs on the IRS website, and they're looking at FAQ 59, which says, "Are earnings paid by a company to staff members who relate people considered certified earnings?

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