Forest Hills NY Employee Retention Tax Credit 2020

 
Can you take the employee retention credit on the salaries paid of your S corporation to you, the 100% owner? Now, this is a huge debate in the tax professional neighborhood right now. I'm not going to hang my hat on any one position up until we get more information from the IRS on this, however if I had to lean one method or the other, I would lean in the instructions of saying that owner salaries in so far as we're talking about someone who owns more than 50 percent of the organization, do not qualify.
  
 
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I do not want to get too technical here, however Section 2301(e) of the CARES Act -- which developed the employee retention credit -- states that for purposes of the employee retention credit, "rules similar to the rule of areas 51(i)( 1) and 280C(a) of the Internal Profits Code of 1986 shall apply," don't get caught up on the 1986, that's simply the last time the Internal Income Code had a major overhaul, so it's simply referred to as the Internal Revenue Code of 1986. The essential part here is those other code areas recommendation.

Let's start with 280C(a) because that's the easy one. That is just saying that if you get a credit on some incomes you pay in your company, you can't double dip and take a deduction for those same salaries. And now let's speak about section 51(i)( 1 ), which states, "No salaries will be considered ...

with respect to an individual who bears any of the relationships described in subparagraphs (A) through (G) of area 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 impressive stock of the corporation, or, if the taxpayer is an entity other than a corporation, to any person who owns, directly or indirectly, more than 50 percent of the capital and profits interests in the entity." So let's concentrate 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 provision that says "if the taxpayer is a corporation" due to the fact that we're presuming an S corp taxpayer here.That is simply stating that if you get a credit on some wages you pay in your company, you can't double dip and take a reduction for those same salaries. Let's focus on the provision that says "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.

So this is stating that you don't take into consideration earnings with respect to a person who owns, straight 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 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 earnings do not certify. Now, some tax professionals are looking at the employee retention credit certified earnings FAQs on the IRS site, and they're looking at FAQ 59, which states, "Are earnings paid by a company to employees who are associated individuals thought about certified earnings?

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