Forest Hills NY Employee Retention Tax Credit And Ppp

 
Can you take the employee retention credit on the incomes paid of your S corporation to you, the 100% owner? Now, this is a huge argument in the tax expert community today. I'm not going to hang my hat on any one position till we get more clarification from the IRS on this, but if I had to lean one method or the other, I would lean in the direction of saying that owner salaries in so far as we're talking about someone who owns more than 50 percent of business, do not certify.
  
 
Just how It Works
I don't wish to get too technical here, however Section 2301(e) of the CARES Act -- which produced the employee retention credit -- states that for purposes of the employee retention credit, "guidelines comparable to the rule of areas 51(i)( 1) and 280C(a) of the Internal Income Code of 1986 will apply," do not get captured up on the 1986, that's just the last time the Internal Profits Code had a significant overhaul, so it's simply referred to as the Internal Income Code of 1986. The fundamental part here is those other code areas recommendation.

Because that's the easy one, let's begin with 280C(a). That is just stating that if you get a credit on some earnings you pay in your company, you can't double dip and take a deduction for those exact same wages. But now let's speak about section 51(i)( 1 ), which says, "No salaries will be taken into consideration ...

with respect to a person who bears any of the relationships explained in subparagraphs (A) through (G) of area 152(d)( 2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who owns, directly or indirectly, more than 50 percent in worth of the outstanding stock of the corporation, or, if the taxpayer is an entity other than a corporation, to any person who owns, straight or indirectly, more than 50 percent of the capital and earnings interests in the entity." So let's focus on the stipulation that states "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.Let's focus on the stipulation that states "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.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 exact same earnings. Let's focus on the stipulation 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 respect to a person who owns, straight or indirectly, more than 50 percent in value of the impressive stock of the corporation. This is saying that you do not take into account salaries with regard to an individual who owns, directly 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 specialists are taking a look at the employee retention credit certified wages FAQs on the IRS website, and they're taking a look at FAQ 59, which says, "Are incomes paid by an employer to employees who relate individuals thought about qualified incomes?

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