Greece NY Employee Retention Credit Application

 
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 debate in the tax professional 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 had to lean one method or the other, I would lean in the direction of stating that owner wages in so far as we're talking about somebody who owns more than 50 percent of business, do not certify.
  
 
Just how It Functions
I do not desire to get too technical here, but Area 2301(e) of the CARES Act -- which developed the employee retention credit -- says that for functions of the employee retention credit, "rules similar to the rule of areas 51(i)( 1) and 280C(a) of the Internal Earnings Code of 1986 will apply," do not get caught up on the 1986, that's just the last time the Internal Earnings Code had a major overhaul, so it's simply referred to as the Internal Earnings Code of 1986. The fundamental part here is those other code areas referral.

Since that's the simple one, let's begin with 280C(a). That is simply stating that if you get a credit on some salaries you pay in your business, you can't double dip and take a reduction for those same salaries. Now let's talk about area 51(i)( 1 ), which says, "No earnings shall 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 person, directly or straight, more than 50 percent in value of worth outstanding stock impressive the corporation, or, if the taxpayer is an entity other than a corporation, to any individual who person, directly or straight, more than 50 percent of the capital and profits interests revenues the entity." So let's concentrate on the stipulation that states "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" because 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 business, you can't double dip and take a reduction for those exact same wages. Let's focus on the provision that says "if the taxpayer is a corporation" due to the fact that we're assuming an S corp taxpayer here.

So this is saying that you don't consider wages with respect to a person who owns, directly 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 wages with respect to an individual who owns, straight or indirectly, more than 50 percent in value of the impressive stock of the corporation. That seems clear to me that owner wages do not certify. Now, some tax professionals are looking at the employee retention credit certified wages FAQs on the IRS site, and they're taking a look at FAQ 59, which says, "Are wages paid by a company to workers who are associated individuals considered qualified 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 say owner salaries or partner earnings do not 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 website is not the tax code. That appears clear to me that owner wages do not qualify. It's only these relatives whose incomes do not count. The IRS site is not the tax code.