Greece NY Employee Retention Specialists

 
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 dispute in the tax professional neighborhood today. I'm not going to hang my hat on any one position until we get more explanation 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 someone who owns more than 50 percent of business, do not certify.
  
 
Exactly How It Functions
I do not want 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, "rules similar to the rule of sections 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 will apply," don't get captured up on the 1986, that's just the last time the Internal Earnings Code had a significant overhaul, so it's simply described as the Internal Revenue Code of 1986. The vital part here is those other code areas reference.

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

with respect to regard individual who bears 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 indirectly, more than 50 percent in value of the outstanding stock impressive the corporation, or, if the taxpayer is an entity other than a corporation, to any individual who person, directly or indirectly, more than 50 percent of the capital and profits interests earnings the entity." So let's focus 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 stipulation that says "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.That is simply saying that if you get a credit on some wages you pay in your company, you can't double dip and take a deduction for those exact same incomes. 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 saying that you don't consider incomes with respect to a person who owns, straight or indirectly, more than 50 percent in worth of the exceptional stock of the corporation. This is stating that you don't take into account salaries with regard to an individual who owns, straight or indirectly, more than 50 percent in worth of the outstanding stock of the corporation. That appears clear to me that owner wages do not qualify. Now, some tax experts are looking at the employee retention credit certified earnings FAQs on the IRS site, and they're looking at FAQ 59, which says, "Are incomes paid by a company to employees who relate individuals considered qualified earnings?

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