Greenburgh NY Employee Retention Credit 2020

 
Can you take the employee retention credit on the earnings paid out of your S corporation to you, the 100% owner? Now, this is a huge debate in the tax expert community 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, but if I had to lean one method or the other, I would lean in the instructions of stating that owner earnings in so far as we're speaking about someone who owns more than 50 percent of business, do not qualify.
  
 
Exactly How It Functions
I don't wish to get too technical here, but 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 sections 51(i)( 1) and 280C(a) of the Internal Earnings Code of 1986 will apply," don't get caught up on the 1986, that's simply the last time the Internal Profits Code had a significant overhaul, so it's just described as the Internal Profits Code of 1986. The vital part here is those other code areas reference.

Let's start with 280C(a) because that's the simple one. That is just stating that if you get a credit on some wages you pay in your business, you can't double dip and take a deduction for those very same wages. However now let's talk about section 51(i)( 1 ), which states, "No wages will be taken into account ...

with regard to a person who bears any of the relationships described in subparagraphs (A) through (G) of section 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 exceptional stock of the corporation, or, if the taxpayer is an entity besides a corporation, to any individual 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 assuming an S corp taxpayer here.That is simply saying that if you get a credit on some salaries you pay in your company, you can't double dip and take a reduction for those very same incomes. Let's focus on the provision that states "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 take into consideration salaries with respect to an individual who owns, directly or indirectly, more than 50 percent in value of the outstanding stock of the corporation. 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 value of the outstanding stock of the corporation. That seems clear to me that owner wages do not qualify. Now, some tax experts are taking a look at the employee retention credit certified earnings FAQs on the IRS website, and they're taking a look at FAQ 59, which says, "Are salaries paid by a company to workers who relate people thought about certified wages?

" and they're saying, "Look at the response here. It's only these loved ones whose incomes do not count. And the IRS didn't specifically say owner wages or partner wages don't count here, so bad-a-boo, bad-a-bing, for that reason owner incomes must 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 certify. It's only these loved ones whose earnings don't count. The IRS website is not the tax code.