Greenburgh NY Employee Retention Credit Under The Cares Act

 
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 big dispute in the tax professional community right now. 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 instructions of stating that owner salaries in so far as we're speaking about someone who owns more than 50 percent of the company, do not qualify.
  
 
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 purposes of the employee retention credit, "guidelines comparable to the guideline of areas 51(i)( 1) and 280C(a) of the Internal Income Code of 1986 shall 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 simply described as the Internal Revenue Code of 1986. The fundamental part here is those other code areas referral.

Because that's the simple one, let's start with 280C(a). That is just 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 same incomes. However now let's discuss section 51(i)( 1 ), which states, "No earnings will be taken into account ...

with respect to a person who bears any of the relationships explained in subparagraphs (A) through (G) of section 152(d)( 2) to the taxpayer, or, if the taxpayer is a corporation, to a person who owns, directly or indirectly, more than 50 percent in value 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 provision that says "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.Let's focus on the stipulation that says "if the taxpayer is a corporation" due to the fact that we're assuming an S corp taxpayer here.That is just saying that if you get a credit on some earnings you pay in your service, you can't double dip and take a deduction for those very same wages. Let's focus on the provision that says "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.

So this is stating that you do not consider salaries with respect to an individual who owns, straight or indirectly, more than 50 percent in value of the impressive stock of the corporation. This is stating that you don't take into account wages with respect to a person who owns, straight or indirectly, more than 50 percent in worth of the impressive stock of the corporation. That appears clear to me that owner wages do not certify. Now, some tax professionals are looking at the employee retention credit qualified incomes FAQs on the IRS website, and they're taking a look at FAQ 59, which says, "Are salaries paid by a company to staff members who belong individuals considered qualified wages?

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