Greenburgh NY Employee Retention Credit

 
Can you take the employee retention credit on the incomes paid out of your S corporation to you, the 100% owner? Now, this is a big dispute in the tax expert community right now. I'm not going to hang my hat on any one position up until we get more explanation from the IRS on this, but if I needed to lean one method or the other, I would lean in the instructions of saying that owner incomes in so far as we're speaking about someone who owns more than 50 percent of the company, do not certify.
  
 
How It Works
I don't desire to get too technical here, but Section 2301(e) of the CARES Act -- which developed the employee retention credit -- states that for functions of the employee retention credit, "guidelines comparable to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Income Code of 1986 shall use," do not get captured up on the 1986, that's simply the last time the Internal Profits Code had a major overhaul, so it's simply referred to as the Internal Earnings Code of 1986. The vital part here is those other code areas recommendation.

Since that's the simple one, let's start with 280C(a). That is just stating 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 very same salaries. Now let's talk about area 51(i)( 1 ), which states, "No earnings shall be taken into account ...

with respect to an individual who bears any of the relationships described in subparagraphs (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 of the corporation, or, if the taxpayer is an entity other than a corporation, to any individual who owns, directly or straight, more than 50 percent of the capital and profits interests earnings the entity." So let's focus on the stipulation that states "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.Let's focus on the clause that states "if the taxpayer is a corporation" due to the fact that we're presuming an S corp taxpayer here.That is just stating that if you get a credit on some salaries you pay in your service, you can't double dip and take a deduction for those very same incomes. Let's focus on the provision that says "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.

So this is stating that you don't consider salaries with respect to an individual who owns, directly 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 wages with regard to a person who owns, straight or indirectly, more than 50 percent in worth of the outstanding 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 salaries FAQs on the IRS website, and they're looking at FAQ 59, which says, "Are earnings paid by an employer to employees who are associated people considered qualified salaries?

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