Hempstead NY Employee Retention Tax Credit And Ppp

 
Can you take the employee retention credit on the wages paid 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 information from the IRS on this, however if I needed to lean one method or the other, I would lean in the instructions of stating that owner salaries in so far as we're discussing somebody who owns more than 50 percent of the company, do not certify.
  
 
Just how It Functions
I don't desire to get too technical here, however Area 2301(e) of the CARES Act -- which developed the employee retention credit -- states that for purposes of the employee retention credit, "guidelines comparable to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Earnings Code of 1986 shall use," do not get caught up on the 1986, that's just the last time the Internal Income Code had a major overhaul, so it's just described as the Internal Earnings Code of 1986. The vital part here is those other code areas recommendation.

Let's begin with 280C(a) since that's the simple one. That is simply stating that if you get a credit on some earnings you pay in your organization, you can't double dip and take a reduction for those exact same earnings. Now let's talk about area 51(i)( 1 ), which states, "No wages will be taken into account ...

with respect to an individual who person any of the relationships described in explained (A) through (G) of section 152(d)( 2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who person, directly or indirectly, more than 50 percent in value of the outstanding stock exceptional 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 earnings the entity." So let's concentrate on the clause that says "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.Let's focus on the provision that states "if the taxpayer is a corporation" since 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 business, you can't double dip and take a deduction for those same wages. 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 stating that you don't take into account incomes with respect to a person who owns, directly or indirectly, more than 50 percent in value of the outstanding stock of the corporation. This is saying that you don't take into account wages with respect to an individual who owns, directly or indirectly, more than 50 percent in worth of the impressive stock of the corporation. That seems clear to me that owner earnings do not certify. Now, some tax professionals are taking a look at the employee retention credit certified incomes FAQs on the IRS site, and they're looking at FAQ 59, which states, "Are salaries paid by an employer to workers who are related individuals considered qualified salaries?

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