Hempstead NY Employee Retention Tax Credit

 
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 argument in the tax expert neighborhood 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 needed to lean one way or the other, I would lean in the instructions of saying that owner wages in so far as we're talking about somebody who owns more than 50 percent of business, do not qualify.
  
 
Exactly How It Functions
I don't want to get too technical here, but Area 2301(e) of the CARES Act -- which produced the employee retention credit -- states that for purposes of the employee retention credit, "rules comparable to the rule of areas 51(i)( 1) and 280C(a) of the Internal Earnings Code of 1986 will use," do not get caught up on the 1986, that's simply the last time the Internal Profits Code had a major overhaul, so it's just described as the Internal Earnings Code of 1986. The important part here is those other code areas referral.

Let's begin with 280C(a) because that's the easy one. 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 exact same wages. However now let's discuss area 51(i)( 1 ), which states, "No incomes will be considered ...

with respect to an individual who bears any of the relationships explained in subparagraphs (A) through (G) of area 152(d)( 2) to the taxpayer, or, if the taxpayer is a corporation, to a person who owns, straight or indirectly, more than 50 percent in worth of the outstanding 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 says "if the taxpayer is a corporation" due to the fact that 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 presuming 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 exact same wages. Let's focus on the provision that states "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.

So this is stating that you don't consider wages with respect to a person who owns, straight or indirectly, more than 50 percent in value of the exceptional stock of the corporation. This is stating that you do not take into account salaries with respect to a person who owns, directly or indirectly, more than 50 percent in value 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 website, and they're looking at FAQ 59, which says, "Are incomes paid by an employer to employees who relate people thought about qualified earnings?

" and they're saying, "Look at the response here. It's just these loved ones whose wages do not count. And the IRS didn't particularly state owner wages or spouse salaries don't 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 appears clear to me that owner wages do not certify. It's only these family members whose salaries do not count. The IRS site is not the tax code.