Irondequoit NY Employee Retention 2021 Erc Qualifications

 
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 argument in the tax professional neighborhood today. 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 needed to lean one way or the other, I would lean in the direction of saying that owner wages in so far as we're talking about somebody who owns more than 50 percent of business, do not certify.
  
 
Just 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 -- says that for purposes of the employee retention credit, "rules similar to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 will use," do not get captured up on the 1986, that's simply the last time the Internal Earnings Code had a major overhaul, so it's just referred to as the Internal Earnings Code of 1986. The fundamental part here is those other code sections referral.

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

with respect to regard individual who person any of the relationships described in explained (A) through (G) of section 152Aread)( 2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who person, directly or straight, more than 50 percent in value of worth outstanding stock of the corporation, or, if the taxpayer is an entity other than 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 focus on the provision that says "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.Let's focus on the stipulation that states "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.That is just stating that if you get a credit on some salaries you pay in your business, you can't double dip and take a reduction for those same earnings. Let's focus on the stipulation that states "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.

So this is saying that you do not take into consideration wages with regard 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 don't take into account incomes with respect to an individual who owns, straight or indirectly, more than 50 percent in value of the impressive stock of the corporation. That appears clear to me that owner incomes do not certify. Now, some tax specialists are taking a look at the employee retention credit certified wages 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 individuals considered certified salaries?

" and they're stating, "Look at the response here. It's just these relatives whose wages don't count. And the IRS didn't particularly state owner wages or partner 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 website is not the tax code. That appears clear to me that owner incomes do not qualify. It's just these family members whose earnings don't count. The IRS site is not the tax code.