Irondequoit NY Employee Retention Specialists

 
Can you take the employee retention credit on the wages paid out of your S corporation to you, the 100% owner? Now, this is a big dispute in the tax expert neighborhood today. I'm not going to hang my hat on any one position until we get more clarification from the IRS on this, however if I had to lean one way or the other, I would lean in the instructions of stating that owner incomes in so far as we're talking about someone who owns more than 50 percent of business, do not qualify.
  
 
Just how It Functions
I don't wish to get too technical here, however Area 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 areas 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 will apply," don't get captured up on the 1986, that's just the last time the Internal Income Code had a major overhaul, so it's just referred to as the Internal Income Code of 1986. The vital part here is those other code areas referral.

Because that's the easy one, let's start with 280C(a). That is simply saying that if you get a credit on some earnings you pay in your company, you can't double dip and take a deduction for those same earnings. However now let's speak about area 51(i)( 1 ), which says, "No wages shall be considered ...

with respect to an individual who bears any of the relationships described in subparagraphs (A) through (G) of area 152(d)( 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 impressive stock of the corporation, or, if the taxpayer is an entity other than a corporation, to any person who owns, directly or indirectly, more than 50 percent of the capital and revenues interests in the entity." So let's concentrate on the provision that states "if the taxpayer is a corporation" because we're presuming 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 presuming an S corp taxpayer here.That is simply saying that if you get a credit on some wages you pay in your service, 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" since we're assuming an S corp taxpayer here.

So this is stating that you do not consider salaries 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 saying that you do not take into account incomes with regard to an individual who owns, directly or indirectly, more than 50 percent in worth of the outstanding stock of the corporation. That appears clear to me that owner salaries do not qualify. Now, some tax specialists are taking a look at the employee retention credit certified 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 thought about certified salaries?

" and they're stating, "Look at the response here. It's just these loved ones whose salaries don't count. And the IRS didn't particularly state owner wages or spouse salaries do not count here, so bad-a-boo, bad-a-bing, for that reason owner wages should 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 qualify. It's just these family members whose earnings don't count. The IRS site is not the tax code.