Jackson Heights NY Employee Retention Credit Eligibility

 
Can you take the employee retention credit on the earnings paid of your S corporation to you, the 100% owner? Now, this is a huge debate in the tax expert 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, 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 organization, do not qualify.
  
 
Just how It Functions
I do not desire to get too technical here, but Section 2301(e) of the CARES Act -- which created the employee retention credit -- states that for purposes of the employee retention credit, "rules similar to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Income Code of 1986 shall apply," 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 referred to as the Internal Profits Code of 1986. The fundamental part here is those other code areas referral.

Since that's the simple one, let's begin with 280C(a). That is simply stating that if you get a credit on some earnings you pay in your company, you can't double dip and take a reduction for those same incomes. But now let's speak about area 51(i)( 1 ), which says, "No earnings shall be taken into consideration ...

with respect to a person who bears any of the relationships described in subparagraphs (A) through (G) of section 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 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 focus on the provision that states "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.Let's focus on the stipulation that states "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.That is just stating that if you get a credit on some incomes you pay in your organization, you can't double dip and take a deduction for those same incomes. Let's focus on the provision that states "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.

So this is stating that you don't consider earnings 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 incomes with respect to a person who owns, straight or indirectly, more than 50 percent in value of the impressive stock of the corporation. That seems clear to me that owner earnings do not qualify. Now, some tax professionals are looking at the employee retention credit qualified wages FAQs on the IRS website, and they're taking a look at FAQ 59, which states, "Are wages paid by a company to staff members who belong individuals thought about qualified salaries?

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