Jackson Heights NY Employee Retention Credit

 
Can you take the employee retention credit on the salaries paid of your S corporation to you, the 100% owner? Now, this is a huge argument in the tax expert community today. I'm not going to hang my hat on any one position until we get more information from the IRS on this, but if I had to lean one way or the other, I would lean in the instructions of stating that owner earnings in so far as we're talking about somebody who owns more than 50 percent of the organization, do not certify.
  
 
Exactly How It Functions
I do not wish to get too technical here, but Section 2301(e) of the CARES Act -- which produced the employee retention credit -- states that for functions of the employee retention credit, "guidelines similar to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Profits Code of 1986 will apply," do not get captured 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 Income Code of 1986. The important part here is those other code areas reference.

Let's begin with 280C(a) since that's the simple one. That is just stating that if you get a credit on some wages you pay in your business, you can't double dip and take a deduction for those very same wages. 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 subparagraphs (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 straight, more than 50 percent in value of the outstanding stock impressive 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 in the entity." So let's concentrate on the provision that says "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.Let's focus on the clause 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 service, you can't double dip and take a reduction for those exact same incomes. Let's focus on the provision that states "if the taxpayer is a corporation" due to the fact that we're presuming an S corp taxpayer here.

So this is stating that you don't take into account wages with regard to an individual who owns, directly or indirectly, more than 50 percent in value of the impressive stock of the corporation. This is saying that you do not take into account salaries with regard to a person who owns, straight or indirectly, more than 50 percent in worth of the impressive stock of the corporation. That appears clear to me that owner wages do not qualify. Now, some tax professionals are looking at the employee retention credit qualified wages FAQs on the IRS site, and they're looking at FAQ 59, which says, "Are earnings paid by an employer to employees who belong individuals considered qualified earnings?

" and they're stating, "Look at the answer here. It's only these relatives whose incomes don't count. And the IRS didn't particularly state owner earnings or spouse earnings do not 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 wages do not qualify. It's just these family members whose earnings do not count. The IRS site is not the tax code.