Jackson Heights NY Employee Retention Grant Program

 
Can you take the employee retention credit on the incomes paid out 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 till we get more clarification from the IRS on this, however if I needed to lean one method or the other, I would lean in the direction of stating that owner salaries in so far as we're talking about somebody who owns more than 50 percent of the service, do not certify.
  
 
Just how It Works
I do not desire to get too technical here, but Section 2301(e) of the CARES Act -- which developed the employee retention credit -- states that for purposes of the employee retention credit, "guidelines comparable to the rule of sections 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 just the last time the Internal Revenue Code had a major overhaul, so it's simply referred to as the Internal Income Code of 1986. The essential 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 wages you pay in your service, you can't double dip and take a deduction for those exact same incomes. Now let's talk about area 51(i)( 1 ), which says, "No salaries shall be taken into account ...

with respect to an individual who person any of the relationships described in explained (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 indirectly, more than 50 percent in value of worth 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 revenues the entity." So let's concentrate on the clause that says "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.Let's focus on the stipulation that says "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.That is simply stating 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 very same wages. 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.

So this is saying that you do not consider incomes with regard to an individual who owns, directly or indirectly, more than 50 percent in value of the outstanding stock of the corporation. This is stating that you do not take into account wages with regard to a person who owns, directly or indirectly, more than 50 percent in worth of the exceptional stock of the corporation. That appears clear to me that owner wages 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 looking at FAQ 59, which states, "Are wages paid by a company to staff members who belong individuals thought about qualified earnings?

" and they're saying, "Look at the answer here. It's just these family members whose earnings do not count. And the IRS didn't particularly state owner salaries or spouse wages do not count here, so bad-a-boo, bad-a-bing, therefore owner earnings should count." To that, I would say, "Look. The IRS site is not the tax code. That seems clear to me that owner earnings do not qualify. It's just these loved ones whose wages do not count. The IRS website is not the tax code.