Levittown NY Employee Retention Credit

 
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 big dispute in the tax expert neighborhood today. I'm not going to hang my hat on any one position till we get more clarification from the IRS on this, but if I had to lean one method or the other, I would lean in the direction of saying that owner incomes in so far as we're discussing someone who owns more than 50 percent of the service, do not certify.
  
 
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I don't desire to get too technical here, however Area 2301(e) of the CARES Act -- which produced the employee retention credit -- states that for functions of the employee retention credit, "guidelines comparable to the rule of sections 51(i)( 1) and 280C(a) of the Internal Profits Code of 1986 shall use," don't get caught up on the 1986, that's simply the last time the Internal Revenue Code had a major overhaul, so it's just described as the Internal Profits Code of 1986. The essential part here is those other code areas recommendation.

Since that's the easy one, let's start with 280C(a). That is simply saying that if you get a credit on some salaries you pay in your company, you can't double dip and take a deduction for those very same earnings. Today let's talk about area 51(i)( 1 ), which says, "No earnings will be taken into consideration ...

with regard to an individual who bears any of the relationships explained 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, directly or indirectly, more than 50 percent in value of the impressive stock of the corporation, or, if the taxpayer is an entity aside from a corporation, to any person who owns, directly or indirectly, more than 50 percent of the capital and earnings interests in the entity." So let's focus on the clause that says "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.Let's focus on the provision that states "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.That is just saying that if you get a credit on some earnings you pay in your business, you can't double dip and take a reduction for those same incomes. Let's focus on the stipulation that says "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.

So this is stating that you don't take into consideration wages with respect to an individual who owns, straight or indirectly, more than 50 percent in worth of the exceptional stock of the corporation. This is saying that you do not take into account salaries with respect to a person who owns, directly or indirectly, more than 50 percent in worth of the outstanding stock of the corporation. That seems clear to me that owner earnings do not qualify. Now, some tax experts are looking at the employee retention credit certified earnings FAQs on the IRS website, and they're looking at FAQ 59, which says, "Are salaries paid by a company to staff members who belong individuals thought about certified wages?

" and they're saying, "Look at the response here. It's just these relatives whose earnings don't count. And the IRS didn't particularly say owner wages or spouse wages do not count here, so bad-a-boo, bad-a-bing, for that reason owner wages should count." To that, I would say, "Look. The IRS website is not the tax code. That seems clear to me that owner incomes do not certify. It's just these loved ones whose earnings don't count. The IRS site is not the tax code.