Levittown NY Employee Retention Ertc Credit

 
Can you take the employee retention credit on the salaries paid out of your S corporation to you, the 100% owner? Now, this is a big argument in the tax professional neighborhood today. 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 had to lean one method or the other, I would lean in the instructions of stating that owner incomes in so far as we're talking about somebody who owns more than 50 percent of the business, do not qualify.
  
 
How It Functions
I don't want to get too technical here, however Area 2301(e) of the CARES Act -- which developed the employee retention credit -- says that for purposes of the employee retention credit, "rules comparable to the rule of sections 51(i)( 1) and 280C(a) of the Internal Income Code of 1986 will apply," do not get caught up on the 1986, that's simply the last time the Internal Revenue Code had a significant overhaul, so it's just described as the Internal Profits Code of 1986. The essential part here is those other code sections recommendation.

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

with regard to an individual who bears any of the relationships explained in subparagraphs (A) through (G) of area 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 worth of the impressive stock of the corporation, or, if the taxpayer is an entity besides a corporation, to any individual who owns, directly or indirectly, more than 50 percent of the capital and revenues interests in the entity." So let's focus on the clause that states "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.Let's focus on the provision 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 incomes you pay in your company, you can't double dip and take a reduction for those exact same earnings. 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 saying that you do not take into consideration wages with regard to a person who owns, directly or indirectly, more than 50 percent in value of the outstanding stock of the corporation. This is saying that you do not take into account salaries with respect to a person who owns, straight or indirectly, more than 50 percent in worth of the exceptional stock of the corporation. That appears clear to me that owner salaries do not certify. Now, some tax professionals are looking at the employee retention credit certified salaries FAQs on the IRS website, and they're looking at FAQ 59, which states, "Are wages paid by an employer to employees who are related individuals thought about certified wages?

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