Levittown NY Employee Retention Qualifications

 
Can you take the employee retention credit on the earnings paid of your S corporation to you, the 100% owner? Now, this is a big argument in the tax expert community right now. 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 needed to lean one way or the other, I would lean in the direction of stating that owner incomes in so far as we're discussing somebody who owns more than 50 percent of the service, do not certify.
  
 
Exactly How It Works
I do not want to get too technical here, but Area 2301(e) of the CARES Act -- which produced the employee retention credit -- says that for functions of the employee retention credit, "rules comparable to the guideline of areas 51(i)( 1) and 280C(a) of the Internal Earnings Code of 1986 will apply," do not get captured up on the 1986, that's simply the last time the Internal Earnings Code had a significant overhaul, so it's simply described as the Internal Profits Code of 1986. The fundamental part here is those other code sections referral.

Let's start with 280C(a) because that's the simple one. 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 incomes. Now let's talk about area 51(i)( 1 ), which states, "No salaries will be taken into account ...

with respect to an individual who person any of the relationships described in subparagraphs (A) through (G) of section 152Aread)( 2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who owns, directly or indirectly, more than 50 percent in value of worth outstanding stock exceptional 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 focus on the provision that says "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.Let's focus on the clause that says "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.That is simply saying that if you get a credit on some earnings you pay in your organization, you can't double dip and take a reduction for those very same wages. Let's focus on the clause 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 do not take into consideration wages with regard to a person who owns, straight or indirectly, more than 50 percent in value of the outstanding stock of the corporation. This is stating that you don't take into account incomes with respect to an individual who owns, directly or indirectly, more than 50 percent in worth of the outstanding stock of the corporation. That appears clear to me that owner incomes do not certify. Now, some tax professionals are looking at the employee retention credit qualified salaries FAQs on the IRS site, and they're looking at FAQ 59, which states, "Are earnings paid by an employer to workers who belong people thought about qualified salaries?

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