Levittown NY Employee Retention Tax Credit 2020

 
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 professional community today. I'm not going to hang my hat on any one position up 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 business, do not certify.
  
 
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I don't wish to get too technical here, but Section 2301(e) of the CARES Act -- which produced the employee retention credit -- says that for functions of the employee retention credit, "guidelines comparable to the rule of sections 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 will use," do not get caught 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 Revenue Code of 1986. The crucial part here is those other code sections reference.

Since that's the simple one, let's start with 280C(a). That is just stating that if you get a credit on some salaries you pay in your organization, you can't double dip and take a deduction for those exact same incomes. Now let's talk about section 51(i)( 1 ), which states, "No earnings will be taken into account ...

with respect to regard individual who bears 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 the outstanding stock of the corporation, or, if the taxpayer is an entity other than a corporation, to any individual who person, directly or indirectly, more than 50 percent of the capital and profits interests revenues the entity." So let's concentrate on the clause that states "if the taxpayer is a corporation" because we're assuming 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 simply saying 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 very same incomes. Let's focus on the clause that says "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.

So this is saying that you do not consider wages with respect to a person who owns, directly or indirectly, more than 50 percent in value of the exceptional stock of the corporation. This is stating that you do not take into account earnings with regard to a person 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 earnings do not qualify. Now, some tax specialists are looking at the employee retention credit certified earnings FAQs on the IRS site, and they're taking a look at FAQ 59, which states, "Are salaries paid by an employer to employees who relate individuals considered certified wages?

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