Levittown NY Employee Retention Tax Credit

 
Can you take the employee retention credit on the earnings paid out of your S corporation to you, the 100% owner? Now, this is a huge argument in the tax expert community today. I'm not going to hang my hat on any one position up until we get more explanation from the IRS on this, however if I had to lean one way or the other, I would lean in the direction of saying that owner salaries in so far as we're discussing somebody who owns more than 50 percent of business, do not qualify.
  
 
Exactly How It Functions
I do not wish to get too technical here, however Area 2301(e) of the CARES Act -- which produced the employee retention credit -- says that for purposes of the employee retention credit, "rules comparable to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 shall use," do not get captured up on the 1986, that's simply the last time the Internal Revenue Code had a significant overhaul, so it's simply described as the Internal Income 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 incomes you pay in your organization, you can't double dip and take a deduction for those exact same wages. Today let's speak about area 51(i)( 1 ), which says, "No wages will be taken into consideration ...

with regard to an individual who bears any of the relationships described in subparagraphs (A) through (G) of section 152(d)( 2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who owns, straight or indirectly, more than 50 percent in value of the exceptional stock of the corporation, or, if the taxpayer is an entity besides a corporation, to any person who owns, directly or indirectly, more than 50 percent of the capital and revenues interests in the entity." So let's concentrate on the provision that states "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.Let's focus on the provision that states "if the taxpayer is a corporation" since 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 exact same incomes. Let's focus on the stipulation that states "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.

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

" and they're stating, "Look at the answer here. It's just these loved ones whose salaries do not count. And the IRS didn't particularly state owner wages or partner incomes do not 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 seems clear to me that owner salaries do not qualify. It's just these loved ones whose salaries don't count. The IRS website is not the tax code.