Mott Haven NY Employee Retention Cares Act 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 dispute in the tax expert community today. I'm not going to hang my hat on any one position until we get more explanation from the IRS on this, but 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 speaking about somebody who owns more than 50 percent of business, do not certify.
  
 
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I do not wish to get too technical here, however Area 2301(e) of the CARES Act -- which created the employee retention credit -- states that for functions of the employee retention credit, "rules similar to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 will use," don't get captured up on the 1986, that's simply the last time the Internal Profits Code had a major overhaul, so it's just referred to as the Internal Earnings Code of 1986. The crucial part here is those other code areas reference.

Let's start with 280C(a) since that's the easy one. That is just stating that if you get a credit on some wages you pay in your business, you can't double dip and take a deduction for those same incomes. But now let's talk about area 51(i)( 1 ), which states, "No salaries will be considered ...

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 an individual who owns, straight or indirectly, more than 50 percent in value of the impressive stock of the corporation, or, if the taxpayer is an entity other than a corporation, to any individual who owns, straight or indirectly, more than 50 percent of the capital and earnings interests in the entity." So let's concentrate on the stipulation that says "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.Let's focus on the provision that says "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.That is simply stating that if you get a credit on some wages you pay in your company, you can't double dip and take a deduction for those exact same earnings. 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 do not take into consideration wages with respect to an individual who owns, directly 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, straight or indirectly, more than 50 percent in value of the impressive stock of the corporation. That appears clear to me that owner salaries do not certify. Now, some tax experts are looking at the employee retention credit qualified earnings FAQs on the IRS website, and they're taking a look at FAQ 59, which says, "Are wages paid by an employer to employees who belong individuals considered qualified wages?

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