Just how It Functions

I do not wish to get too technical here, but Section 2301(e) of the CARES Act -- which developed the employee retention credit -- states that for functions of the employee retention credit, "rules similar to the guideline of areas 51(i)( 1) and 280C(a) of the Internal Profits Code of 1986 shall use," do not get captured up on the 1986, that's simply the last time the Internal Earnings Code had a major overhaul, so it's just described as the Internal Earnings Code of 1986. The vital part here is those other code sections reference.

That is simply saying 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 very same salaries. Let's focus on the stipulation that states "if the taxpayer is a corporation" due to the fact that we're assuming an S corp taxpayer here.

This is saying that you don't take into account wages with respect to a person who owns, directly or indirectly, more than 50 percent in worth of the outstanding stock of the corporation. That seems clear to me that owner incomes do not certify. Now, some tax professionals are taking a look at the employee retention credit certified earnings FAQs on the IRS website, and they're looking at FAQ 59, which states, "Are incomes paid by a company to staff members who are related individuals considered certified salaries?

" and they're stating, "Look at the response here. It's just these family members whose earnings don't count. And the IRS didn't specifically state owner salaries or partner salaries do not count here, so bad-a-boo, bad-a-bing, therefore owner incomes should count." To that, I would state, "Look. The IRS website is not the tax code.

 


 

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