New Rochelle NY Employee Retention Erc

 
Can you take the employee retention credit on the wages paid of your S corporation to you, the 100% owner? Now, this is a big debate in the tax professional community today. I'm not going to hang my hat on any one position till we get more information 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 earnings in so far as we're speaking about somebody who owns more than 50 percent of business, do not certify.
  
 
Exactly How It Functions
I do not want to get too technical here, however Section 2301(e) of the CARES Act -- which developed the employee retention credit -- states that for purposes of the employee retention credit, "rules comparable to the guideline of areas 51(i)( 1) and 280C(a) of the Internal Income Code of 1986 shall apply," don't 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 fundamental part here is those other code sections referral.

Let's start with 280C(a) because that's the simple one. That is simply stating that if you get a credit on some incomes you pay in your company, you can't double dip and take a reduction for those very same wages. Now let's talk about section 51(i)( 1 ), which states, "No salaries shall be taken into account ...

with respect to regard individual who bears any of the relationships described in explained (A) through (G) of section 152Aread)( 2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who person, directly or straight, more than 50 percent in value of worth outstanding stock impressive the corporation, or, if the taxpayer is an entity other than a corporation, to any individual who owns, directly or straight, more than 50 percent of the capital and profits interests in the entity." So let's focus on the clause that says "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.Let's focus on the stipulation that states "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.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 very same wages. Let's focus on the provision that states "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.

So this is stating that you do not consider wages with regard to a person who owns, directly or indirectly, more than 50 percent in worth of the impressive stock of the corporation. This is stating that you do not take into account salaries with regard to an individual who owns, straight or indirectly, more than 50 percent in worth of the impressive stock of the corporation. That appears clear to me that owner salaries do not qualify. Now, some tax specialists are taking a look at the employee retention credit qualified incomes FAQs on the IRS site, and they're looking at FAQ 59, which states, "Are salaries paid by a company to workers who belong individuals thought about qualified salaries?

" and they're stating, "Look at the answer here. It's just these family members whose wages do not count. And the IRS didn't particularly state owner incomes or partner incomes don't count here, so bad-a-boo, bad-a-bing, for that reason owner incomes should count." To that, I would state, "Look. The IRS website is not the tax code. That appears clear to me that owner wages do not qualify. It's just these family members whose salaries do not count. The IRS site is not the tax code.