New Rochelle NY Employee Retention Qualifications

 
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 huge debate in the tax expert neighborhood 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 instructions of saying that owner salaries in so far as we're speaking about somebody who owns more than 50 percent of business, do not qualify.
  
 
Exactly How It Works
I don't wish to get too technical here, however Section 2301(e) of the CARES Act -- which created the employee retention credit -- states that for purposes of the employee retention credit, "rules comparable to the guideline of sections 51(i)( 1) and 280C(a) of the Internal Earnings Code of 1986 will apply," don't get caught up on the 1986, that's simply the last time the Internal Profits Code had a major overhaul, so it's simply referred to as the Internal Profits Code of 1986. The important part here is those other code areas referral.

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

with respect to an individual who person 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, 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 straight, more than 50 percent of the capital and profits interests in the entity." So let's concentrate on the stipulation that states "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.Let's focus on the stipulation that states "if the taxpayer is a corporation" because we're presuming an S corp taxpayer here.That is just stating that if you get a credit on some earnings 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 says "if the taxpayer is a corporation" due to the fact that we're presuming an S corp taxpayer here.

So this is saying that you do not take into consideration salaries with regard to an individual who owns, straight or indirectly, more than 50 percent in worth of the outstanding stock of the corporation. This is saying that you do not take into account incomes with respect 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 professionals are taking a look at the employee retention credit qualified incomes 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 relate people thought about qualified wages?

" and they're saying, "Look at the response here. It's just these family members whose incomes do not count. And the IRS didn't particularly state owner incomes or spouse salaries don't count here, so bad-a-boo, bad-a-bing, for that reason owner earnings 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 just these relatives whose salaries do not count. The IRS website is not the tax code.