How It Works

I do not desire to get too technical here, however Section 2301(e) of the CARES Act -- which produced the employee retention credit -- says that for functions of the employee retention credit, "rules similar to the rule of sections 51(i)( 1) and 280C(a) of the Internal Revenue Code of 1986 will use," do not get caught up on the 1986, that's simply the last time the Internal Revenue Code had a major overhaul, so it's just referred to as the Internal Revenue Code of 1986. The fundamental part here is those other code areas recommendation.

That is just saying that if you get a credit on some incomes you pay in your business, you can't double dip and take a deduction for those same earnings. Let's focus on the stipulation that states "if the taxpayer is a corporation" since we're presuming an S corp taxpayer here.

This is saying that you don't take into account salaries with regard to a person who owns, straight or indirectly, more than 50 percent in value of the impressive stock of the corporation. That seems clear to me that owner incomes do not certify. Now, some tax specialists are looking at the employee retention credit certified incomes FAQs on the IRS site, and they're looking at FAQ 59, which states, "Are incomes paid by an employer to employees who are related people thought about qualified earnings?

" and they're stating, "Look at the response here. It's only these relatives whose wages do not count. And the IRS didn't particularly state owner wages or spouse wages do not count here, so bad-a-boo, bad-a-bing, therefore owner salaries must count." To that, I would state, "Look. The IRS site is not the tax code.

 


 

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