IRS punishes S corp shareholders that have relatives From Forbes, copied right.

Posted on October 2, 2021 by markinaustin

In a tremendously unpleasant surprise for owners of S-corporations and C-Corporations and their tax advisors, the IRS issued Notice 2021-49 on August 4th which states that the Employee Retention Credit (ERC), made available for businesses suffering from the COVID-19 crisis, will not be available with respect to wages paid to a majority owner, or such owner’s spouse, if the majority owner has a brother or sister (whether by whole or half-blood), ancestor, or lineal descendant.

In the event that the majority owner of a corporation has no brother or sister (whether by whole or half-blood), ancestor, or lineal descendant, then wages paid to a majority owner and such owner’s spouse will qualify for the Employee Retention Credit.

Yes, you read that right. If a majority owner of a corporation has any living family members then wages paid to the owner will not be eligible for the ERC credit; however, if the majority owner has no family then wages are eligible for the ERC credit.

This is brutally unfair and makes no sense whatsoever. Only orphans that have no children are able to get the credit, while it is people with large families who need the credit to support their families. This is anti-family, unamerican, and utterly without logic or justification.

My comment: Congress ain’t gonna fix it, either.

 

Filed under: Economy, Open Thread, taxes | 13 Comments »