When it comes to the Employee Retention Credit (ERC), the percentage of ownership is a key factor. The IRS examines the salaries paid to landlords above 50% to determine if the company can take advantage of the credit. If the majority owner of a business has any living family members, the salaries paid to the owner will not be eligible for the ERC credit. However, if the majority owner has no family, their salaries are eligible for the ERC credit.
The IRS also looks at related individuals, such as family members, of the majority shareholders and their salaries to determine if the company can benefit from the ERC. It's important to note that even if a business meets all other requirements for the ERC, if any of its owners or related individuals have a salary above 50%, they will not be eligible for the credit. Businesses should be aware of these rules and regulations when applying for the ERC. It's important to understand who is eligible and who is disqualified in order to maximize your chances of receiving the credit.