September 2016 JD Supra

S Corps are corporate entities through which the income and or losses of the entity pass through to its owner’s personal income tax return. It is estimated that 100% of the shares of approximately 70% of small businesses incorporated as S Corps are owned by only “one person”.   In years past, officer shareholders of S corps received “unreasonably” low salaries in order to “reduce” FICA and Medicare payroll taxes.  Some shareholder/employees of S corps with significant earnings were receiving little or no salary until, in 2005, IRS stepped up enforcement of the issue.  Did You Know That Payroll Taxes Non-Compliance Can Get You Into TROUBLE