I'm now unconvinced that you know what payroll tax is, or how S-Corps work. One of the reasons you file as an S-Corp is to W2 your income. Owners of S-Corps pay W2 like everyone else.<p>This isn't some system where by design we designate S-Corp income as "income" and thus "exempt from payroll tax" (payroll tax being, for the most part, FICA). If it was, LLC income --- which is, for owners, <i>entirely</i> distributions --- wouldn't be liable for self-employment tax.<p>This is a situation where very specifically the S-Corp designation allows people to create a channel to avoid paying FICA tax that they owe.<p>If you have $90,000 of income and you're a small business owner, you should be paying your share whether the income is salary or distribution.<p>You can call it "whining" and "noise" but since this practice was already an audit flag I have very little to whine about; my side of the argument already won. All I'm saying is, "good for them for closing this loophole".<p><i>[Edit: you clearly do know how S-Corps work, so now I'm wondering why you're playing semantic games with the word "income".]</i>