On May 23, the IRS and Treasury released final regulations governing certified professional employer organizations (“CPEOs”).  CPEOs were created by the Tax Increase Prevention Act of 2014, P.L. 113-295, which added new Code sections 3511 and 7705 that contain certification requirements for, and the federal employment tax consequences of, being a CPEO.  The measure, passed with support from the PEO industry, eliminates the requirement for a CPEO to restart the FICA and FUTA wage base when an employee is onboarded from the worksite employer to the CPEO pursuant to a new contract between the worksite employer and the CPEO.  The same applies when the contract is terminated and employees move from the payroll of the CPEO to that of the worksite employer.  The regulations also clarify that the CPEO is solely liable for employment taxes due on remuneration paid by the CPEO.
Continue Reading Final CPEO Rules Signal Loosened Bond Requirements, Clarify Other Provisions