![]() To become a CPEO, the organization must apply through the IRS Online Registration System. A CPEO is generally treated for employment tax purposes as the employer of any individual who performs services for a customer of the CPEO and is covered by a contract described in section 7705(e)(2) between the CPEO and the customer (CPEO contract), but only for wages and other compensation paid to the individual by the CPEO. Certification as a CPEO may affect the employment tax liabilities of both the CPEO and its customers. To become and remain certified under the certification program, certified professional employer organizations (CPEOs) must meet various requirements described in sections 35 and related published guidance. PEOs handle various payroll administration and tax reporting responsibilities for their business clients and are typically paid a fee based on payroll costs. The Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 required the IRS to establish a voluntary certification program for PEOs. ![]() Certification program for professional employer organizations (PEOs). ![]()
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