In June 2017, the IRS issued notices of certification to 84 organizations that applied to become Certified Professional Employer Organizations (CPEO).
This development marks a significant shift in the landscape of human resources for small businesses across the country. The CPEO status is part of the Small Business Efficiency Act, which aims to provide clearer tax liability protections for small business owners partnering with professional employer organizations.
Why this matters for your business
Certification helps to clarify that the PEO is solely liable for the payment of federal employment taxes for the worksite employees. For many small business owners, this reduces the ambiguity and risk associated with HR outsourcing, allowing for more streamlined payroll and compliance management.
As the sector continues to evolve, we encourage small business managers to verify if their current providers hold such certification or are actively working toward the designation by the IRS. Proper due diligence remains a cornerstone of effective HR strategy.