We’ve been a leading provider of human resource and payroll solutions throughout South Carolina, the Southeast and the rest of the US for more than 20 years, and now we’re among the very first PEOs that have been designated as a CPEO by the IRS. Out of nearly 1000 Professional Employer Organizations in the US, only 34* received the certification in the first round of designations.
“We are honored to be among the first CPEOs in the country,” said Propel President Lee Yarborough. “This is especially great news for our clients, who will now be further protected from employment tax liabilities.”
What exactly can this benefit your company?
Assurance. The professional employer organization has been thoroughly vetted by the IRS so the client company can be assured that the CPEO is a reputable, compliant, stable professional employer organization.
Sole Payroll Tax Liability. The IRS will only hold the CPEO liable for federal payroll taxes and not the client. A certification designation means that the IRS cannot look to the client for federal payroll taxes, but only to the CPEO.
FICA and FUTA wage base restart. If a client begins a relationship with a CPEO in the middle of the year, it will not have a wage base restart. The CPEO is deemed a successor employer and therefore there is no wage base restart at the beginning of the relationship with the CPEO.
Federal Tax Credits. The client company, and not the CPEO, is entitled to the federal tax credits. The CPEO must give the client information necessary to claim any applicable credits.
Bonded. CPEOs are required to have a bond to cover federal taxes just in case something goes wrong. Propel HR has a $1 million bond, which is the highest amount required. Rest assured, we have you covered.
How did Propel HR become one of the first CPEOs?
The IRS established the voluntary certification program under the Small Business Efficiency Act (SBEA) of 2014, which passed through both houses of Congress with rare bipartisan support and was signed by President Obama.
The Small Business Efficiency Act gives CPEOs the authority to collect and remit federal employment taxes and saves the client money if they join or leave a PEO relationship. CPEO customers also qualify for specified federal tax credits.
PEOs that applied to become CPEOs went through a strict vetting process. The IRS’s certification process for CPEOs is involved, demanding and detailed. Both the initial application portion and the ongoing compliance portions require the submission of detailed financial information, background checks, questions about operations, historical information, experience, certifications and attestations from the CPA and executives of the CPEO. IRS agents spent hours with each application to thoroughly review and analyze the CPEO to determine if it was qualified to receive certification from the IRS. The IRS maintains a list of CPEOs on its website.
The newly Certified PEOs have proven to be industry leaders that have set a high standard of excellence and are now certified as trustworthy by the IRS. We’re proud to be a part of this distinguished group, and we’re excited to continue providing dependable HR and payroll solutions - now with the IRS’s stamp of approval.
The Internal Revenue Service does not endorse any particular certified professional employer organization. For more information on certified professional employer organizations, go to www.IRS.gov.
*As of June 1, 2017, there are 87 CPEO licenses representing approximately 34 PEO companies.