Late in December, President Obama signed into law the Small Business Efficient Act (SBEA) which clearly defines professional employer organizations (PEOs) in the federal tax code as well as a host of other items that will assist the PEO industry.
A key component of the new law is a voluntary certification program for PEOs with the IRS. This program will help consumers select PEOs that have undergone strict review of financial standards by the IRS. To meet those standards the PEO must satisfy reporting obligations, meet financial standards (including bonding and independent financial reviews) and meet other appropriate standards set by the IRS.
Once a PEO is certified, they would take the sole liability for the collection and remission of federal employment taxes for worksite employees. This makes it very clear for the clients of the PEO where the liability lies and removes some of the current ambiguity.
“INVO PEO is dedicated to providing the highest standards in financial stability. As this new program is launched, our company will be one of the first to pursue this certification,” stated Bill Arowood of INVO PEO concerning this new legislation.