Not all PEOs are created equal! On June 1, 2017, the Internal Revenue Service (IRS) announced that MidwestHR has qualified for and has been listed as one of the first IRS Certified Professional Employer Organizations (CPEOs) in the country. What does this new certification mean to our existing and prospective clients? Expert HR services remain unchanged. The biggest difference CPEO clients will enjoy is additional peace of mind. Let’s take a look.
Fully vetted by the IRS
To earn CPEO status, rigorous requirements have been met. These include background verification, review of tax compliance history, annual audited financial statements, and an independent surety bond guaranteeing payment of federal employment tax liabilities. Quarterly assertions must be submitted from an independent accountant declaring that taxes are paid and the company reflects a positive financial condition. All of these give employers greater financial protection working with a CPEO.
Zero liability for federal employment taxes
Clients of a CPEO cannot be held liable for unpaid federal employment taxes once they remit their employees’ tax withholdings to the CPEO. This is a common concern for PEO clients because they can be held legally responsible by the IRS for required tax deposits even if nonpayment was their PEO’s fault.
No wage base restarting
Companies can switch mid-year to a CPEO and the taxes paid on the previous federal employer identification number (FEIN) will carry over. There will no longer be a wage base restart because CPEOs are now considered a “successor employer” as it relates to FICA and FUTA taxes. Switching to a CPEO mid-year no longer triggers a double tax payment.
As a leading Chicago PEO, MidwestHR is thrilled to offer these additional protections to current and future clients. Our business model has always been guided by the needs of our client partners. Our dedicated HR specialists are ready to provide expert advice for every situation. Give us a call 630-836-3000 and experience first hand how we’re different.
The IRS does not endorse specific Certified Professional Employer Organizations. For more information, please visit www.irs.gov or our website at midwesthr.com.
