Source: https://www.irs.gov/zh-hans/tax-professionals/certified-professional-employer-organization-help
Timestamp: 2020-07-13 16:08:27
Document Index: 248293694

Matched Legal Cases: ['art 1', '§ 31', 'art 4', 'art 1', 'art 5', 'art 6', '§ 31', '§ 31', 'art 5', '§ 31', 'art 6', '§ 31', '§ 31', '§ 31', '§ 31', 'art 1', 'art 5', '§ 301']

Certified Professional Employer Organization Help | Internal Revenue Service
Certified Professional Employer Organization Help
Certified Professional Employer Organization Program Help
Maintaining Certification FAQs
Form 8973 FAQs
Form 940: Schedule A & Schedule R FAQs
How do I upload a request for independent review (or withdraw a request for independent review) if I received a notice of proposed denial of certification?
How do I upload a request for independent review (or withdraw a request for independent review) if I received a notice of suspension and proposed revocation of certification?
How do I submit annual audited financial statements after I’ve become certified?
For purposes of Part 1 of Form 8973, what is the service contract start date?
What if I received a letter from IRS stating that the service contract start date on my completed Form 8973 is incorrect?
Can Form 8973 be signed by either a CPEO or a customer using an electronic or mechanically reproduced signature?
What happens if a customer subject to a CPEO contract (as described in section 7705(e)(2)) does not sign Form 8973?
What happens if a client subject to a service agreement described in § 31.3504-2(b)(2) does not sign Form 8973?
How does a CPEO report a customer or client on Schedule R if it has not yet submitted to the IRS a Form 8973 for that customer or client?
If a CPEO’s effective date of certification is January 1, 2017, and the CPEO enters into a service contract that starts after its effective date of certification and before the date of its notice of certification, what is the CPEO’s due date for filing a timely Form 8973 reporting the start of the service contract?
If a CPEO’s effective date of certification is January 1, 2017, and the CPEO ends a service contract after its effective date of certification and before the date of its notice of certification, what is the CPEO’s due date for filing a timely Form 8973 reporting the end of the service contract?
If a CPEO ends a service contract after its effective date of certification and before filing a timely Form 8973 reporting the start of the service contract, does the CPEO have to file two separate Forms 8973, one reporting the start of the service contract and one reporting the end of the service contract?
For 2017, I paid state unemployment tax in more than one state and/or my clients paid state unemployment tax in more than one state with respect to FUTA taxable wages I paid. How do I fill out Schedule A (Form 940), Multi-State Employer and Credit Reduction Information, to reflect that my clients and/or I paid state unemployment tax in more than one state?
For 2017, I paid FUTA taxable wages that are subject to state unemployment tax in a credit reduction state. How do I fill out Schedule A (Form 940) to reflect that I paid FUTA taxable wages that are subject to state unemployment tax in a credit reduction state?
For 2017, I paid state unemployment tax in more than one state for a client that is a multi-state employer. How do I fill out column (b) of Schedule R (Form 940), Allocation Schedule for Aggregate Form 940 Filers, to report the correct state abbreviation code for this client?
For 2017, with respect to a particular client, I paid FUTA taxable wages that are subject to state unemployment tax in more than one credit reduction state. How do I fill out column (f) of Schedule R (Form 940) to report the correct credit reduction amount allocated to this client from Form 940, line 11?
Can I submit a surety bond with the application (instead of a letter from a surety)?
Which surety companies are qualified to sign the Surety Letter and the Form 14751, Certified Professional Employer Organization Surety Bond?
What if I change surety companies?
What if a bond is cancelled?
Why can’t I view documents I’ve uploaded into the IRS Online Registration System?
Why am I getting kicked out of an application before my application is complete?
Can I cancel the Controlled Group license?
Individual Identity Verification FAQ Answers
Responsible Individual FAQ Answers
In addition, as provided by Notice 2016-49, the term "responsible individual" also includes: (1) in the case of a disregarded entity owned by a corporation or partnership, the responsible individuals of that corporation or partnership (as defined by the regulations); and (2) in the case of a disregarded entity owned by an individual, the individual owner.
From the Main Menu of the IRS Online Registration System, find CPEO-PEO Certification and click ''Details’ to the right. The application status should be Open.
Click ‘Submit Documents’ in the pop-up window.
On the new screen click ‘Browse’ to select the file containing the Independent Review Request (or withdrawal request) documents on your computer. In the Notes section add the words ‘Request for Independent Review’ (or ‘Withdraw IR Request’), then click ‘Attach’ and ‘Submit’. The file cannot exceed 2 MB in size. Important – if not done in this order, the document will not upload.
For more information on requests for review of proposed denial of certification and withdrawing these requests for review, see section 8 of Revenue Procedure 2016-33
From the Main Menu of the IRS Online Registration System, locate ‘Manage Your License Information’ and select the ‘Choose Application’ drop down list next to the CPEO license number. Choose ‘Update CPEO Account Information – Upload Files.’
Select ‘Other’ from the Attachment List, then follow the on-screen instructions to attach the file containing your Independent Review Request (or withdrawal request) documents. If the file exceeds 2MB in size, you will need to open another CPEO Update transaction and repeat the steps for each subsequent file. In the Notes section, type ‘Request for Independent Review’ (or ‘Withdraw IR Request’) to identify the document.
For more information on requests for review of proposed revocation of certification, and withdrawing these requests for review, see section 3 of Revenue Procedure 2017-14.
Related Entities FAQ Answers
The term "related entity" includes any entity that is a member of a controlled group (with certain adjustments) of which the CPEO applicant is also a member. The term "related entity" also includes any provider of employment-related services if either: (1) a majority of the directors or a majority of the officers of the CPEO applicant are also directors or officers of the provider of employment-related services; or (2) an owner of the provider of employment- related services is a responsible individual of both the provider of employment-related service and the CPEO applicant by virtue of his or her ownership interest. Section 301.7705-1T(b)(12) provides the technical definition of a related entity for purposes of the CPEO program.
In addition, as provided by Notice 2016-49, CPEO applicants that, but for their status as disregarded entities would separately be members of a controlled group, are treated as members of a controlled group for purposes of CPEO program requirements.
Certified Professional Employer Organization Application FAQ Answers
What is the process for submitting amendments to a CPEO Application?
For more information on requests for review of proposed denial of certification and withdrawing these requests for review, see section 8 of Revenue Procedure 2016-33.
As of April 2018, an Annual Audited Financial Statement transaction for controlled groups and individual CPEOs is available through the IRS Online Registration System for Professional Employer Organizations. The transaction is accessed under the ‘Manage your license information’ on the main menu of the registration system.
This is the date the CPEO and customer entered into either; a CPEO contract described under IRC 7705(e)(2) or a service agreement described under Regulation section 31.3504-2(b)(2). If Line 10 in Part 4 is checked “Yes” (i.e. the CPEO and customer are subject to a CPEO contract), then the service contract start date entered in Part 1 must be the date the CPEO and customer entered into the CPEO contract, even if the CPEO and customer had an existing contractual relationship prior to the CPEO’s certification. The service contract start date of a CPEO contract under IRC 7705(e)(2) CANNOT precede the certification effective date.
You should follow the instructions in the letter. You must provide IRS a corrected Form 8973 with the correct service contract start date within 15 days. The service contract start date of a CPEO contract must be on or after the certification effective date. The corrected Form 8973 must be signed by the CPEO, but the customer’s signature is not required. You must provide the customer a copy of the corrected Form 8973.
The IRS requires that the Form 8973 be signed in ink by both the CPEO and the customer or client. The IRS will accept Forms 8973 where the customer or client’s original signature has been mechanically reproduced by scanning or facsimile transmission. For example, a customer may sign the Form 8973 in ink then scan or fax the signed form to the CPEO for the CPEO to print, sign, and mail to the IRS.
CPEOs are required to secure the signature of all customers subject to a CPEO contract (as described in section 7705(e)(2)) on Part 5 of Form 8973 prior to submission of the form to the IRS. The IRS recognizes, however, that a CPEO might occasionally experience difficulty in obtaining a signature from a customer subject to a CPEO contract. In such limited situations, the CPEO must still submit Form 8973, even though it is unsigned by the customer, with the CPEO’s signature on Part 6 and on the CPEO Consent to Disclosure of Tax Information, by the applicable deadline. However, if a customer subject to a CPEO contract does not sign Form 8973, section 3511 does not apply to the customer. Consequently, the CPEO must report this customer as a client covered by a service agreement described in § 31.3504-2(b)(2), rather than as a customer covered by section 3511, on Schedule R of Forms 940 and 941 (or Form 943, if applicable). See FAQ #3 for specific procedures (including the need to attach a written statement) for submitting an unsigned Form 8973.
CPEOs are required to secure the signature of all clients subject to a service agreement described in § 31.3504-2(b)(2) on Part 5 of Form 8973 prior to submission of the form to the IRS. The IRS recognizes, however, that a CPEO might occasionally experience difficulty in obtaining a signature from a client subject to a service agreement described in § 31.3504-2(b)(2). In such limited situations, the CPEO must still submit Form 8973, even though it is unsigned by the client, with the CPEO’s signature on Part 6 and on the CPEO Consent to Disclosure of Tax Information, by the applicable deadline. Because the CPEO did not obtain its client’s signature on the form, the CPEO must attach a written statement to the Form 8973 containing the following information:
The name and federal tax identification number of the client for which the associated Form 8973 is being submitted.
The steps the CPEO has taken in an attempt to meet its requirement to secure the client’s signature in a timely manner, and
Why the steps were unsuccessful
A statement (signed by an individual who has the authority to execute Form 8973 for the CPEO), with the following language:
Under penalties of perjury, I declare that the information contained in this statement is true, correct and complete to the best of my knowledge and belief
The occasional submission by a CPEO of an unsigned Form 8973 with the attachment described above should not, absent other factors, result in suspension or revocation of the CPEO’s certification. However, the IRS will suspend and revoke the CPEO’s certification if the IRS determines that the prevalence or number of unsigned Forms 8973 submitted by the CPEO reaches a frequency or level of significance that poses a material risk to the IRS’s collection of federal employment taxes.
A client subject to a service agreement described in § 31.3504-2(b)(2) must be properly reported on Schedule R of Forms 940 and 941 (or Form 943, if applicable), even if it does not sign Form 8973.
A CPEO must report every customer subject to a CPEO contract under section 7705(e)(2) and every client subject to a service agreement described in § 31.3504-2(b)(2) on Schedule R of Forms 940 and 941 (or Form 943, if applicable), even with respect to those clients or customers for whom the CPEO has not yet submitted a Form 8973. If a CPEO signs a CPEO contract with a customer, but has not yet submitted Form 8973 for such customer to the IRS, the CPEO may still report that customer as subject to a CPEO contract on Schedule R for periods ending prior to the applicable deadline for submitting the Form 8973. However, if that customer subsequently does not sign Form 8973, then section 3511 does not apply to the customer and the CPEO must report the customer on Schedule R as subject to a service agreement described in § 31.3504-2(b)(2), rather than as subject to a CPEO contract. In addition, for the periods in which the CPEO reported the customer on Schedule R as subject to a CPEO contract to which section 3511 applies, the CPEO must submit a Form 941-X (or Form 943-X if applicable) and Form 940-X (if applicable), with an amended Schedule R recharacterizing the wages, tips, and other compensation as those paid under a service agreement described in § 31.3504-2(b)(2), rather than under section 3511(a) or (c).
For a CPEO with an effective date of certification of January 1, 2017, that enters into a service contract that starts after its effective date of certification and before the date of its notice of certification, the due date for filing a timely Form 8973 reporting the start of the service contract is six months from the date of the CPEO’s notice of certification
For a CPEO with an effective date of certification of January 1, 2017, that ends a service contract after its effective date of certification and before the date of its notice of certification, the due date for filing a timely Form 8973 reporting the end of the service contract is six months from the date of the CPEO’s notice of certification.
A CPEO that ends a service contract after its effective date of certification and before filing a timely Form 8973 reporting the start of the service contract does not have to file two separate Forms 8973. Instead, the CPEO may file just one Form 8973, reporting both the start and the end of the service contract, by the due date for reporting the start of the service contract. When submitting one Form 8973 to report both the start and the end of the service contract, the CPEO should complete all parts of Form 8973 in accordance with the instructions applicable to the start of a service contract, with the following modifications:
Print “Combined Start and End of Service Contract” at the top of Form 8973.
In Part 1, “Why are you filing this form?,” indicate both the date the service contract started and the date the service contract ended.
In Part 5, “Customer Signature,” the customer is not required to sign a Form 8973 reporting both the start and end of a service contract.
If the CPEO does not file a combined Form 8973 reporting both the start and the end of a service contract, the CPEO must timely file two separate Forms 8973, one reporting the start of the service contract and one reporting the end of the service contract, within the applicable reporting periods. See the Instructions to Form 8973 and section 2.06(1) of Revenue Procedure 2017-14.
A CPEO that paid state unemployment tax in more than one state and/or whose clients paid state unemployment tax in more than one state with respect to FUTA taxable wages the CPEO paid must attach a single, aggregate Schedule A to its Form 940 and must place an “X” in the box of every state in which the CPEO or its clients paid state unemployment tax this year.
A CPEO that paid FUTA taxable wages that are subject to state unemployment tax in a credit reduction state must attach a single, aggregate Schedule A to its Form 940. For each state with a credit reduction rate greater than zero, the CPEO must enter the aggregate FUTA taxable wages that are subject to state unemployment tax, multiply the aggregate FUTA taxable wages by the reduction rate, and enter the aggregate credit reduction amount. The aggregate “Total Credit Reduction” shown at the bottom of Schedule A should be entered on Form 940, line 11, and should match the credit reduction amount reported in column (f) of Schedule R (Form 940), line 19.
A CPEO that paid state unemployment tax in more than one state for a client that is a multi-state employer should report in column (b) of Schedule R the two-letter U.S. Postal Service abbreviation for the state where the client’s principal place of business is located.
A CPEO that, with respect to a particular client, paid FUTA taxable wages that are subject to state unemployment tax in more than one credit reduction state should report in column (f) of Schedule R (Form 940) the aggregate credit reduction amount allocated to the client from Form 940, line 11, i.e., the total of the credit reduction amount from each state that relates to FUTA taxable wages paid with respect to that client.
When applying for initial certification, the CPEO applicant is required to submit a Surety Letter. This is a signed letter from a qualified surety confirming that the surety agrees to issue a bond to the CPEO applicant when it is certified as a CPEO in the amount required by § 301.7705-2(g)(2) and pursuant to the terms set forth in Form 14751, Certified Professional Employer Organization Surety Bond. As with the Form 14751, the Obligee is the United States of America.
If an applicant is a member of a controlled group of which other members are applicants, the surety letter must also contain the name and Employer Identification Number ("EIN") of all applicants or CPEOs that are or will be covered by the bond. All CPEO members of a controlled group are required to be on the same bond.
A CPEO applicant is required to submit a surety letter stating that the surety agrees to issue a bond in the amount required by the Federal Regulations. If this amount cannot be determined at the time the CPEO applicant submits its application (for example, because the federal employment tax liability for the prior year cannot be calculated because the calendar year has not yet ended), the surety letter may provide that, based on the CPEO applicant’s current financial position, the surety is prepared to issue the bond in a dollar amount, specified in the surety letter, that is at least equal to the CPEO applicant’s anticipated bond amount. In calculating the anticipated bond amount, the CPEO applicant must make a reasonable attempt to estimate the amount that will ultimately be required under the regulations at the time of certification. If the CPEO applicant is approved for certification, the CPEO applicant is required to obtain a bond in at least the exact amount required under the regulations, and provide the required proof of that bond within 30 days from the date of the notice of certification.
When changing surety companies, a CPEO must cancel the existing bond with its current surety company and send notice of the cancellation to the IRS (see question 8 below). The effective date of the new bond from the new surety company can be no later than the effective date of the cancellation of the existing bond. If the new bond is a superseding bond, the effective date of the bond must be the effective date of the preceding cancelled bond.
Either the CPEO or surety company may cancel a bond. If the CPEO cancels the bond, written notice must be given to IRS. The notice of the intent to cancel must be given 90 days in advance of the effective date of cancellation and be sent via certified mail. The written notice of cancellation must state the effective date of cancellation. If the surety cancels the bond, written notice must be sent by certified mail to IRS and the CPEO at least 90 days in advance of the effective date of cancellation and include the effective date of cancellation. The written notice given to IRS should be sent to the IRS employee that handles the CPEO’s account on the CPEO On-line Registration System. If that information in unknown, you can request it by emailing sbse.able.cpeo@irs.gov. In addition, when uploading the bond replacing the cancelled bond, the CPEO must also upload a “Notification of Cancelled Bond,” which can be any scanned document or memo providing the name of the surety for the cancelled bond, the cancelled bond number, and the effective date of the cancelled bond.
Additional Information FAQ Answers
What is meant by 'experience level' the CPEO application?
Note: Files must be less than 2 MB in size. Acceptable document extensions are: .pdf, .doc, .docx, .rtf, .txt, .gif, .jpeg, .jpg, and .png. Only one file can be uploaded for each category above. If there are multiple documents that must be submitted for one category, merge them into a single file that does not exceed 2 MB.
Articles of Organization for LLC (if applicable
What audited financial statements are required if the CPEO applicant’s financial statements for the most recently completed fiscal year have not yet been audited?
CPA’s examination level attestation indicates that the applicant has failed to withhold or make An applicant will not fail to meet the quarterly assertion and attestation requirements if the deposits in certain immaterial respects, provided that the attestation includes a summary of the immaterial failures that were found, states that the failures were immaterial and isolated and do not reflect a meaningful lapse in compliance with federal employment tax withholding and deposit requirements, and the IRS determines that the isolated and immaterial failures identified by the CPA do not present a material risk to the IRS's collection of federal employment taxes.
Is there a fee for applying for certification and if so, is it returnable?
Please see the Certified Professional Employer Organizations – What You Need to Know page for detailed procedures in the section titled “Electronic Filing Waiver Request Procedures for CPEOs.”
The IRS Online Registration System does not allow for viewing or retrieval of documents you have submitted. Once you click 'Attach' and 'Submit' as part of any document upload or application submission, and no error messages are received, that document has been accepted by the system and will subsequently be reviewed by the IRS.
Caution: Do not provide any sensitive information such as your employer identification number or social security number. The IRS welcomes your feedback and comments in order to improve the content of the program’s website. We will generally not provide personalized responses to feedback and comments submitted to this e-mail address.
In some situations, however, the IRS will provide personalized responses to address CPEO program questions not already covered on the CPEO web pages or existing guidance.
Do not send comments regarding system/technology issues you encounter while using this online registration system to the e-mail address above. Instead, refer to the login page of the registration system for the Helpdesk phone number. Please see FAQ #23.
Yes. The Controlled Group license that links CPEOs can be cancelled at any time. Please note: cancelling a controlled group license does not result in the voluntary termination of the certification of the individual CPEO members of the controlled group. When a controlled group license is cancelled, the individual CPEO members of the controlled group continue to be certified. A CPEO that wishes to voluntarily terminate its certification must follow the voluntary termination procedures found in Rev. Proc. 2017-14. To cancel the Controlled Group license, the Controlled Group representative must submit a written request to the program.
Select ‘Other’ from the Attachment List, then follow the on-screen instructions to attach the file containing your cancellation request. If the file exceeds 2MB in size, you will need to open another CPEO Update transaction and repeat the steps for each subsequent file. In the Notes section, type ‘Cancel Controlled Group License’ to identify the document.
Page Last Reviewed or Updated: 26-Dec-2019