Get (For Use By Employers Or Payers)

Many CLEs outsource some or all of their payroll and related tax duties to a third party payer. A Professional Employer Organization (PEO) is a type of third party payer. If the CLE is outsourcing payroll, the CLE generally remains responsible for paying taxes and filing returns.

More In Tax Pros Becoming and remaining certified as a CPEO means that a PEO has met the background, experience, business location, financial reporting, tax compliance, and bonding requirements described in the statute and regulationsPDF of the CPEO program.

PEOs, also known as a professional employment or employer organizations, are sometimes mistaken for other outsourcing service organizations that include similar or related services, such as: Staff leasing company. Employee leasing company. Managed payroll.

IRS Form W-2, also known as a “Wage and Tax Statement,” reports an employee's income from the prior year and how much tax the employer withheld. Employers send out W-2s to employees in January. A copy also goes to the IRS. You should receive a W-2 from every employer that paid you at least $600 during the year.

Tax implications of leaving a PEO: Many PEOs pay their clients' payroll taxes under the PEO's tax ID. When exiting the PEO, taxes will now be paid under your own tax ID and all wage bases must be met.

PEO means professional employer organization. They serve to help small and midsized businesses manage certain HR responsibilities and risks through co-employment.

Under the Shared Responsibility for Employers Regarding Health Coverage (PDF) final rule, applicable large employers (ALEs) - generally defined as employers with 50 or more full-time or full-time equivalent employees in the prior year - are required to offer to at least 95 percent of their full-time employees - ...

The PEO agreement indicates which employment tax withholding, reporting and payment the PEO is responsible for on behalf of the client. PEOs pay client employees and employment taxes with funds from the client, and file employment tax returns for the client using the PEO's EIN.