Have employee payroll obligations and other related personnel duties been a burden to your business? If so, you might consider outsourcing your payroll to a Professional Employer Organization (PEO). PEOs perform employee management tasks such as employee benefits, payroll and workers’ compensation, recruiting, human resources, and training and development. The PEO hires your employees directly and your organization is the co-employer. The PEO usually takes on the liability for filing payroll reports and paying payroll taxes to the IRS for “your” employees (for which you pay a fee to the PEO). However, in cases where the PEO has failed to remit payroll taxes for the employees, the IRS has been successful in also coming after the co-employer (e.g. your organization) for the unpaid taxes, providing the company with a large potential liability.
The good news is the IRS recently released a list of organizations which they have certified to take your status as the “employer” for employment tax purposes. By using a certified professional employer organization, your organization would be relieved of the potential liability for unpaid payroll taxes. You can find a full list of organizations which have been certified by the IRS here.
Please contact us if you have any questions regarding outsourcing your payroll to a PEO. If you already use a PEO, be sure to check that the organization has been certified or plans to become certified.
Source: Don Farmer's Federal Tax Update
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