ALEXANDRIA, Va., Nov. 21, 2013 /PRNewswire-USNewswire/ -- The National Association of Professional Employer Organizations (NAPEO) today praised the introduction of a bill that would define professional employer organizations (PEOs) in the federal tax code and create a voluntary certification program for PEOs within the IRS. PEOs provide comprehensive HR, benefits, tax administration, and compliance services for small and mid-size businesses.
"The Small Business Efficiency Act (H.R.3581) will improve tax compliance and create needed certainty for small businesses so that they can focus on growing their companies while leaving benefits administration and tax compliance to the experts in the PEO industry," said NAPEO President and CEO Pat Cleary. "Legislation is long overdue to recognize and certify PEOs, an important provider of solutions for small businesses on everything from healthcare to regulatory compliance."
The bill, introduced by Reps. Kevin Brady (R-TX) and Mike Thompson (D-CA), creates a voluntary certification program for PEOs within the IRS. To become IRS-certified, a PEO would have to meet financial standards (including bonding and independent financial audit requirements) and satisfy reporting obligations and other appropriate standards set by the IRS. Once certified, a PEO would take on sole liability for the collection of federal employment taxes for worksite employees. Small and mid-sized businesses that contract with certified PEOs would be assured that they would not be liable for employment taxes once they remit their employees' tax withholdings to the PEO.
"Congressmen Brady and Thompson have been true champions of the PEO industry, and their commitment to creating a legislative and regulatory environment that allows small businesses to grow and thrive is to be commended," Cleary said.
Approximately 250,000 businesses use PEOs, and PEOs provide access to healthcare coverage for as many as six million people. Through a PEO, the employees of small businesses gain access to employee benefits such as 401(k) plans; health, dental, life, and other insurance; dependent care; and other benefits typically provided by large companies. According to a recent study, 40 percent of small businesses in PEO arrangements upgrade their total employee benefit offerings as a result.
The National Association of Professional Employer Organizations (NAPEO) represents about 85 percent of the industry's estimated $92 billion in gross revenues. NAPEO has some 300 PEO members, ranging from start-ups to large publicly held companies with years of success in the industry, as well as some 200 service provider members. PEOs provide payroll, benefits, and other HR services to small and mid-sized businesses. Approximately 250,000 businesses and more than 2.5 million people are part of PEO arrangements. For more information about NAPEO, please visit www.napeo.org.
SOURCE National Association of Professional Employer Organizations (NAPEO)