According to the United States Internal Revenue Service (IRS) in their article “Third party payer arrangements – Professional Employer Organizations,” if you are planning to partner with a PEO for your business, it is vital to understand the tax implications of that decision.
“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. However, there are provisions in the IRC that provide for limited situations where the CLE’s employment tax obligations may be shared by or shifted to the PEO,” the IRS said.
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Article with all rights reserved, courtesy of the IRS —- https://www.irs.gov/