Axcet HR Solutions, a human resources management firm, has been awarded Certified Professional Employer Organization (CPEO) status by the Internal Revenue Service. It is the first professional employer organization in the Kansas City area to receive the designation and one of the first 84 nationally to do so.
The CPEO program was established through the Small Business Efficiency Act (SBEA) of 2014 as a voluntary IRS certification program for PEOs. To earn the certification, organizations must show a documented history of federal, state and local tax compliance; financial responsibility; and organizational integrity.
“Axcet has always maintained high standards for financial reporting and accountability,” said Gerald Diddle, president and founder of Axcet HR Solutions. “This IRS certification is another reason for our clients to have confidence in their partnership with Axcet.”
CPEO certification assures clients of the financial wellbeing of the PEO, as well as providing tax advantages and more protection for business owners. Previously, PEO clients risked double taxation when joining or leaving a PEO relationship midyear. Under the SBEA, a CPEO is treated as a “successor employer” for purposes of Social Security/Medicare and federal unemployment taxes, eliminating the need to restart FICA and FUTA wage bases.
Clients of professional employer organizations that have received the CPEO designation not only know the PEO is financially stable but also can receive some tax advantages and more protections. For example, with the new quarterly reporting requirements to the IRS, CPEO clients are assured that employment-related taxes are being handled appropriately. In addition, CPEOs take sole liability for their clients’ federal employment-related taxes. The IRS cannot hold CPEO clients liable for unpaid taxes in the event the CPEO doesn’t pay the required taxes. Under the SBEA, CPEO clients continue to qualify for specified federal tax credits, such as the Work Opportunity Tax Credit. Also under the SBEA, a CPEO can be treated as a successor employer for the purposes of Social Security/Medicare and federal unemployment taxes, so there is also no double taxation when a company joins a PEO mid-year.
To remain certified, CPEOs must comply with IRS requirements, including annual verification, bonding from a qualified surety, annual audited financial statements and other conditions.
Axcet HR Solutions has managed human resources, benefits, payroll, safety, and workers’ compensation for Kansas City area small- to medium-sized businesses since 1988.