IRS Logo
Print - Click this link to Print this page

Certified Professional Employer Organization Program Help

Key Terms

Individual Identity Verification FAQs

Responsible Individual FAQs

Related Entities FAQs

Certified Professional Employer Organization Application FAQs

Additional Information FAQs


Key Terms

Professional Employer Organization (PEO): A professional employer organization, sometimes referred to as an employee leasing company, is an organization that enters into an agreement with a client to perform some or all of the federal employment tax withholding, reporting, and payment functions related to workers performing services for the client. Being certified by the IRS as a certified professional employer organization (CPEO) has certain federal employment tax consequences for both the CPEO and its customers.

Individual Identity Verification: The IRS must verify your identity before you can submit an application to be a certified professional employer organization (CPEO) or a Responsible Individual Personal Attestation (RIPA) form. If you have never filed a U.S. Individual Income tax return, the IRS will be unable to verify your identity online. The inability to have your identity verified online may increase the overall processing time for an application for certification.

Responsible Individual: Generally, a responsible individual is an individual who (1) owns at least 33 percent of the CPEO applicant, (2) is a director, officer, managing member, or sole proprietor; or (3) controls, manages, or supervises the CPEO applicant, its operations, finances, or federal employment tax compliance.

Responsible Individual Personal Attestation Form (RIPA): A RIPA is required of all responsible individuals listed on a CPEO applicant’s application for voluntary certification, to enable the IRS to conduct background and suitability checks.

Back to top


Frequently Asked Questions & Information to Assist with Online Applications

Individual Identity Verification FAQs

  1. What is the Individual Identity Verification process and who must go through it?
  2. How do I include my name suffix (Sr., Jr.) in the Individual Identity Verification process?
  3. How can I complete the Individual Identity Verification process if there is a problem with my date of birth?
  4. What is an Individual Number (INDV)?

Responsible Individual FAQs

  1. Who is a responsible individual?
  2. When will a responsible individual need to waive confidentiality or privilege?
  3. How do I submit my fingerprints as part of an individual background check?
  4. Can I order additional fingerprint cards for other people within my organization?
  5. Is a responsible individual limited in the number of CPEO applicants he or she can identify on the RIPA?
  6. If an individual is a responsible individual for more than 15 CPEO applicants, how are the additional CPEO applicants identified since they can’t be included on the RIPA?
  7. Is a responsible individual limited in the number of related entities he or she can identify on the RIPA?
  8. What is the process for submitting amendments to the RIPA?
  9. How long does it take the IRS to process my RIPA?
  1. What is a related entity?
  2. What is a controlled group?
  3. What is a provider of employment-related services?
  4. What is a precursor entity?

Certified Professional Employer Organization Application FAQs

  1. Can a sole proprietorship be a certified professional employer organization (CPEO)?
  2. Can a disregarded entity be a certified professional employer organization (CPEO)?
  3. Who is authorized to submit an application for certification?
  4. Can there be more than one account submitter assigned to a CPEO?
  5. Is there a limit to the number of responsible individuals that can be included on a CPEO Application for Certification?
  6. Is there a limit to the number of Controlled Groups or Related Entities that can be included on a CPEO application for certification?
  7. What is the process for submitting amendments to the CPEO Application?
  8. How long does it take the IRS to process my CPEO application?

Additional Information FAQs

  1. What is an assurance organization?
  2. What is meant by "experience level" on the CPEO application?
  3. What is meant by "physical address" on the CPEO application?
  4. What documents will a CPEO applicant be required to upload as part of its application for certification?
  5. What audited financial statements are required to be uploaded as part of the application for certification?
  6. What audited financial statements are required if the CPEO applicant's financial statements for the most recently completed fiscal year have not yet been audited?
  7. What audited financial statements are required if the CPEO was not operating as a provider of employment-related services for all or part of the most recently completed fiscal year?
  8. How do I submit the audited financial statements required while my application for certification is still being reviewed?
  9. What CPA documents are required to be uploaded as part of the application for certification?
  10. How do I submit the quarterly assertions, attestations, and working capital statements required while my application for certification is still being reviewed?
  11. I'm applying for certification in the first year of the program, and the annual audited financial statements and CPA opinion that I must submit predate the issuance of guidance concerning requirements for applying to the CPEO program. For this reason, they do not comply with the regulatory requirements regarding positive working capital. Am I required to amend prior financial statements or conduct financial audits of those years anew?
  12. Does the CPEO applicant or the CPA need to provide a Form 2848 as part of its application?
  13. When I am required to provide an assertion or statement "under penalties of perjury," what language is acceptable to meet this requirement?
  14. What bond documents are required to be uploaded as part of the application for certification?
  15. How does a CPEO applicant calculate the amount of the bond to be included in the Surety Letter submitted with the application?
  16. Does the mere retention by the surety of the right to seek collateral violate the "no collateral" requirement established by the regulations?
  17. Can I submit a surety bond with the application (instead of a letter from a surety)?
  18. Which surety companies are qualified to sign the Surety Letter and the Form 14751, Certified Professional Employer Organization Surety Bond?
  19. What are the quarterly assertion and attestation documents required to be uploaded as part of the application for certification?
  20. What quarterly assertion and attestation documents are required if the CPEO was not operating as a provider of employment-related services for all or part of the most recently completed calendar quarter?
  21. Is there a fee for applying for certification and if so, is it refundable?
  22. How do I request a waiver from electronic filing requirements as discussed in Revenue Procedure 2017-14?
  23. Who do I contact if I have technical problems with the IRS Online Registration System?
  24. Provide Feedback or General Inquiries on the CPEO Program
  25. Why am I getting kicked out of an application before my application is complete.
  26. How do I access an incomplete application?
  27. Can a CPEO applicant that has received notice of certification but has not yet provided Form 14751, Certified Professional Employer Organization Security Bond, withdraw its application?

1. What is the Individual Identity Verification process and who must go through it?

The Individual Identity Verification process is a one-time process that allows the IRS to validate that an individual is WHO they say they are by asking personal questions in conjunction with questions from the individual’s most recently filed tax return. This is a mandatory process that applies to any individual submitting either a Responsible Individual Personal Attestation (RIPA) or an application for certification.

2. How do I include my name suffix (Sr., Jr.) in the Individual Identity Verification process?

If you have a suffix in your name (for example Junior or Senior), you have two options when filling out your basic information in the Individual Identity Verification online.

  • You may choose to omit the suffix altogether.
  • You may enter your suffix in the Last Name field. If you choose to enter the suffix, do not to include any punctuation. Including punctuation could case your identity proofing attempt to fail. For example, if you name is Thomas Smith Jr. you would only enter "Smith Jr" in the Last Name field.

3. How can I complete the Individual Identity Verification process if there is a problem with my date of birth?

You will need to contact the Social Security Administration (SSA) and correct or confirm your date of birth.  If SSA corrects it, wait 14 calendar days and try to complete the Individual Identity Verification process again. If, instead of correcting, SSA confirms that your date of birth is correct, or if SSA corrects your date of birth but you are still having problems, please contact the online registration technical help desk. Refer to the login page of the registration system for the Helpdesk phone number.

4. What is an Individual Number (INDV)?

The Individual (INDV) Number is assigned to any CPEO applicant account submitter or responsible individual who successfully completes the Identify Verification process.

After completion of the Identity Verification process, a responsible individual must also complete and submit a Responsible Individual Personal Attestation (RIPA). Once submission of the RIPA is complete, the responsible individual should share his or her INDV number with the account submitter of each CPEO applicant for which he or she is a responsible individual. Failure to provide this information could result in an inability for a would-be CPEO applicant to apply for certification.

Back to top


5. Who is a responsible individual?

For purposes of a CPEO applicant, a responsible individual is generally defined as any individual who (1) owns at least 33 percent of the CPEO applicant, (2) is a director, officer, managing member, or sole proprietor; or (3) controls, manages, or supervises the CPEO applicant, its operations, finances, or federal employment tax compliance. Section 301.7705-1T(b)(13) provides the technical definition of a responsible individual for purposes of the CPEO program.

In addition, as provided by Notice 2016-49, the term "responsible individual" also includes: (1) in the case of a disregarded entity owned by a corporation or partnership, the responsible individuals of that corporation or partnership (as defined by the regulations); and (2) in the case of a disregarded entity owned by an individual, the individual owner. 

6. When will a responsible individual need to waive confidentiality or privilege?

A responsible individual must take such actions as are necessary to authorize the IRS to conduct background checks and to investigate the accuracy of statements and submissions made by the CPEO applicant in the application for certification and by the responsible individual in the RIPA. This may include waiving confidentiality and privilege in situations in which the IRS would otherwise be prevented from obtaining or confirming information necessary to evaluate a CPEO applicant's qualification for certification from relevant third parties (such as former employers) because of the existence of confidentiality, non-disclosure, or similar agreements.

7. How do I submit my fingerprints as part of an individual background check?

NOTE: THIS PROCESS IS TO BE USED ONLY TO REQUEST FINGERPRINT CARDS FOR THE CPEO PROGRAM. If you need fingerprint cards for IRS e-file, acceptance, EFIN or other e-service, use the procedures specific to that program. Non-CPEO email requests cannot be forwarded.

In order to initiate background checks, fingerprints must be submitted by each responsible individual and/or application submitter. Generally, there are no exceptions. Fingerprints are submitted on a Form FD-258, Fingerprint Card. The fingerprint cards used for the CPEO program are unique and can only be obtained by sending an email request to sbse.able.cpeo@irs.gov with CPEO FINGERPRINT in the subject line. The request should include the requestor's name and mailing address. Two cards and complete instructions will be mailed to each requestor. The individual will fill out the necessary information on the card; and take the card in person, along with photo identification, to a law enforcement office (or similar location) for fingerprinting. The cards should then be mailed back to the IRS at the following address:

Internal Revenue Service
Submission Processing Center - Austin
3651 S. IH-35, Stop 6380 AUSC
Attn: CPEOFPC
Austin, TX 78741

Two cards should be completed and returned for each individual in case one is not useable. Photocopies of fingerprint cards are not acceptable.

8. Can I order additional fingerprint cards for other people within my organization?

Yes. If you are requesting cards for multiple responsible individuals, please provide the number of individuals in your email request. If you wish to order fingerprint cards for individuals and have the cards mailed to multiple addresses, you will need to provide a separate email request for each individual and their corresponding address.

9. Is a responsible individual limited in the number of CPEO applicants he or she can identify on the RIPA?

Yes. A responsible individual can identify no more than 15 CPEO applicants on the RIPA.

10. If an individual is a responsible individual for more than 15 CPEO applicants, how are the additional CPEO applicants identified since they can’t be included on the RIPA?

If a responsible individual identifies 15 CPEO applicants on the RIPA, the IRS will contact the responsible individual to obtain information relating to certain CPEO applicants not otherwise identified on the RIPA. A responsible individual must identify either on the RIPA or in subsequent correspondence with the IRS each CPEO applicant that has identified or will identify the individual as a responsible individual on its CPEO application.

11. Is a responsible individual limited in the number of related entities he or she can identify on the RIPA?

Yes. A responsible individual can only identify up to 15 different entities on their RIPA. If a responsible individual has more than 15 related entities, the responsible individual should follow the ordering rules listed below in determining which 15 related entities to identify on its RIPA. NOTE: Refer to the FAQ for Responsible Individuals that identifies waiving confidentiality.

  1. Any corporation in which the responsible individual owns 33 percent or more of the total value of shares of all classes of stock of the corporation ranked in order of the total value of shares of all classes of stock of the corporation owned by the individual.
  2. Any corporation in which the responsible individual owns 33 percent or more of the total combined voting power of all classes of stock entitled to vote of the corporation ranked in order of the total value of shares of all classes of stock of the corporation owned by the individual.
  3. Any partnership in which the responsible individual owns 33 percent or more of the capital interest of the partnership ranked in order of the percentage of capital interest of the partnership owned by the individual.
  4. Any partnership in which the responsible individual owns 33 percent or more of the profits interest of the partnership ranked in order of the percentage of profits interest of the partnership owned by the individual.

12. What is the process for submitting amendments to the RIPA?

If you need to make changes to the RIPA, please refer to the login page of the registration system for the Helpdesk phone number.

13. How long does it take the IRS to process my RIPA?

RIPAs are reviewed in conjunction with the CPEO application.  Processing times are based on all of the facts and information submitted with an application and the associated RIPAs. If the IRS requires additional information or clarification, it may contact the CPEO applicant or the appropriate responsible individual.

Back to top


The term "related entity" includes any entity that is a member of a controlled group (with certain adjustments) of which the CPEO applicant is also a member. The term "related entity" also includes any provider of employment-related services if either: (1) a majority of the directors or a majority of the officers of the CPEO applicant are also directors or officers of the provider of employment-related services; or (2) an owner of the provider of employment-related services is a responsible individual of both the provider of employment-related service and the CPEO applicant by virtue of his or her ownership interest. Section 301.7705-1T(b)(12) provides the technical definition of a related entity for purposes of the CPEO program.

In general, a controlled group is a group of related businesses that have common ownership. For purposes of the CPEO program, all CPEO applicants and CPEOs that are members of a controlled group within the meaning of §§ 414(b) and (c) of the Code are treated as a single CPEO applicant or CPEO for purposes of the financial statement and quarterly assertion and attestation requirements (other than the positive working capital requirements), and for purposes of the bond requirements.

In addition, as provided by Notice 2016-49, CPEO applicants that, but for their status as disregarded entities would separately be members of a controlled group, are treated as members of a controlled group for purposes of CPEO program requirements. 

A provider of employment-related services is a person that provides payroll or other employment tax administration and compliance services to clients, including, but not limited to, collecting, reporting, and paying employment taxes with respect to wages or compensation paid by the provider of employment-related services to individuals performing services for the clients. Section 301.7705-1T(b)(11) provides the technical definition of a provider of employment-related services for purposes of the CPEO program.

A precursor entity is any related entity of a CPEO applicant that is or was a provider of employment-related services and that has ceased operations, dissolved, or made a substantial asset transfer to the CPEO applicant during the calendar year that the CPEO applicant applies for certification or any of the three preceding calendar years. A precursor entity also includes a related provider of employment-related services that plans to make a substantial asset transfer to the CPEO applicant while the application for certification is pending or in the 12-month period following the date of the CPEO applicant's application. For specific information about substantial asset transfers or providers of employment-related services and other definitions, refer to: § 301.7705-1T.

Back to top


18. Can a sole proprietorship be a certified professional employer organization (CPEO)?

Yes, a sole proprietorship can apply to become a CPEO.

19. Can a disregarded entity be a certified professional employer organization (CPEO)?

Yes, as provided by Notice 2016-49, a business entity that is disregarded as an entity separate from its owner for any purpose under §301.7701-2 and that is wholly owned directly (including through one or more disregarded entities organized in the United States) by a United States person (as defined in section 7701(a)(30)) may apply for certification as a CPEO.  Because a CPEO applicant must be created or organized in the United States or under the law of the United States or of any state, only domestic disregarded entities are eligible to apply for certification.

In addition, as provided by Notice 2016-49, CPEO applicants that, but for their status as disregarded entities would separately be members of a controlled group, are treated as members of a controlled group for purposes of CPEO program requirements. 

20. Who is authorized to submit an application for certification?

Each CPEO applicant will designate an account submitter to submit the application for certification. Because the account submitter will receive correspondence about the CPEO application from the IRS, the account submitter must be legally authorized to receive the CPEO applicant’s return information. It is recommended that the account submitter be a responsible individual. For further information, please refer to I.R.C. §§ 6103(a); 6103(e).

If you are a Then the account submitter must be:
Partnership
  • Partner
  • Limited partner
Corporation or S-Corporation
  • President
  • Vice President
  • Secretary
  • Treasurer
  • Chief Accounting Officer
  • Any Tax Officer, including Controller
  • 1% shareholder (corporation)
  • Shareholder (S-corporation)
Sole Proprietor
  • Owner
  • Sole Proprietor

21. Can there be more than one account submitter assigned to a CPEO?

No. At this time, each CPEO applicant is allowed to have only one account submitter of record associated with each CPEO applicant.

22. Is there a limit to the number of responsible individuals that can be included on a CPEO application for certification?

Yes. A CPEO applicant may only identify up to 15 responsible individuals in its application for certification. If a CPEO applicant has more than 15 responsible individuals, it should follow the ordering rules listed below in determining which 15 individuals to identify on its application.

In the case of a corporation

  • Any individual who owns 33 percent or more of the total value of shares of all classes of stock of the corporation.
  • Any individual who owns 33 percent or more of the total combined voting power of all classes of voting stock of the corporation.
  • Any individual who is a chief executive, operating, financial, legal or accounting officer of the corporation (including the president, vice-president, secretary, or treasurer) ranked in order of the total value of shares of all classes of stock of the corporation owned by the individual.
  • Any individual who is a director of the corporation ranked in order of the total value of shares of all classes of stock of the corporation owned by the individual.

In the case of a partnership

  • Any individual who owns 33 percent or more of the capital interest of the partnership.
  • Any individual who owns 33 percent or more of the profits interest of the partnership.
  • Any individual who is a managing member of the partnership ranked in order of the percentage of capital interest of the partnership owned by the individual.
  • Any individual who is a general partner of the partnership ranked in order of the percentage of capital interest of the partnership owned by the individual.
  • Any individual who is a general partner of the partnership ranked in order of the percentage of profits interest of the partnership owned by the individual.

In the case of either a corporation or partnership, after application of the rules above

  • Any individual who, regardless of title, has ultimate responsibility for implementing the decisions of the organization’s governing body.
  • Any individual who, regardless of title, has primary responsibility for the organization’s federal employment tax compliance.
  • Any individual who, regardless of title, has ultimate responsibility for managing the organization’s finances.
  • Any individual who, regardless of title, has ultimate responsibility for supervising the management, administration, or operation of the organization.

See the term "responsible individual" as defined in § 301.7705-1T(b)(13) for additional details.

23. Is there a limit to the number of Controlled Groups or Related Entities that can be included on a CPEO application for certification?

There is no limit to the number of controlled groups or related entities that can be include on a CPEO application.

24. What is the process for submitting amendments to a CPEO Application?

If you need to make changes to a CPEO application, please refer to the login page of the registration system for the Helpdesk phone number.

25. How long does it take the IRS to process my CPEO application?

CPEO applications are reviewed in conjunction with the associated RIPAs.  Processing times are based on all of the facts and information submitted with an application and the associated RIPAs. If the IRS requires additional information or clarification, it may contact the CPEO applicant or the appropriate responsible individual.

Back to top


26. What is an assurance organization?

Private assurance organizations or programs are part of the PEO industry's self-regulation efforts. They are independent accreditation bodies that help verify accredited PEOs' compliance with ethical, financial, and operational standards. They also provide financial assurance of the performance of key employer obligations by accredited PEOs.

27. What is meant by 'experience level'  the CPEO application?

It is important that a CPEO applicant or CPEO be managed by individuals with knowledge or experience regarding federal and state employment tax compliance and business practices relating to those compliance requirements. The IRS may deny a CPEO application for certification or revoke or suspend a CPEO's certification if the CPEO applicant or CPEO and its responsible individuals fail to demonstrate adequate collective knowledge or experience with respect to federal or state employment tax reporting, depositing, and withholding requirements; handling and accounting of payroll, tax payments, and other funds on behalf of others; effective recordkeeping systems; retention of qualified personnel and legal advisors; and general business and risk management. The IRS reserves the right to ask a CPEO applicant to support its representations with respect to its knowledge or experience of its responsible individuals, by providing a written work history or third-party references.

28. What is meant by "physical address" on the CPEO application?

The CPEO applicant must have one or more established, physical business locations within the United States at which a significant portion of its PEO-related functions are carried on and administrative records are kept. The physical address of the CPEO applicant’s principal administrative office or place of business must include the suite, room, or other unit number after the street address. Entering a P.O. Box or an “in care of” (c/o) address on this line will result in a rejection of the application. Note: If the CPEO applicant is a corporation, do not use the address of the registered agent for the state in which the corporation is incorporated. For example, if a business is incorporated in Delaware or Nevada and the corporation's principal office is located in Little Rock, AR, the corporation should enter the Little Rock address.

29. What documents will a CPEO applicant be required to upload as part of its application for certification?

As part of the application for certification process, a CPEO applicant will be required to upload the following documents:

  • Audited Financial Statements
  • CPA Documents
  • Bond Documents
  • Quarterly Documents
  • Articles of Organization for LLC (if applicable)
  • Articles of Incorporation (if applicable)
  • Corporate Charter (if applicable)
  • Partnership Agreement (if applicable)

For additional guidance on the required materials, see Rev. Proc. 2016-33.

Note: files must be less than 5 MB in size. Acceptable document extensions are: .pdf, .doc, .docx, .rtf, .txt, .gif, .jpeg, .jpg, and .png. Only one file can be uploaded for each category above. If there are multiple documents that must be submitted for one category, merge them into a single file that does not exceed 5 MB.

Example: The following documents related to annual audited financial statements requirements would be merged into one file for upload: copy of the CPEO applicant’s annual audited financial statements (including the Note to the Financial Statement), CPA unmodified opinion of the financial statements, and, if applicable, the separate statement of positive working capital signed by a responsible individual of the CPEO applicant (applicable only for annual audited financial statements for fiscal years ending before September 30, 2016).

30. What audited financial statements are required to be uploaded as part of the application for certification?

A CPEO applicant must upload a copy of its annual audited financial statements for the most recently completed fiscal year as of the date it submits its application for certification.  In addition, it must submit an unmodified opinion of a CPA that the annual audited financial statements submitted with the application are presented fairly in accordance with GAAP and reflect positive working capital for the fiscal year or negative working capital if the exception described in the next paragraph applies, in either case setting forth in detail a calculation of the CPEO applicant’s working capital. As provided in Notice 2016-49, the opinion itself does not need to include these working capital statements, provided that the audited financial statements covered by the opinion include a Note to the Financial Statements that states that the financial statements reflect positive working capital (or that the CPEO applicant or CPEO satisfies the negative working capital exception described in the next paragraph) and sets forth in detail a calculation of the working capital.

An applicant will not fail to meet the positive working capital requirement if three requirements are satisfied. First, the CPEO applicant cannot have negative working capital for more than two consecutive fiscal quarters of the fiscal year, which should be demonstrated in the Note or opinion. Second, the CPEO applicant or its CPA must provide an explanation describing the reason for the failure, which should also be included in the Note or opinion. Third, the IRS must determine that the failure does not present a material risk to the IRS’s collection of federal employment taxes.

The copy of the annual audited financial statements (including the Note to the Financial Statements, if applicable) and the CPA unmodified opinion of the financial statements must be uploaded into the system as one consolidated document.

If a CPEO applicant is a member of a controlled group of which other members are CPEO applicants or CPEOs, the CPEO applicant must submit copies of combined or consolidated annual audited financial statements for all CPEO applicants and CPEOs in the controlled group, with an accompanying unmodified opinion of a CPA that such financial statements are presented fairly and in accordance with GAAP. Either the opinion or a Note to the Financial Statements must state that the individual CPEO applicant’s financial statements reflect positive working capital (or meet the exception described above). See Revenue Procedure 2016-33 and Notice 2016-49 for more detail on controlled group requirements.

31. What audited financial statements are required if the CPEO applicant’s financial statements for the most recently completed fiscal year have not yet been audited?

If a CPEO applicant submits its application less than six months after the most recently completed fiscal year ends, and the audit of its financial statements for that fiscal year are not yet completed, the CPEO applicant must provide the annual audited financial statements for the immediately preceding fiscal year with its application. For example, if a CPEO applicant applies for certification on September 1, 2016, and its most recently completed fiscal year ended on June 30, 2016, and the annual audited financial statements for that period are not yet complete, it should submit the annual audited financial statements for the fiscal year that ended on June 30, 2015 with its application. The CPEO applicant must submit the annual audited financial statements for the fiscal year that ended on June 30, 2016 no later than December 31, 2016.

32. What audited financial statements are required if the CPEO was not operating as a provider of employment-related services for all or part of the most recently completed fiscal year?

If the CPEO applicant was not operating as a provider of employment-related services for all or part of the most recently completed fiscal year as of the date it applies for certification, it is considered a "newly established CPEO applicant." In addition to its own annual audited financial statements, a newly established CPEO applicant must also provide a copy of the annual audited financial statements for the most recently completed fiscal year of any precursor entity. If the newly established CPEO applicant does not have a precursor entity, it must provide a copy of the annual audited financial statements for the most recently completed fiscal year of any related entity described in § 301.7705-1T(b)(12)(ii)(B). In general, this type of related entity is a provider of employment-related services that is related to the newly established CPEO applicant because of the common ownership of a responsible individual.

33.How do I submit the audited financial statements required while my application for certification is still being reviewed?

For any fiscal year that ends after the CPEO applicant submits its application for certification and on or before the effective date of certification, if applicable, the CPEO applicant must provide its annual audited financial statements for that year and an unmodified opinion of a CPA that the annual audited financial statements submitted are presented fairly in accordance with GAAP and reflect positive working capital for the fiscal year or reflect negative working capital but meet the regulatory exception, in either case setting forth in detail a calculation of working capital, by the last day of the sixth month after such fiscal year ends. The opinion itself does not need to include the working capital statement, provided that the audited financial statements covered by the opinion include a Note to the Financial Statements that includes the working capital statement and detailed calculation of working capital. The copy of the annual audited financial statements (including the Note to the Financial Statements, if applicable) and the CPA unmodified opinion of the financial statements must be uploaded as one consolidated document. To upload the document:

  1. From the Main Menu of the IRS Online Registration System, click 'Details' next to the current CPEO – PEO Certification.  Your application status should be 'Open.'
  2. Click 'Submit Documents' in the pop-up window.
  3. This brings up a new screen.  Use 'Browse' to choose the file you wish to upload.  Then click 'Attach' and 'Submit.'  If not done in this order, the document will not upload.

34. What CPA documents are required to be uploaded as part of the application for certification?

The CPEO applicant must submit a written declaration from the CPA who provides the opinion of the audited annual financial statements and, if different, from the CPA who provides the examination-level attestation regarding the CPEO applicant’s assertion on federal employment tax compliance, that he or she is currently authorized to practice as a CPA.

All declarations, if there are more than one, must be uploaded into the system as one consolidated document.

35. How do I submit the quarterly assertions, attestations, and working capital statements required while my application for certification is still being reviewed?

  1. From the Main Menu of the IRS Online Registration System, click 'Details' next to the current CPEO – PEO Certification.  Your application status should be 'Open.'
  2. Click 'Submit Documents' in the pop-up window
  3. This brings up a new screen.  Use 'Browse' to choose the file you wish to upload.  Then click 'Attach' and 'Submit.'  If not done in this order, the document will not upload.

A CPEO applicant must continue to provide this documentation for every subsequently completed calendar quarter during which its application for certification is pending for some or all of the quarter. This documentation must be provided by the last day of the second month after the end of each such subsequent quarter. Initial applicants are allowed additional time to upload these documents and will not be penalized during the initial application review period.

36. I’m applying for certification in the first year of the program, and the annual audited financial statements and CPA opinion that I must submit predate the issuance of guidance concerning requirements for applying to the CPEO program. For this reason, they do not comply with the regulatory requirements regarding positive working capital. Am I required to amend prior financial statements or conduct financial audits of those years anew?

No. Notice 2016-49 provides transition relief for CPEO applicants submitting annual audited financial statements for fiscal years ending before September 30, 2016. Specifically, a CPEO applicant will not fail to meet the requirements for submitting annual audited financial statements and accompanying CPA opinion (as provided in §301.7705-2T(e)(2) or section 2.05(1) and (2) of Rev. Proc. 2016-33) if the CPEO applicant submits, together with annual audited financial statements for a fiscal year ending before September 30, 2016: (1) an unmodified opinion of a CPA that the annual audited financial statements are presented fairly in accordance with GAAP; and (2) a separate statement, signed under penalties of perjury by a responsible individual of the CPEO applicant, that the financial statements reflect positive working capital for the fiscal year or that the CPEO applicant satisfies the requirements of §301.7705-2T(e)(3), in lieu of such information being provided in the CPA opinion or in a Note to the Financial Statement. 

The statement by the responsible individual must also provide in detail a calculation of the CPEO applicant’s working capital.  In the case of a CPEO applicant that is a member of a controlled group of which other members are also CPEO applicants or CPEOs, the CPEO applicant must submit its own separate statement by a responsible individual that the individual financial statements of that CPEO applicant reflect positive working capital (as defined by GAAP) or that the requirements of §301.7705-2T(e)(3) are satisfied, in either case setting forth in detail a calculation of the individual CPEO applicant’s working capital. 

The statement by the responsible individual described above must be uploaded into the system as one consolidated document with the audited annual financial statements and the CPA unmodified opinion of the financial statements.

37. Does the CPEO applicant or the CPA need to provide a Form 2848 as part of its application?

No, neither the CPEO applicant nor the CPA is required to provide a Form 2848, Power of Attorney and Declaration of Representative, authorizing the CPA to act on behalf of the CPEO applicant by providing an opinion or attestation for use in connection with an application for certification. While a Form 2848 is not required as part of the application, a Form 2848 will be required if the CPA intends to represent the CPEO before the IRS in the resolution of issues related to the application or certification.

38. When I am required to provide an assertion or statement "under penalties of perjury," what language is acceptable to meet this requirement?

For purposes of submitting assertions or statements under penalties of perjury, the following is acceptable language: "Under penalties of perjury, I declare that I have examined [insert, as appropriate: this assertion, this statement, etc.], including any accompanying documents, and, to the best of my knowledge and belief, [insert, as appropriate: this assertion, this statement, etc.] is true, correct, and complete."

39. What bond documents are required to be uploaded as part of the application for certification?

When applying for initial certification, the CPEO applicant is required to submit a Surety Letter. This is a signed letter from a qualified surety confirming that the surety agrees to issue a bond to the CPEO applicant when it is certified as a CPEO in the amount required by § 301.7705-2T(g)(2) and pursuant to the terms set forth in Form 14751, Certified Professional Employer Organization Surety Bond. As with the Form 14751, the Obligee is the United States of America. 

If an applicant is a member of a controlled group of which other members are applicants, the surety letter must also contain the name and Employer Identification Number ("EIN") of all applicants or CPEOs that are or will be covered by the bond. All CPEO members of a controlled group are required to be on the same bond.

Although the Surety Letter is uploaded with the application, not mailed to the IRS, you can address the letter to The Department of the Treasury - Internal Revenue Service, Washington, DC 20224.

40. How does a CPEO applicant calculate the amount of the bond to be included in the Surety Letter submitted with the application?

A CPEO applicant is required to submit a surety letter stating that the surety agrees to issue a bond in the amount required by the temporary regulations. If this amount cannot be determined at the time the CPEO applicant submits its application (for example, because the federal employment tax liability for the prior year cannot be calculated because the calendar year has not yet ended), the surety letter may provide that, based on the CPEO applicant’s current financial position, the surety is prepared to issue the bond in a dollar amount, specified in the surety letter, that is at least equal to the CPEO applicant’s anticipated bond amount. In calculating the anticipated bond amount, the CPEO applicant must make a reasonable attempt to estimate the amount that will ultimately be required under the regulations at the time of certification. If the CPEO applicant is approved for certification, the CPEO applicant is required to obtain a bond in at least the exact amount required under the regulations, and provide the required proof of that bond within 30 days from the date of the notice of certification.

41. Does the mere retention by the surety of the right to seek collateral violate the "no collateral" requirement established by the regulations?

No. A surety’s retention of the right to seek collateral, as long as no collateral is actually required by the surety or posted by the CPEO, does not violate the regulatory requirement that a CPEO applicant and CPEO must meet the bond requirements without posting collateral. However, if a surety later exercises this right and seeks collateral for a CPEO’s bond, such action qualifies as a material change that must be immediately timely reported to the IRS, and that which will result in the revocation of the CPEO’s certification.

42. Can I submit a surety bond with the application (instead of a letter from a surety)?

No. The requirement is to submit the bond within 30 days of the date of the notice of certification.

43. Which surety companies are qualified to sign the Surety Letter and the Form 14751, Certified Professional Employer Organization Surety Bond?

The surety company must hold a Certificate of Authority from the Department of the Treasury, Bureau of the Fiscal Service. These companies are listed in Treasury Circular 570. You may get a copy of this circular by writing to the U.S. Department of the Treasury, Bureau of the Fiscal Service, Surety Bond Section, 3700 East West Hwy, Room 6D22, Hyattsville, MD 20782; by calling (202) 874-6850 (not a toll-free number); or online at Department of the Treasury.

Once certified and required to submit Form 14751, the CPEO is not obligated to use the same qualified surety company that signed the Surety Letter.

44. What are the quarterly assertion and attestation documents required to be uploaded as part of the application for certification?

A CPEO applicant must upload an assertion that it has withheld and made deposits of all federal employment taxes for which the CPEO applicant is liable for the most recently completed calendar quarter as of the date it submits its application for certification; an examination level attestation from a CPA stating that this assertion is fairly stated in all material respects; and a statement verifying that the CPEO applicant has positive working capital.  The assertion, attestation, and positive working capital statement must be uploaded into the system as one consolidated document.

The assertion must be signed by a responsible individual under penalties of perjury stating that the CPEO applicant has withheld and made deposits of all federal employment taxes (other than taxes imposed by chapter 23 of the Code) as required for the quarter. The examination level attestation must come from a CPA stating that this assertion is fairly stated.

An applicant will not fail to meet the quarterly assertion and attestation requirements if the CPA’s examination level attestation indicates that the applicant has failed to withhold or make deposits in certain immaterial respects, provided that the attestation includes a summary of the immaterial failures that were found, states that the failures were immaterial and isolated and do not reflect a meaningful lapse in compliance with federal employment tax withholding and deposit requirements, and the IRS determines that the isolated and immaterial failures identified by the CPA do not present a material risk to the IRS's collection of federal employment taxes.

The statement verifying positive working capital must be signed by a responsible individual under penalties of perjury, verify that the CPEO applicant has positive working capital (as defined by GAAP), and include a detailed calculation of the CPEO applicant's working capital. If available, a copy of the CPEO applicant’s unaudited financial statements for the most recently completed fiscal quarter should be included.

A CPEO applicant will not fail to meet the positive working capital requirement if three requirements are satisfied. First, the CPEO applicant cannot have negative working capital for the two immediately preceding fiscal quarters. Second, the CPEO applicant must provide a detailed calculation of its negative working capital and an explanation to the IRS describing the reason for such negative working capital. Third, the IRS must determine that the failure does not present a material risk to the IRS’s collection of federal employment taxes.

45. What quarterly assertion and attestation documents are required if the CPEO was not operating as a provider of employment-related services for all or part of the most recently completed calendar quarter?

A CPEO applicant that was not operating as a provider of employment-related services during the most recently completed calendar quarter as of the date it submits its application for certification must provide an assertion, examination level attestation, and positive working capital statement for any precursor entity.

46. Is there a fee for applying for certification and if so, is it returnable?

There is a fee charged in connection with applying for and maintaining certification as a Certified Professional Employer Organization. The annual fee is $1,000. After submission of the application for certification, the CPEO applicant will be automatically directed to pay a user fee in the amount of $1,000 through www.pay.gov. Payment confirmations are provided through the www.pay.gov portal. The IRS cannot complete processing of the application until this fee is received. Once processing of the application has begun, the user fee will not be returned, including if the application is withdrawn or denied. There is no fee associated with a responsible individual submitting a Responsible Individual Personal Attestation (RIPA).

47. How do I request a waiver from electronic filing requirements as discussed in Revenue Procedure 2017-14?

At this time, a waiver process has not been finalized.  Once finalized, this FAQ will be updated with instructions on requesting a waiver. 

48. Who do I contact if I have technical problems with the IRS Online Registration System?

If you have a technical question related to your use of the IRS Online Registration System, please refer to the login page of the registration system for the Helpdesk phone number.

49. Provide Feedback or General Inquiries on the CPEO Program

Here’s the place to provide feedback and comments on the IRS CPEO Program sbse.able.cpeo.info@irs.gov

Caution: Do not provide any sensitive information such as your employer identification number or social security number. The IRS welcomes your feedback and comments in order to improve the content of the program’s website. We will generally not provide personalized responses to feedback and comments submitted to this e-mail address. 

In some situations, however, the IRS will provide personalized responses to address CPEO program questions not already covered on the CPEO web pages or existing guidance. 

Do not send comments regarding system/technology issues you encounter while using this online registration system to the e-mail address above. Instead, refer to the login page of the registration system for the Helpdesk phone number. Please see FAQ #48.

50. Why am I getting kicked out of an application before my application is complete?

For security reasons, the IRS Online Registration System will time-out after 15 minutes of inactivity. After remaining on the same page for 12 minutes, the system will display a pop-up stating that the session is about to expire, with a “Please click here to continue” link. Clicking the link reloads the page, causing any unsaved information to be lost. After 3 additional minutes (a total of 15), a Session Timeout popup will appear, informing the user that their session has expired. At this point, the user must log in again to continue working on their incomplete application. To avoid losing work, you should click the Next or Previous button every 5-10 minutes. This will save your progress and reset the timeout clock. This is only needed when you need 12+ minutes to complete a single page of the application.

51. How do I access an incomplete application?

After logging in to the IRS Online Registration System account where the application was started make the following selections:
From the Organization Type dropdown, select CPEO.
From the Application dropdown, select PEO Certification.

After making these selections, a pop-up will appear. From the pop-up, click the Select button next to “Resume Working on the Incomplete Application.” The incomplete application will open at its most recently saved point and you can continue to work the application normally.

52. Can a CPEO applicant that has received notice of certification but has not yet provided Form 14751, Certified Professional Employer Organization Security Bond, withdraw its application?

Yes. If the CPEO applicant is within the 30-day period after the date of its notice of certification and has not yet submitted Form 14751, the CPEO applicant may withdraw its application. An application may be withdrawn only upon the written request of a responsible individual authorized to correspond with the IRS on behalf of the CPEO applicant.

Back to top

Page Last Reviewed or Updated: 17-Feb-2017