Certified professional employer organization help

Key terms
CPEO/501(c)(4) system access/assistive technology FAQs
Individual Identity Verification FAQs
Responsible individual FAQs
Related entities FAQs
Certified professional employer organization application FAQs
Maintaining certification FAQs
Form 8973 FAQs
Form 940: Schedule A & Schedule R FAQs
Bond 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.

Frequently asked questions & information to assist with online applications

CPEO/501(c)(4) system access/assistive technology FAQs

Please view the CPEO/501(c)(4) system access/assistive technology FAQs page for additional support on the following topics related to using the IRS Online Registration System:

How do I reset a forgotten password?
How do I retrieve a forgotten user ID?
How do I access a locked account?
What to do if I am experiencing technical difficulties?
How do I receive support for assistive technology tools?

Individual identity verification FAQ answers

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.
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.

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, then wait 14 calendar days and try to complete the Individual Identity Verification process again. If SSA confirms that your date of birth is correct (instead of correcting the data of birth) or if SSA corrects your date of birth but you are still having problems, then please refer to Individual Identity Verification FAQ 1.
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.

Responsible individual FAQ answers

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.
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.
How do I submit my fingerprints as part of an individual background check?
NOTE: Fingerprints obtained for the CPEO Program cannot be used for any other Internal Revenue Service program. If you need fingerprints for IRS e-file, acceptance, EFIN or other e-service, use the procedures specific to that program.

To initiate background checks, fingerprints must be submitted by each responsible individual and/or application submitter. Generally, there are no exceptions. Schedule an appointment at Fieldprint®. During your appointment you will use personal identification such as a state issued identification card, passport, etc. to verify your identify. The program code used for the CPEO program is unique and is only used for this program. This program code is only available for use beginning June 1, 2022.

For additional instructions on scheduling your appointment please see Publication 5249 PDF.
What is the process for submitting amendments to the Responsible Individual Personal Attestation (RIPA)?
Sign-in to the IRS Online Registration System and refer to the Main Menu.
1. Find the appropriate Responsible Individual license number (INDV-######) under the 'Manage Your License Information' section.
2. Click 'Select’ next to ‘Update RI Account Information’.
Once you begin the Update RI Account Information process, follow the instructions on each screen to identify and make changes as needed, including uploading documents. You will also need to provide the date that each change occurred.
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.

How do I upload a request for independent review (or withdraw a request for independent review) if I received a notice of proposed denial of certification?
1. From the Main Menu of the IRS Online Registration System, find CPEO-PEO Certification and click ''Details’ to the right. The application status should be Open.
2. Click ‘Submit Documents’ in the pop-up window.
3. On the new screen click ‘Browse’ to select the file containing the Independent Review Request (or withdrawal request) documents on your computer. In the Notes section add the words ‘Request for Independent Review’ (or ‘Withdraw IR Request’), then click ‘Attach’ and ‘Submit’. The file cannot exceed 2 MB in size. Important – if not done in this order, the document will not upload.
4. For more information on requests for review of proposed denial of certification and withdrawing these requests for review, see section 8 of Revenue Procedure 2016-33
How do I upload a request for independent review (or withdraw a request for independent review) if I received a notice of suspension and proposed revocation of certification?
1. From the Main Menu of the IRS Online Registration System, locate ‘Manage Your License Information’ and select the ‘Choose Application’ drop down list next to the CPEO license number. Choose ‘Update CPEO Account Information – Upload Files.’
2. Select ‘Other’ from the Attachment List, then follow the on-screen instructions to attach the file containing your Independent Review Request (or withdrawal request) documents. If the file exceeds 2MB in size, you will need to open another CPEO Update transaction and repeat the steps for each subsequent file. In the Notes section, type ‘Request for Independent Review’ (or ‘Withdraw IR Request’) to identify the document.
3. For more information on requests for review of proposed revocation of certification, and withdrawing these requests for review, see section 3 of Revenue Procedure 2017-14.

Certified professional employer organization application FAQ answers

Can a sole proprietorship be a certified professional employer organization (CPEO)?
Yes, a sole proprietorship can apply to become a CPEO.
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.

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

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.
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.
What is the process for submitting amendments to my CPEO application?
The designated application submitter may submit amendments to the CPEO application by signing into the IRS Online Registration System and completing the following steps:
If your CPEO application is under review:
1. In the Main Menu, find your Open application under the ‘View Application Status’ section.
2. Click ‘Details’ next to the application. This will generate a pop-up window.
3. If the application is still editable, then the pop-up will provide a 'Fix' button which will allow you to edit your submission. Once your changes are complete, re-submit the application.
If the Open application is no longer editable or further assistance is needed, then email sbse.able.cpeo.info@irs.gov. Please provide the application number (found in the ‘Details’ pop-up window), along with any desired changes to your submission.

Caution: Do not provide any sensitive information such as your employer identification number or Social Security number.
If your CPEO application was already accepted:
1. In the Main Menu, find the appropriate license number (CPEO-######) under the 'Manage Your License Information' section.
2. Select the 'Choose Application' drop down list next to the CPEO license number.
3. Choose 'Update CPEO Account Information'.
Once you begin the 'Update CPEO Account Information' process, follow the instructions on each screen to identify and make changes as needed, including uploading documents. You will also need to provide the date that each change occurred.
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.
How do I upload a request for independent review (or withdraw a request for independent review) if I received a notice of proposed denial of certification?
1. From the Main Menu of the IRS Online Registration System, find CPEO-PEO Certification and click ''Details’ to the right. The application status should be Open.
2. Click ‘Submit Documents’ in the pop-up window.
3. On the new screen click ‘Browse’ to select the file containing the Independent Review Request (or withdrawal request) documents on your computer. In the Notes section add the words ‘Request for Independent Review’ (or ‘Withdraw IR Request’), then click ‘Attach’ and ‘Submit’. The file cannot exceed 2 MB in size. Important – if not done in this order, the document will not upload.
4. For more information on requests for review of proposed denial of certification and withdrawing these requests for review, see section 8 of Revenue Procedure 2016-33.
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.

Maintaining certification FAQs

How do I submit annual audited financial statements after I’ve become certified?
As of April 2018, an Annual Audited Financial Statement transaction for controlled groups and individual CPEOs is available through the IRS Online Registration System for Professional Employer Organizations. The transaction is accessed under the ‘Manage your license information’ on the main menu of the registration system.

Form 8973 FAQs

For purposes of Part 1 of Form 8973, what is the service contract start date?
This is the date the CPEO and customer entered into either; a CPEO contract described under IRC 7705(e)(2) or a service agreement described under Regulation section 31.3504-2(b)(2). If Line 10 in Part 4 is checked “Yes” (i.e. the CPEO and customer are subject to a CPEO contract), then the service contract start date entered in Part 1 must be the date the CPEO and customer entered into the CPEO contract, even if the CPEO and customer had an existing contractual relationship prior to the CPEO’s certification. The service contract start date of a CPEO contract under IRC 7705(e)(2) CANNOT precede the certification effective date.

What if I received a letter from IRS stating that the service contract start date on my completed Form 8973 is incorrect?
You should follow the instructions in the letter. You must provide IRS a corrected Form 8973 with the correct service contract start date within 15 days. The service contract start date of a CPEO contract must be on or after the certification effective date. The corrected Form 8973 must be signed by the CPEO, but the customer’s signature is not required. You must provide the customer a copy of the corrected Form 8973.

Can Form 8973 be signed by either a CPEO or a customer using an electronic or mechanically reproduced signature?
The IRS requires that the Form 8973 be signed in ink by both the CPEO and the customer or client. The IRS will accept Forms 8973 where the customer or client’s original signature has been mechanically reproduced by scanning or facsimile transmission. For example, a customer may sign the Form 8973 in ink then scan or fax the signed form to the CPEO for the CPEO to print, sign, and mail to the IRS.

What happens if a customer subject to a CPEO contract (as described in Section 7705(e)(2)) does not sign Form 8973?
CPEOs are required to secure the signature of all customers subject to a CPEO contract (as described in section 7705(e)(2)) on Part 5 of Form 8973 prior to submission of the form to the IRS. The IRS recognizes, however, that a CPEO might occasionally experience difficulty in obtaining a signature from a customer subject to a CPEO contract. In such limited situations, the CPEO must still submit Form 8973, even though it is unsigned by the customer, with the CPEO’s signature on Part 6 and on the CPEO Consent to Disclosure of Tax Information, by the applicable deadline. However, if a customer subject to a CPEO contract does not sign Form 8973, section 3511 does not apply to the customer. Consequently, the CPEO must report this customer as a client covered by a service agreement described in § 31.3504-2(b)(2), rather than as a customer covered by section 3511, on Schedule R of Forms 940 and 941 (or Form 943, if applicable). See FAQ #3 for specific procedures (including the need to attach a written statement) for submitting an unsigned Form 8973.

What happens if a client subject to a service agreement described in Section 31.3504-2(b)(2) does not sign Form 8973?
CPEOs are required to secure the signature of all clients subject to a service agreement described in § 31.3504-2(b)(2) on Part 5 of Form 8973 prior to submission of the form to the IRS. The IRS recognizes, however, that a CPEO might occasionally experience difficulty in obtaining a signature from a client subject to a service agreement described in § 31.3504-2(b)(2). In such limited situations, the CPEO must still submit Form 8973, even though it is unsigned by the client, with the CPEO’s signature on Part 6 and on the CPEO Consent to Disclosure of Tax Information, by the applicable deadline. Because the CPEO did not obtain its client’s signature on the form, the CPEO must attach a written statement to the Form 8973 containing the following information:
- The CPEO’s name, federal tax identification number, mailing address, contact name, phone number and e-mail address.
- The name and federal tax identification number of the client for which the associated Form 8973 is being submitted.
- A detailed statement which lists:
  - The steps the CPEO has taken in an attempt to meet its requirement to secure the client’s signature in a timely manner, and
  - Why the steps were unsuccessful
- A statement (signed by an individual who has the authority to execute Form 8973 for the CPEO), with the following language:
  - Under penalties of perjury, I declare that the information contained in this statement is true, correct and complete to the best of my knowledge and belief
The occasional submission by a CPEO of an unsigned Form 8973 with the attachment described above should not, absent other factors, result in suspension or revocation of the CPEO’s certification. However, the IRS will suspend and revoke the CPEO’s certification if the IRS determines that the prevalence or number of unsigned Forms 8973 submitted by the CPEO reaches a frequency or level of significance that poses a material risk to the IRS’s collection of federal employment taxes.

A client subject to a service agreement described in § 31.3504-2(b)(2) must be properly reported on Schedule R of Forms 940 and 941 (or Form 943, if applicable), even if it does not sign Form 8973.
How does a CPEO report a customer or client on Schedule R if it has not yet submitted to the IRS a Form 8973 for that customer or client?

A CPEO must report every customer subject to a CPEO contract under section 7705(e)(2) and every client subject to a service agreement described in § 31.3504-2(b)(2) on Schedule R of Forms 940 and 941 (or Form 943, if applicable), even with respect to those clients or customers for whom the CPEO has not yet submitted a Form 8973. If a CPEO signs a CPEO contract with a customer, but has not yet submitted Form 8973 for such customer to the IRS, the CPEO may still report that customer as subject to a CPEO contract on Schedule R for periods ending prior to the applicable deadline for submitting the Form 8973. However, if that customer subsequently does not sign Form 8973, then section 3511 does not apply to the customer and the CPEO must report the customer on Schedule R as subject to a service agreement described in § 31.3504-2(b)(2), rather than as subject to a CPEO contract. In addition, for the periods in which the CPEO reported the customer on Schedule R as subject to a CPEO contract to which section 3511 applies, the CPEO must submit a Form 941-X (or Form 943-X if applicable) and Form 940-X (if applicable), with an amended Schedule R recharacterizing the wages, tips, and other compensation as those paid under a service agreement described in § 31.3504-2(b)(2), rather than under section 3511(a) or (c).
If a CPEO’s effective date of certification is January 1, 2017, and the CPEO enters into a service contract that starts after its effective date of certification and before the date of its notice of certification, what is the CPEO’s due date for filing a timely Form 8973 reporting the start of the service contract?
For a CPEO with an effective date of certification of January 1, 2017, that enters into a service contract that starts after its effective date of certification and before the date of its notice of certification, the due date for filing a timely Form 8973 reporting the start of the service contract is six months from the date of the CPEO’s notice of certification

If a CPEO’s effective date of certification is January 1, 2017, and the CPEO ends a service contract after its effective date of certification and before the date of its notice of certification, what is the CPEO’s due date for filing a timely Form 8973 reporting the end of the service contract?
For a CPEO with an effective date of certification of January 1, 2017, that ends a service contract after its effective date of certification and before the date of its notice of certification, the due date for filing a timely Form 8973 reporting the end of the service contract is six months from the date of the CPEO’s notice of certification.

If a CPEO ends a service contract after its effective date of certification and before filing a timely Form 8973 reporting the start of the service contract, does the CPEO have to file two separate Forms 8973, one reporting the start of the service contract and one reporting the end of the service contract?
A CPEO that ends a service contract after its effective date of certification and before filing a timely Form 8973 reporting the start of the service contract does not have to file two separate Forms 8973. Instead, the CPEO may file just one Form 8973, reporting both the start and the end of the service contract, by the due date for reporting the start of the service contract. When submitting one Form 8973 to report both the start and the end of the service contract, the CPEO should complete all parts of Form 8973 in accordance with the instructions applicable to the start of a service contract, with the following modifications:
1. Print “Combined Start and End of Service Contract” at the top of Form 8973.
2. In Part 1, “Why are you filing this form?,” indicate both the date the service contract started and the date the service contract ended.
3. In Part 5, “Customer Signature,” the customer is not required to sign a Form 8973 reporting both the start and end of a service contract.
If the CPEO does not file a combined Form 8973 reporting both the start and the end of a service contract, the CPEO must timely file two separate Forms 8973, one reporting the start of the service contract and one reporting the end of the service contract, within the applicable reporting periods. See the Instructions to Form 8973 and section 2.06(1) of Revenue Procedure 2017-14.

Form 940: Schedule A and Schedule R FAQs

For 2017, I paid state unemployment tax in more than one state and/or my clients paid state unemployment tax in more than one state with respect to FUTA taxable wages I paid. How do I fill out Schedule A (Form 940), Multi-State Employer and Credit Reduction Information, to reflect that my clients and/or I paid state unemployment tax in more than one state?
A CPEO that paid state unemployment tax in more than one state and/or whose clients paid state unemployment tax in more than one state with respect to FUTA taxable wages the CPEO paid must attach a single, aggregate Schedule A to its Form 940 and must place an “X” in the box of every state in which the CPEO or its clients paid state unemployment tax this year.

For 2017, I paid FUTA taxable wages that are subject to state unemployment tax in a credit reduction state. How do I fill out Schedule A (Form 940) to reflect that I paid FUTA taxable wages that are subject to state unemployment tax in a credit reduction state?
A CPEO that paid FUTA taxable wages that are subject to state unemployment tax in a credit reduction state must attach a single, aggregate Schedule A to its Form 940. For each state with a credit reduction rate greater than zero, the CPEO must enter the aggregate FUTA taxable wages that are subject to state unemployment tax, multiply the aggregate FUTA taxable wages by the reduction rate, and enter the aggregate credit reduction amount. The aggregate “Total Credit Reduction” shown at the bottom of Schedule A should be entered on Form 940, line 11, and should match the credit reduction amount reported in column (f) of Schedule R (Form 940), line 19.

For 2017, I paid state unemployment tax in more than one state for a client that is a multi-state employer. How do I fill out column (b) of Schedule R (Form 940), Allocation Schedule for Aggregate Form 940 Filers, to report the correct state abbreviation code for this client?
A CPEO that paid state unemployment tax in more than one state for a client that is a multi-state employer should report in column (b) of Schedule R the two-letter U.S. Postal Service abbreviation for the state where the client’s principal place of business is located.

For 2017, with respect to a particular client, I paid FUTA taxable wages that are subject to state unemployment tax in more than one credit reduction state. How do I fill out column (f) of Schedule R (Form 940) to report the correct credit reduction amount allocated to this client from Form 940, line 11?
A CPEO that, with respect to a particular client, paid FUTA taxable wages that are subject to state unemployment tax in more than one credit reduction state should report in column (f) of Schedule R (Form 940) the aggregate credit reduction amount allocated to the client from Form 940, line 11, i.e., the total of the credit reduction amount from each state that relates to FUTA taxable wages paid with respect to that client.

Bond FAQs

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 § 301.7705-2(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.

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 Federal 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.

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.

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.

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 PDF, the CPEO is not obligated to use the same qualified surety company that signed the Surety Letter.

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.

What if I change surety companies?
When changing surety companies, a CPEO must cancel the existing bond with its current surety company and send notice of the cancellation to the IRS (see question 8 below). The effective date of the new bond from the new surety company can be no later than the effective date of the cancellation of the existing bond. If the new bond is a superseding bond, the effective date of the bond must be the effective date of the preceding cancelled bond.

What if a bond is cancelled?
Either the CPEO or surety company may cancel a bond. If the CPEO cancels the bond, written notice must be given to IRS. The notice of the intent to cancel must be given 90 days in advance of the effective date of cancellation and be sent via certified mail. The written notice of cancellation must state the effective date of cancellation. If the surety cancels the bond, written notice must be sent by certified mail to IRS and the CPEO at least 90 days in advance of the effective date of cancellation and include the effective date of cancellation. The written notice given to IRS should be sent to the IRS employee that handles the CPEO’s account on the CPEO On-line Registration System. If that information in unknown, you can request it by emailing sbse.able.cpeo@irs.gov. In addition, when uploading the bond replacing the cancelled bond, the CPEO must also upload a “Notification of Cancelled Bond,” which can be any scanned document or memo providing the name of the surety for the cancelled bond, the cancelled bond number, and the effective date of the cancelled bond.

Additional information FAQ answers

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.
What is meant by "experience level" on 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.
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.
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:

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

Note: Files must be less than 2 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 2 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).
- 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)
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.
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.
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.
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.
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.
How do I submit the quarterly assertions, attestations, and working capital statements required while my application for certification is still being reviewed?
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.
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.
Does the CPEO application submitter or the CPA need to provide a Form 2848, Power of Attorney and Declaration of Representative, as part of the application?
No, neither the CPEO application submitter nor the CPA is required to provide a Form 2848, Power of Attorney and Declaration of Representative. However, an application submitter must be authorized by section 6103(e) to inspect the return of the CPEO applicant. In addition, a Form 2848 will be required if the CPA or other individual intends to represent the CPEO before the IRS in the resolution of issues related to the application or certification. Finally, if issues concerning a CPEO’s related entities that affect the CPEO’s application or certification arise, a Form 2848 or Form 8821, Tax Information Authorization, may be required in order for the IRS to discuss with an application submitter matters concerning the CPEO’s related entities.
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."
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.

A CPEO applicant will not fail to meet the requirements if the examination level attestation indicates that the CPEO 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.
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.
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 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).
How do I request a waiver from electronic filing requirements as discussed in Revenue Procedure 2017-14?
Please see the Certified Professional Employer Organizations – What You Need to Know page for detailed procedures in the section titled “Electronic Filing Waiver Request Procedures for CPEOs.”
Why can't I view documents I've uploaded into the IRS online registration system?
The IRS Online Registration System does not allow for viewing or retrieval of documents you have submitted. Once you click 'Attach' and 'Submit' as part of any document upload or application submission, and no error messages are received, that document has been accepted by the system and will subsequently be reviewed by the IRS.
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 email 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.
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.
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.
Can I cancel the controlled group license?
Yes. The Controlled Group license that links CPEOs can be cancelled at any time. Please note: cancelling a controlled group license does not result in the voluntary termination of the certification of the individual CPEO members of the controlled group. When a controlled group license is cancelled, the individual CPEO members of the controlled group continue to be certified. A CPEO that wishes to voluntarily terminate its certification must follow the voluntary termination procedures found in Rev. Proc. 2017-14. To cancel the Controlled Group license, the Controlled Group representative must submit a written request to the program.
1. From the Main Menu of the IRS Online Registration System, locate ‘Manage Your License Information’ and select the ‘Choose Application’ drop down list next to the CPEO license number. Choose ‘Update CPEO Account Information – Upload Files.’
2. Select ‘Other’ from the Attachment List, then follow the on-screen instructions to attach the file containing your cancellation request. If the file exceeds 2MB in size, you will need to open another CPEO Update transaction and repeat the steps for each subsequent file. In the Notes section, type ‘Cancel Controlled Group License’ to identify the document.

Certified Professional Employer Organization Program help

More In Tax Pros

Key terms

Frequently asked questions & information to assist with online applications

CPEO/501(c)(4) system access/assistive technology FAQs

Individual identity verification FAQs

Responsible individual FAQs

Related entities FAQs

Certified professional employer organization application FAQs

Maintaining certification FAQs

Form 8973 FAQs

Form 940: Schedule A and Schedule R FAQs

Bond FAQs

Additional information FAQs

Individual identity verification FAQ answers

What is the individual identity verification process and who must go through it?

How do I include my name suffix (Sr., Jr.) in the individual identity verification process?

How can I complete the individual identity verification process if there is a problem with my date of birth?

What is an Individual Number (INDV)?

Responsible individual FAQ answers

Who is a responsible individual?

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

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

What is the process for submitting amendments to the Responsible Individual Personal Attestation (RIPA)?

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

How do I upload a request for independent review (or withdraw a request for independent review) if I received a notice of proposed denial of certification?

How do I upload a request for independent review (or withdraw a request for independent review) if I received a notice of suspension and proposed revocation of certification?

Related entities FAQ answers

What is a related entity?

What is a controlled group?

What is a provider of employment-related services?

What is a precursor entity?

Certified professional employer organization application FAQ answers

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

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

Who is authorized to submit an application for certification?

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

Is there a limit to the number of controlled groups or related entities that can be included on a CPEO application for certification?

What is the process for submitting amendments to my CPEO application?

If your CPEO application is under review:

If your CPEO application was already accepted:

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

How do I upload a request for independent review (or withdraw a request for independent review) if I received a notice of proposed denial of certification?

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

Maintaining certification FAQs

How do I submit annual audited financial statements after I’ve become certified?

Form 8973 FAQs

For purposes of Part 1 of Form 8973, what is the service contract start date?

What if I received a letter from IRS stating that the service contract start date on my completed Form 8973 is incorrect?

Can Form 8973 be signed by either a CPEO or a customer using an electronic or mechanically reproduced signature?

What happens if a customer subject to a CPEO contract (as described in Section 7705(e)(2)) does not sign Form 8973?

What happens if a client subject to a service agreement described in Section 31.3504-2(b)(2) does not sign Form 8973?

How does a CPEO report a customer or client on Schedule R if it has not yet submitted to the IRS a Form 8973 for that customer or client?

If a CPEO’s effective date of certification is January 1, 2017, and the CPEO ends a service contract after its effective date of certification and before the date of its notice of certification, what is the CPEO’s due date for filing a timely Form 8973 reporting the end of the service contract?

Form 940: Schedule A and Schedule R FAQs

For 2017, I paid FUTA taxable wages that are subject to state unemployment tax in a credit reduction state. How do I fill out Schedule A (Form 940) to reflect that I paid FUTA taxable wages that are subject to state unemployment tax in a credit reduction state?

For 2017, I paid state unemployment tax in more than one state for a client that is a multi-state employer. How do I fill out column (b) of Schedule R (Form 940), Allocation Schedule for Aggregate Form 940 Filers, to report the correct state abbreviation code for this client?

Bond FAQs

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

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

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

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

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

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?

What if I change surety companies?

What if a bond is cancelled?

Additional information FAQ answers

What is an assurance organization?

What is meant by "experience level" on the CPEO application?

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

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

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

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?

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?

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

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

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

Does the CPEO application submitter or the CPA need to provide a Form 2848, Power of Attorney and Declaration of Representative, as part of the application?

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

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