IRS Certified Professional Employer Organizations
Pursuant to section 7705(a) of the Internal Revenue Code, the term “certified professional employer organization” (CPEO) means a person that applies to be certified as a CPEO and that the Internal Revenue Service (IRS) has certified as meeting the applicable requirements. A person is a CPEO as of the effective date of its certification and remains a CPEO until the IRS revokes its certification or, if earlier, until the CPEO voluntarily terminates its certification. In accordance with section 7705(f), the IRS will publish a list (provided below) of all organizations that are certified as CPEOs and the effective date of certification. This list will be updated to reflect newly certified CPEOs by the 15th day of the first month of every calendar quarter.
CPEO Suspension and Revocation
In accordance with section 7705(f), the IRS will publish a list (provided below) of all organizations whose certification as a CPEO is suspended or revoked.
The IRS may suspend the certification of any CPEO as a result of a failure to meet any requirement described in the applicable guidance, and will do so if the IRS determines, based on a review of the relevant facts and circumstances, that the failure presents a material risk to the IRS’s collection of federal employment taxes. A CPEO whose certification is suspended will be removed from the list of IRS Certified Professional Employer Organizations and placed on the list of Suspended CPEOs below. If it’s determined that, as a result of the suspension, the CPEO has taken actions that have resolved or will resolve the failure and/or will prevent the failure from reoccurring, the suspension will be lifted and the CPEO’s name will subsequently be removed from the list of Suspended CPEOs and placed back on the list of IRS Certified Professional Employer Organizations. If it is determined that the CPEO has not taken actions that adequately resolve the failures and/or prevent the failures from reoccurring, the CPEO’s certification will be revoked and the CPEO’s name will subsequently be removed from the list of Suspended CPEOs and placed on the list of Revoked CPEOs.
For more information on CPEO suspension and revocation, see section 3 of Revenue Procedure 2017-14.
List of Suspended CPEOs
Consequences of suspension
- If a CPEO's certification is suspended, section 3511 will not apply to any new CPEO contract (not including modifications or extensions to existing contracts) into which the CPEO enters during the suspension period.
- If a CPEO's certification is suspended, the CPEO must provide written notice to each of its customers within 10 days of the effective date of suspension.
- The IRS will include the suspended CPEO in the published list of suspended CPEOs and may also individually notify the CPEO's customers of the suspension.
List of Revoked CPEOs
Consequences of revocation
- If a CPEO's certification is revoked, the organization will not be considered a CPEO for purposes of section 3511 after the effective date of such revocation unless and until it again applies to be certified as a CPEO and is again certified by the IRS.
- If a CPEO's certification is revoked, within 10 days after the date of the notice of final revocation and no less than 30 days before the effective date of revocation, the CPEO must provide written notice to each of its customers that the IRS has revoked its certification, that the provisions of section 3511 no longer apply to the customer's relationship with the CPEO, and that the customers may also be liable (as of the effective date of revocation) for federal employment taxes imposed on remuneration remitted by the CPEO to all employees covered by the customer's contract with the CPEO.
- The IRS will include the CPEO in the published list of revoked CPEOs as soon as practicable, but no later than the next update of the list that occurs after the effective date of revocation, and may also individually notify the CPEO's customers of the revocation.