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IRS releases more guidance on certified professional employer organization program

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Tax Hot Topics: Certified professional employer organizationsThe IRS has issued Rev. Proc. 2016-33 to provide additional details on how a business entity can become certified under the IRS’s new certified professional employer organization (CPEO) program. This revenue procedure supplements temporary and proposed regulations published by the IRS in May.  

To become and remain certified under the new program, CPEOs must meet tax status, background, experience, business location, financial reporting, bonding and other requirements.

Under the revenue procedure, interested applicants will be required to apply electronically and submit supporting documents through a new online system. Paper applications will not be accepted. A $1,000 application fee must be paid using Pay.gov. The revenue procedure also includes detailed information on bond, financial audit and other requirements.
 
According to the IRS, the new online application system will be accessible on IRS.gov in coming weeks, and the IRS will be ready to accept application materials beginning on July 1, 2016. The effective date of certification for an applicant that submits a complete and accurate application before Sept. 1, 2016, and is certified, will be Jan. 1, 2017, even in situations where the certification letter is not issued until after that date. The IRS will publish a list of CPEOs on its website, and the list will be updated quarterly.
               
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