NATIONAL ASSOCIATION OF PROFESSIONAL EMPLOYER ORGANIZATIONS

TAX · Taxation/Internal Revenue Code

NAPEO is lobbying to include the following provisions in tax legislation - PEO liability for client payroll tax credits: In December 2023, the IRS sent a memo to all CPEOs stating that a CPEO is solely liable for ERTC claims made on their amended tax returns. The memo also stated that PEOs are jointly liable for ERTC credits taken on their amended returns. NAPEO is lobbying Congress to introduce legislation to draw clear lines of liability for payroll tax credits taken by clients. Section 199-A: In 2017, Congress included language in the tax bill that allows passthrough business owners to deduct 20 percent of annual qualified business income when determining their tax liability - Section 199A of the tax code. In 2018, many PEOs were contacted by their clients, who said their accountants were informing them that PEO clients were not eligible for Section 199A. At that time, the Department of Treasury provided guidance that clearly states that PEO clients are eligible for this tax credit. We are asking that guidance issued in 2017 be included as legislative language in reconciliation IRS Modernization: NAPEO is lobbying Congress to call attention to the need for the IRS to use modern technology to process our tax claims. Specifically, we are asking Congress to require the IRS to use electronic returns and allow for transparency in the processing of tax returns submitted by PEOs. Additionally, NAPEO continues to work with Congress and the IRS to process amended tax returns containing Employee Retention Tax Credits (ERTC).