The National Association of Professional Employer Organizations (NAPEO), the national trade association for the PEO industry with approximately 350 PEO members operating in all 50 states, representing more than 90% of the industry’s $68 billion in revenues, has endorsed HR 2466, the Small Business Efficiency Act of 2011. NAPEO’s PEO members range in size from start-up PEOs to large, publicly held companies with years of success in the industry.
NAPEO stated: “Federal tax law has not kept pace with changes in human resource management and current law regarding the withholding and remitting of employment taxes is outdated, ill suited, and not easily applied to the PEO arrangement. Statutory clarity is needed to update the Internal Revenue Code regarding the rights and responsibilities of a PEO to withhold and remit employment taxes. Clarification of the PEO and small business client regarding tax responsibilities will improve compliance and provide certainty for the small business clients. The Small Business Efficiency Act (H.R. 2466) introduced by Congressmen Kevin Brady (R, TX) and Mike Thompson (D, CA), would clarify the rights and responsibilities of PEOs with regard to withholding and remitting payroll taxes and improve tax compliance. NAPEO has endorsed this legislation.“