The current tax legislation is somewhat obscure regarding who is in the end responsible for the withholding and payment of these employment taxes in the PEO environment – the client or the PEO. The SBEA eliminates any uncertainties by clarifying that it is the PEO which is accountable for remitting federal payroll taxes to the IRS. As such, companies that use licensed PEOs to remit their payroll taxes are guarded under the Act.(adsbygoogle = window.adsbygoogle || []).push({})

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On December 19, 2014, the Tax Increase Avoidance Act of 2014 was signed into law. This integrated the enactment of the Little Company Effectiveness Act (SBEA), which amended the Inner Income Code to set up a certification plan for Professional Employer Companies (PEOs).This certification plan should get rid of particular issues employers might have about partnering with a PEO.

What Does the SBEA do?

In a PEO relationship, the PEO collects and remits employment taxes for their clients and worksite workers. The current tax law is relatively vague regarding who is in the end accountable for the withholding and payment of these work taxes in the PEO atmosphere – the client or the PEO. The SBEA eliminates any uncertainties by clarifying that it is the PEO which is accountable for remitting federal payroll taxes to the IRS.

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