IRS
• Employers may enter into a service contract with a certified professional employer organization (CPEO) in which the CPEO agrees to take over some or all of the employer’s federal employment tax withholding, reporting and payment responsibilities and obligations.
• The start and end of these contracts must be reported to the IRS on Form 8973, Certified Professional Employer Organization/Customer Reporting Agreement. Form 8973 also notifies the IRS of the tax returns the CPEO will file reporting wages or compensation paid to employees performing services for the customer.
• A CPEO and its customer may both be liable with regard to remuneration the CPEO pays to non-worksite employees.