Glossary · PEO basics
CPEO (Certified PEO)
A PEO certified by the IRS under the Small Business Efficiency Act, providing client businesses explicit federal employment-tax liability assurance.
The Certified Professional Employer Organization (CPEO) program was established by the Small Business Efficiency Act of 2014 and administered by the IRS. CPEOs must meet ongoing financial, bonding, audit, and reporting requirements.
The primary client benefit is statutory clarity: when a CPEO files and pays federal employment taxes for a client's workforce, the IRS treats those obligations as satisfied even if the CPEO later fails to remit. Non-certified PEOs do not provide this assurance.
Related terms
- PEO (Professional Employer Organization)A PEO is a firm that co-employs a client's workforce to deliver payroll, benefits, HR, and compliance services under a shared-employment arrangement.
- Co-employmentA contractual arrangement in which two entities — typically a PEO and its client — share legal and operational responsibilities for the same workforce.
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