June 05, 2017

Extensis Among First to Receive CPEO Designation

On June 1, 2017, Extensis was named by the Internal Revenue Service (IRS) as one of the first-ever PEOs to meet the requirements to become a Certified Professional Employer Organization (CPEO), effective January 1, 2017. IRS certification gives our brokers, clients, and vendors confidence, in combination with our Employer Services Assurance Corporation (ESAC) accreditation, that we are one of a select group of PEOs who have met the highest standards set by the U.S. government and the PEO industry’s financial assurance program.

“We are thrilled to be one of the first to meet the requirements to become a CPEO," said Dan Sheridan, President, Extensis. “Now benefit brokers and clients have a simple way to objectively short-list PEOs: CPEOs who are also accredited by ESAC offer independent assurances of financial reliability and the highest business and ethical standards.”

When it became law in 2014, the Small Business Efficiency Act (SBEA) became a historic milestone for the PEO industry by providing federal recognition of PEO services. It required the IRS to create a voluntary certification program for PEOs. To qualify for IRS certification, we had to meet specific tax compliance, background, experience, business location, independent financial review reporting, bonding, and other requirements. To preserve our status as a CPEO, we’ll maintain specific records and provide the IRS with ongoing independent financial review reporting. We’re also required to post a bond each year guaranteeing payment of our federal employment tax liabilities.

The SBEA eliminates the double taxation that can occur when a company joins or leaves a CPEO mid-year. Under the SBEA, a CPEO can be treated as a successor employer for purposes of Social Security/Medicare (FICA) and federal unemployment taxes (FUTA). This eliminates the need to restart FICA and FUTA wage bases. “This double taxation expense has been a constraint for many brokers and their clients in the past who wanted to switch PEOs mid-year on the anniversary date of their health insurance plan,” said Sheridan.

Additionally, the SBEA confirms that clients of a CPEO may continue to qualify for specified federal tax credits such as the Work Opportunity Tax Credit.

“It took significant effort to complete the application process and to do it within the initial submission timeline,” said Don Abernathy, CFO, Extensis. “We wanted to share this accomplishment with you. Extensis has the highest PEO credentials; we are the fastest growing PEO in the Northeast: and we are a broker-focused PEO. We hope you’ll agree that we’re the right PEO choice for you and your clients.”

If you have any questions please email marketing@extensisgroup.com.

The IRS does not endorse any particular certified professional employer organization. For more information on certified professional employer organizations go to www.IRS.gov.