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On entering into a CPEO contract with a client with respect to an employee, the CPEO is treated as a successor employer and the client is treated as a predecessor employer during the term of the CPEO contract.
Consequently, in determining the amount of a credit, the client, and not the CPEO, takes into account wages and federal employment taxes paid by the CPEO with respect to the employee and for which the CPEO receives payment from the client.
However, a CPEO must maintain a separate annual wage base and withholding threshold with respect to each client company for which a covered employee performs services during a calendar year.
The CPEO provisions do not apply in the case of a client who is related to the CPEO.
While the requirements to become a CPEO are quite rigid (see the sidebars "Requirements to Become a CPEO" and "Bond and Financial Requirements") and using a CPEO may be more expensive than using a PEO, the peace of mind a CPEO can offer definitely makes it worth considering.
To become and remain certified under the new program, CPEOs must meet tax compliance, background, experience, business location, financial reporting, bonding, and other requirements.
For CPEO status, the organization must assume responsibility for wage and tax payments of its clients' employees, without regard to the receipt or adequacy of payment from the employer.
Failure to meet these requirements means the entity will not qualify as a CPEO for the attestation period.
Once clinically diagnosed to be suffering from CPEO, opinions of geneticists were sought and diagnosis confirmed.