CPEO (Certified PEO)
A Certified PEO has passed IRS certification for financial fitness and bonding, and certification changes who is liable for federal employment taxes.
A CPEO is generally solely liable for federal employment taxes on remuneration it pays to qualifying worksite employees. Different treatment can apply to non-worksite employees, and certification belongs to a specific legal entity. Verify the entity and effective date on the IRS public listing.
Federal regulations treat a CPEO and its customer as predecessor and successor employers for specified FICA and FUTA annual wage limitations when a qualifying CPEO contract starts or ends for a worksite employee. The rule has conditions, and state unemployment treatment must be checked separately.
CPEO status documents that the entity met the IRS certification requirements. It does not evaluate benefit plans, service quality, pricing, workers compensation, or state compliance.