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16 Berkeley Bus. L.J. 571 (2019)
Certified Professional Employer Organizations and Tax Liability Shifting: Assessing the First Two Years of the IRS Certification Program

handle is hein.journals/berkbusj16 and id is 577 raw text is: Certified Professional Employer Organizations and Tax Liability Shifting: Assessing the First Two Years of the IRS Certification Program Katherine Sanford Goodner* & Ursula Ramsey** In tro d u ctio n ............................................................................................. 5 7 2 I. The Evolution of Professional Employer Organizations ..................... 574 A. The Building Blocks of the Modem PEO ............................ 574 1. History of Employee Leasing and the Growth of Employee Leasing Companies ....................................... 574 2. Current Structure and Traditional PEO Model of Co- E m ploym ent ................................................................... 577 B. The Concept of the Common Law Employer ...................... 577 1. T he C ontrol T est ............................................................ 578 2. Facts and Circumstances Inquiry ................................... 579 C . A buse and PE O Fraud .......................................................... 581 11. Tax Increase Prevention Act of 2014 ................................................. 582 A. IRC § 7705 - Creation of Certified Professional Employer O rganizations (C PE O s) ........................................................ 583 B. IRC § 3511 - The Impact of CPEO Creation ...................... 584 1. The Role of CPEO as Employer for Purposes of Em ploym ent Taxes ........................................................ 585 2. The Customer as Employer for Federal Tax Credits ..... 585 III. Important Considerations for Businesses Utilizing PEOs and C P E O s ......................................................................................... 5 8 5 A. Protection Against Liability for Employment Taxes ........... 585 B. Successor Employer Status for CPEO and Double Taxation A v o id an ce ............................................................................ 5 8 6 C. Service Contract Requirements under § 7705(e)(2) ............. 586 IV. Unknown Implications of §§ 3511 and 7705 .................................... 587 A. The Question of Liability for Un-Certified PEOs ................ 587 1. Inability of IRS to Issue Notices to Employers Using Un- C ertifi ed PE O s ............................................................... 588 DOI: https://doi.org/10.15779/Z38QB9V61D * B.A., Wake Forest University; J.D., University of Tennessee College of Law; LL.M., Boston University. Assistant Professor of Business Law, Cameron School of Business, University of North Carolina Wilmington. B.A., Furman University; J.D., University of Tennessee College of Law.

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