Responsibilities Of A PEO

A Professional Employer Organization (PEO) assumes responsibilities and liabilities for payment of wages and compliance with all rules and regulations governing the reporting and payment of federal and state taxes on wages paid to its employees. The Internal Revenue Service recognizes a Professional Employer Organization (PEO) as the employer of record for federal income and unemployment taxes, and case law affirms the principle that the PEO is responsible for payroll taxes.

As the employer for employment tax and employee benefits, a PEO assumes responsibility and liability for payment of state unemployment taxes. Most states recognize the PEO as the employer for UI purposes. Many states also recognize the PEO as the employer of worksite employees for purposes of providing workers compensation coverage.