1. Vice President, Federal Government Affairs
Thom Stohler
Vice President, Federal Government Affairs
NAPEO
PACE
May 23, 2017

2. Recent Activity on IRS PEO Certification
On March 28, Bloomberg published a story stating that PEO certification would occur “in June”
On March 30, the IRS made changes to the FAQs on PEO Certification that somewhat confirm the June certification comments
On May 4, the IRS released an updated draft of Form – the bond form to be used by a certified PEO.
On May 18, the IRS posted the instructions for Form 8973, and on Friday May 19, the IRS published the final form 8973.

3. Next Steps on IRS Certification
The IRS continues to contact PEOs that have applied for certification.
First certifications: June
Final bond form
Additional FAQs and/or guidance for certified PEOs.

4. Survey of NAPEO members Top Federal Issues
1.) Allow PEOs to offer health insurance as a large employer
2.) Clarify PEO responsibilities/liabilities under OSHA
3.) NLRB Joint employer decisions
4.) Joint employment-OSHA
5.) Clarify that if the client of a PEO is a government contractor that does not make the PEO (or other PEO clients) a government contractor
6.) Overtime regulation
7.) Recognition in the tax code of PEO healthcare and pension plans
8.) New EEO-1 form
9.) End prohibition against home healthcare companies using PEOs
10.) Form 5500

5. NAPEO Legislative and Regulatory Priorities
PEO Industry Legislative Priorities
Attach a legislative fix to tax reform that amends the Small Business Efficiency Act to address problems with the law and/or the IRS’s interpretation of the law:
85 Percent Rule
Self-Employment (SECA v. FICA)
Required contract language
Double taxation
Add language to reconciliation bill that creates a definition of “closed Multiple Employer Plans” under ERISA, for the purpose of clarifying/recognizing the PEO employee benefits business model in ERISA.
ACA Repeal/Replace: Achieve recognition of the PEO healthcare model through ACA replacement and/or other healthcare reform legislation.

6. NAPEO Legislative and Regulatory Priorities
Additional Legislative Priorities
Monitor Association Health Plan (AHP) and other healthcare reform legislation for potential risks to/opportunities for the PEO industry.
Support enactment of comprehensive tax reform legislation, and monitor any such legislation for potential risks to/opportunities for the PEO industry.

7. NAPEO Legislative and Regulatory Priorities
PEO Industry Regulatory Priorities
Form 5500: Ask the Department of Labor to revise the instructions for PEOs that file the Form 5500 to permit multiple employer plans to separately submit their lists of participating employers and contribution percentage estimates in a manner in which the information remains confidential and is not made available to the public.
Engage the Occupational Safety and Health Administration to determine the feasibility of obtaining clarification that the PEO client is primarily responsible for workplace safety obligations at the client worksite.
Ask the Office of Federal Contract Compliance Program to clarify that neither a PEO nor all of the PEO’s clients are federal subcontractors simply because a PEO has a client that is a federal contractor or subcontractor.

8. PEO Industry Regulatory Priorities
Equal Employment Opportunity Commission (EEOC):
Ask the EEOC to clarify that the responsibility for filing the EEO-1 form is determined at the client level.
Ask the EEOC to clarify that if a client of a PEO is required by law to file an EEO-1 form, that obligation does not extend to the PEO or the rest of its clients who would otherwise not be required to file an EEO-1 form.
Ask the Immigration and Customs Enforcement agency to clarify the responsibilities of a PEO under E-verify, addressing the following issues:
PEO and client compliance responsibilities under E-Verify
Compliance with E-Verify for individuals and clients that are already in a PEO relationship
Creating an E-verify compliance safe harbor for PEOs
Continue efforts to improve the IRS PEO certification program and obtain favorable clarification of the rules and responsibilities of CPEOs.

9. Where is NAPEO on the priorities?
Healthcare
OSHA
EEOC

10. Any Questions?