Frost Law
A Professional Employer Organization (PEO) is a company that provides outsourced human resource services, handling payroll, employee benefits, workers' compensation, and other administrative tasks for businesses. While PEOs may offer small businesses cost savings and compliance expertise, there are significant drawbacks when it comes to filing for and following-up on Employee Retention Credit (ERC) refund claims.
If your business used a PEO to file employment tax returns in 2020 and 2021, it must rely on the PEO to file the amended returns to claim the ERC. Unlike businesses that file Form 941-X directly with the IRS, PEOs use Schedule R, which is attached to the PEO’s Employer Identification Number (EIN). This creates a significant issue because multiple businesses are listed on a single Schedule R, and may be attached to a single Form 941-X, making it difficult for any individual business owner to access their own filing details.
Many PEOs refuse to provide their clients with copies of the Schedule R, even in redacted form, which leaves businesses with no independent verification of their claim filings. Instead, clients must take the PEO’s word that their ERC claims were submitted correctly and on time. This lack of transparency puts businesses at risk, particularly given the heightened scrutiny around ERC claims for credit.
A common complaint among businesses that have used a PEO for ERC filings is the lack of individualized communication and case-specific updates. Many PEOs send out generic email updates without providing critical details about the status of a client’s specific ERC claim. This lack of transparency leaves business owners in the dark, unable to verify their claim’s status.
Several reputable PEOs including, but not limited to, Trinet, Insperity PEO, Oasis PEO, Paychex, ADP TotalSource, Vensure, People PEO, Decision HR, Extensis HR, BBSI, Co Advantage, Optimum, Kimberly Group, Syndeo, Howard Leasing, Engage, FrankCrum, and JustWorks continue to provide their clients with general information and updates on ERC without providing specifics as it relates to the client’s filing. Instead of advocating for their clients with the IRS, these PEOs have taken a step back and are simply using a wait and see approach regarding seeing these claims be processed.
If you used a PEO to file for ERC and are struggling to obtain clear, specific information about your claim, you may need to seek legal advice. The complexities of ERC filings through PEOs, combined with the industry’s reluctance to provide Schedule R’s and other proof of filing such as copies of IRS Account Transcripts, create significant risks for businesses. Legal counsel can help you navigate these challenges, verify your claim’s validity, and take appropriate action if your PEO is uncooperative.
At Frost Law, we understand the complications that arise when dealing with PEOs and ERC claims. Our experienced legal team is here to help you assess your situation, advocate for your rights, and evaluate options to ensure your business is protected. Contact us today at (410) 497-5947 or schedule a confidential consultation.
A Professional Employer Organization (PEO) is a company that provides outsourced human resource services, handling payroll, employee benefits, workers' compensation, and other administrative tasks for businesses. While PEOs may offer small businesses cost savings and compliance expertise, there are significant drawbacks when it comes to filing for and following-up on Employee Retention Credit (ERC) refund claims.
If your business used a PEO to file employment tax returns in 2020 and 2021, it must rely on the PEO to file the amended returns to claim the ERC. Unlike businesses that file Form 941-X directly with the IRS, PEOs use Schedule R, which is attached to the PEO’s Employer Identification Number (EIN). This creates a significant issue because multiple businesses are listed on a single Schedule R, and may be attached to a single Form 941-X, making it difficult for any individual business owner to access their own filing details.
Many PEOs refuse to provide their clients with copies of the Schedule R, even in redacted form, which leaves businesses with no independent verification of their claim filings. Instead, clients must take the PEO’s word that their ERC claims were submitted correctly and on time. This lack of transparency puts businesses at risk, particularly given the heightened scrutiny around ERC claims for credit.
A common complaint among businesses that have used a PEO for ERC filings is the lack of individualized communication and case-specific updates. Many PEOs send out generic email updates without providing critical details about the status of a client’s specific ERC claim. This lack of transparency leaves business owners in the dark, unable to verify their claim’s status.
Several reputable PEOs including, but not limited to, Trinet, Insperity PEO, Oasis PEO, Paychex, ADP TotalSource, Vensure, People PEO, Decision HR, Extensis HR, BBSI, Co Advantage, Optimum, Kimberly Group, Syndeo, Howard Leasing, Engage, FrankCrum, and JustWorks continue to provide their clients with general information and updates on ERC without providing specifics as it relates to the client’s filing. Instead of advocating for their clients with the IRS, these PEOs have taken a step back and are simply using a wait and see approach regarding seeing these claims be processed.
If you used a PEO to file for ERC and are struggling to obtain clear, specific information about your claim, you may need to seek legal advice. The complexities of ERC filings through PEOs, combined with the industry’s reluctance to provide Schedule R’s and other proof of filing such as copies of IRS Account Transcripts, create significant risks for businesses. Legal counsel can help you navigate these challenges, verify your claim’s validity, and take appropriate action if your PEO is uncooperative.
At Frost Law, we understand the complications that arise when dealing with PEOs and ERC claims. Our experienced legal team is here to help you assess your situation, advocate for your rights, and evaluate options to ensure your business is protected. Contact us today at (410) 497-5947 or schedule a confidential consultation.
