skip to main content
X

COURT RULING ON TRINET CAUSES CONFUSION FOR PEOs AND THEIR CUSTOMERS

COURT RULING ON TRINET CAUSES CONFUSION FOR PEOs AND THEIR CUSTOMERS

Recently, the IRS has announced its nonacquiescence with a ruling made by the Eleventh Circuit Court in Trinet Group, Inc. v. United States, CA-11, which ruled that the professional employer organization (rather than the client) has “control over the payment of wages” and was permitted to claim the IRC Sec. 45B credit for employer FICA tax paid with respect to employee cash tips NOT the client. So what does this mean for the PEO industry?

Matt Munn, national PEO practice leader contends that this just muddies the waters for PEOs when it comes to handling their tax filings. “This ruling is extremely confusing for PEOs and the IRS’s position makes it even worse.” “Without an industry standard, this almost becomes a case by case basis, and in cases that fall within the jurisdiction of the Eleventh Circuit, the Court’s ruling would have precedence, so there are essentially two sets of rules.”

With the latest ruling from the Eleventh Circuit Court and the IRS’s position, it is extremely important to consult with your tax specialist to ensure that your business is applying the correct treatment to specific tax credits and incentives.

HAVE A QUESTION?

Please complete this form to hear from one of our PEO specialists

Hide Firm Disclaimer

©2021 UHY LLP. ALL RIGHTS RESERVED.

UHY LLP is a licensed independent CPA firm that performs attest services in an alternative practice structure with UHY Advisors, Inc. and its subsidiary entities. UHY Advisors, Inc. provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of "UHY Advisors." UHY Advisors, Inc. and its subsidiary entities are not licensed CPA firms. UHY LLP and UHY Advisors, Inc. are U.S. members of Urbach Hacker Young International Limited, a UK company, and form part of the international UHY network of legally independent accounting and consulting firms. "UHY" is the brand name for the UHY international network. Any services described herein are provided by UHY LLP and/or UHY Advisors (as the case may be) and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.

On this website, (i) the term "our firm", "we" and terms of similar import, denote the alternative practice structure conducted by UHY LLP and UHY Advisors, Inc. and its subsidiary entities, and (ii) the term "UHYI" denotes the UHY international network, in each case as more fully described in the preceding paragraph.