IRS: PEO clients eligible to take Trump’s section 199A 20% tax deduction

Department of Treasury Guidance a Victory for the PEO Industry

Thank you to all of you who weighed in, you made a difference!

Today, the U.S. Department of Treasury (Treasury) and the Internal Revenue Service (IRS) issued a notice of proposed rulemaking that contains guidance for pass-through entities that are clients of PEOs. The guidance clearly states that eligible pass-through entities that are clients of a PEO can take the 20 percent tax deduction created by Section 199A of tax reform.

This guidance affirms what we have advocated this year: being a PEO client does not affect the eligibility of a pass-through entity for the 20 percent tax deduction in Section 199A of the tax code.

Since January of this year, we have led a lobbying campaign to push the IRS to provide this much needed clarity for PEOs and their clients. The formal guidance represents a major victory for the PEO industry, and demonstrates that when the industry works together with one voice, it can achieve victories in Washington. Thank you again.

Relevant language of the rule can be found here.

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About Emplicity:
Since 1995, Emplicity has provided a smarter, more secure, and integrated platform of employer services to its 300 business clients and their 8,500 employees. As a Professional Employer Organization, or PEO, the California-based HR outsourcing firm simplifies the compliance, administration, and support businesses need in the areas of employee benefits, payroll, and human resources technology.

NOTICE: Emplicity provides HR advice and recommendations. Information provided by Emplicity is not intended as a substitute for employment law counsel. At no time will Emplicity have the authority or right to make decisions on behalf of its clients.

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