The Hill - House members look to ease load for small businesses

Two House members are looking to give small businesses more peace of mind when it comes to employment taxes.

Reps. Kevin Brady (R-Texas) and Mike Thompson (D-Calif.), both members of the tax-writing House Ways and Means Committee, have introduced legislation that would create a certification process for organizations that handle human resources operations for many small businesses.

Under the measure, professional employer organizations (PEOs) that met IRS standards would take total responsibility for the employment taxes they file for companies. The change, the congressmen say, would also mean less red tape for businessmen and women.

“Our legislation provides small business owners the flexibility to do what they do best - deliver quality products and services to their customers and expand their businesses, instead of worrying about reams of government paperwork,” Brady said in a statement.

“These are the kinds of smart, targeted policies that will keep our small businesses - and our economy - on the path to prosperity,” Thompson added.

For their part, the National Association of Professional Employer Organizations, a PEO trade group, said the legislation was a long time coming.

“Federal tax law has not kept pace with changes in human resource management and this bill provides important modernization,” Brian Fayak, the group's chairman and founder of an Oklahoma-based PEO, said in a statement. “Clarification of PEO and small business client tax responsibilities will improve compliance and provide certainty for these small business clients.”

To meet IRS benchmarks, PEOs would have to illustrate basic financial qualifications, among other things.

In general, PEOs provide a host of services for companies, including oversight of unemployment and health insurance responsibilities.