,,ii  #aac? ,,congress  #a/ ,session    
,s4 #dgi  ,,9 ,,! ,,s5ate ,,( ,,!       
,,unit$ ,,/ates  ,m>* #f1 #bjac ,mr4    
,grassley 7= himself1 ,mr4 ,nelson1 ,mr4
 ,portman1 & ,mr4 ,pryor7 introduc$ !   
foll[+ bill2 :i* 0 read twice & ref]r$  
to ! ,committee on ,f9ance  ,a ,,bill   
,to am5d ! ,int]nal ,rev5ue ,code (     
#aihf to cl>ify ! employm5t tax treatm5t
 & report+ ( wages paid by pr(essional  
employ] organizations1 & = o!r purposes4
  #a4 ,%ort title ,?is ,act may be cit$ 
z ! ,small ,bus9ess ,effici5cy ,act4    
#b4 ,c]tifi$ pr(essional employ]        
organizations  7a7 ,employm5t taxes     
,*apt] #be ( ! ,int]nal ,rev5ue ,code ( 
#aihf is am5d$ by add+ at ! end ! foll[+
 new section3  #ceaa4 ,c]tifi$          
pr(essional employ] organizations  7a7  
,g5]al rules ,= purposes ( ! taxes1 &   
o!r obligations1 impos$ by ?is          
subtitle--  7#a7 a c]tifi$ pr(essional  
employ] organization %all be treat$ z ! 
employ] 7& no o!r p]son %all be treat$ z
 ! employ]7 ( any "w site employee p]=m+

 s]vices = any cu/om] ( su*             
organization1 b only ) respect to       
remun]ation remitt$ by su* organization 
to su* "w site employee1 &  7#b7        
exclusions1 def9itions1 & o!r rules :i* 
are bas$ on ! type ( employ] & :i* w\ld 
7b = p>agraph 7#a77 apply %all apply )  
respect to su* taxes impos$ on su*      
remun]ation4  7b7 ,successor employ]    
/atus ,= purposes ( sections            
#caba7;a77#a71 #cbca7;e77#b77;,c71 &    
#ccjf7;b77#a7--  7#a7 a c]tifi$         
pr(essional employ] organization ent]+  
into a s]vice contract ) a cu/om] )     
respect to a "w site employee %all be   
treat$ z a successor employ] & ! cu/om] 
%all be treat$ z a pr$ecessor employ]   
dur+ ! t]m ( su* s]vice contract1 &     
7#b7 a cu/om] ^: s]vice contract ) a    
c]tifi$ pr(essional employ] organization
 is t]m9at$ ) respect to a "w site      
employee %all be treat$ z a successor   
employ] & ! c]tifi$ pr(essional employ] 
organization %all be treat$ z a         
pr$ecessor employ]4  7c7 ,liability (   

c]tifi$ pr(essional employ] organization
 ,solely = purposes ( its liability = ! 
taxes1 & o!r obligations1 impos$ by ?is 
subtitle--  7#a7 a c]tifi$ pr(essional  
employ] organization %all be treat$ z ! 
employ] ( any individual 7o!r ?an a "w  
site employee or a p]son describ$ 9     
subsection 7f77 :o is p]=m+ s]vices     
cov]$ by a contract meet+ ! requirem5ts 
( section #ggje7;e77#b71 b only )       
respect to remun]ation remitt$ by su*   
organization to su* individual1 &  7#b7 
exclusions1 def9itions1 & o!r rules :i* 
are bas$ on ! type ( employ] & :i* w\ld 
7b = p>agraph 7#a77 apply %all apply )  
respect to su* taxes impos$ on su*      
remun]ation4  7d7 ,treatm5t ( cr$its    
7#a7 ,9 g5]al ,= purposes ( any cr$it   
specifi$ 9 p>agraph 7#b7--  7,a7 su*    
cr$it ) respect to a "w site employee   
p]=m+ s]vices = ! cu/om] applies to !   
cu/om]1 n ! c]tifi$ pr(essional employ] 
organization1  7,b7 ! cu/om]1 & n !     
c]tifi$ pr(essional employ]             
organization1 %all take into acc\nt     

wages & employm5t taxes--  7i7 paid by !
 c]tifi$ pr(essional employ]            
organization ) respect to ! "w site     
employee1 &  7ii7 = :i* ! c]tifi$       
pr(essional employ] organization        
receives paym5t f ! cu/om]1 &  7,c7 !   
c]tifi$ pr(essional employ] organization
 %all furni% ! cu/om] ) any in=mation   
necess>y = ! cu/om] to claim su* cr$it4 
7#b7 ,cr$its specifi$ ,a cr$it is       
specifi$ 9 ?is p>agraph if su* cr$it is 
all[$ "u--  7,a7 section #da 7cr$it =   
increas+ rese>* activity71  7,b7 section
 #de;,a 7,indian employm5t cr$it71  7,c7
 section #de;,b 7cr$it = portion (      
employ] social security taxes paid )    
respect to employee ca% tips71  7,d7    
section #de;,c 7cl9ical te/+ exp5ses =  
c]ta9 drugs = r>e diseases or           
conditions71  7,e7 section #de,r        
7employee heal? insurance exp5ses (     
small employ]s71  7,f7 section #ea 7"w  
opportunity cr$it71  7,g7 section #ea;,a
 7tempor>y inc5tives = employ+ long-t]m 
family assi/ance recipi5ts71  7,h7      

section #acif 7emp[]m5t zone employm5t  
cr$it71  7,i7 #adjj7;d7 7,,dc ,zone     
employm5t cr$it71  7,j7 ,section        
#adjj;,h 7r5ewal community employm5t    
cr$it71 &  7,k7 any o!r section z       
provid$ by ! ,secret>y4  7e7 ,special   
rule = relat$ p>ty ,?is section %all n  
apply 9 ! case ( a cu/om] :i* be>s a    
relation%ip to a c]tifi$ pr(essional    
employ] organization describ$ 9 section 
#bfg7;b7 or #gjg7;b74 ,= purposes ( !   
prec$+ s5t5ce1 su* sections %all be     
appli$ by sub/itut+ #aj p]c5t = #ej     
p]c5t4  7f7 ,special rule = c]ta9       
individuals ,= purposes ( ! taxes impos$
 "u ?is subtitle1 an individual ) net   
e>n+s f self-employm5t d]iv$ f !        
cu/om]'s trade or bus9ess is n a "w site
 employee ) respect to remun]ation paid 
by a c]tifi$ pr(essional employ]        
organization4  7g7 ,regulations ,!      
,secret>y %all prescribe su* regulations
 z may be necess>y or appropriate to    
c>ry out ! purposes ( ?is section4  4   
7b7 ,c]tifi$ pr(essional employ]        

organization def9$ ,*apt] #gi ( !       
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by add+ at ! end ! foll[+ new section3  
#ggje4 ,c]tifi$ pr(essional employ]     
organizations def9$  7a7 ,9 g5]al ,=    
purposes ( ?is title1 ! t]m c]tifi$     
pr(essional employ] organization means a
 p]son :o has be5 c]tifi$ by ! ,secret>y
 = purposes ( section #ceaa z meet+ !   
requirem5ts ( subsection 7b74  7b7      
,g5]al requirem5ts ,a p]son meets !     
requirem5ts ( ?is subsection if su*     
p]son--  7#a7 demon/rates t su* p]son 7&
 any own]1 (fic]1 & su* o!r p]sons z may
 be specifi$ 9 regulations7 meets su*   
requirem5ts z ! ,secret>y %all e/abli% )
 respect to tax /atus1 backgr\nd1       
exp]i5ce1 bus9ess location1 & annual    
f9ancial audits1  7#b7 computes its     
taxable income us+ an accrual me?od (   
acc\nt+ unless ! ,secret>y approves     
ano!r me?od1  7#c7 agrees t x w satisfy 
! bond & indep5d5t f9ancial review      
requirem5ts ( subsection 7c7 on an ongo+
 basis1  7#d7 agrees t x w satisfy su*  

report+ obligations z may be impos$ by !
 ,secret>y1  7#e7 agrees to v]ify on su*
 p]iodic basis z ! ,secret>y may        
prescribe t x cont9ues to meet !        
requirem5ts ( ?is subsection1 &  7#f7   
agrees to notify ! ,secret>y 9 writ+ )9 
su* "t z ! ,secret>y may prescribe ( any
 *ange t mat]ially affects :e!r x       
cont9ues to meet ! requirem5ts ( ?is    
subsection4  7c7 ,bond & indep5d5t      
f9ancial review requirem5ts  7#a7 ,9    
g5]al ,an organization meets !          
requirem5ts ( ?is p>agraph if su*       
organization--  7,a7 meets ! bond       
requirem5ts ( p>agraph 7#b71 &  7,b7    
meets ! indep5d5t f9ancial review       
requirem5ts ( p>agraph 7#c74  7#b7 ,bond
  7,a7 ,9 g5]al ,a c]tifi$ pr(essional  
employ] organization meets ! requirem5ts
 ( ?is p>agraph if ! organization has   
po/$ a bond = ! paym5t ( taxes "u       
subtitle ,c 79 a =m acceptable to !     
,secret>y7 9 an am\nt at lea/ equal to !
 am\nt specifi$ 9 subp>agraph 7,b74     
7,b7 ,am\nt ( bond ,= ! p]iod ,april #a 

( any cal5d> ye> ?r\gh ,m>* #ca ( !     
foll[+ cal5d> ye>1 ! am\nt ( ! bond     
requir$ is equal to ! great] (--  7i7 #e
 p]c5t ( ! organization's liability "u  
section #ceaa = taxes impos$ by subtitle
 ,c dur+ ! prec$+ cal5d> ye> 7b n to    
exce$ #a1jjj1jjj71 or  7ii7 #ej1jjj4    
7#c7 ,indep5d5t f9ancial review         
requirem5ts ,a c]tifi$ pr(essional      
employ] organization meets ! requirem5ts
 ( ?is p>agraph if su* organization--   
7,a7 has1 z ( ! mo/ rec5t review date1  
caus$ to be prep>$ & provid$ to !       
,secret>y 79 su* mann] z ! ,secret>y may
 prescribe7 an op9ion ( an indep5d5t    
c]tifi$ public acc\ntant t ! c]tifi$    
pr(essional employ] organization's      
f9ancial /atem5ts are pres5t$ fairly 9  
accordance ) g5]ally accept$ acc\nt+    
pr9ciples1 &  7,b7 provides1 n lat] ?an 
! la/ day ( ! second mon? beg9n+ aft] ! 
end ( ea* cal5d> qu>t]1 to ! ,secret>y f
 an indep5d5t c]tifi$ public acc\ntant  
an ass]tion reg>d+ ,f$]al employm5t tax 
paym5ts & an exam9ation level atte/ation

 on su* ass]tion4  ,su* ass]tion %all   
/ate t ! organization has )held & made  
deposits ( all taxes impos$ by *apt]s   
#ba1 #bb1 & #bd ( ! ,int]nal ,rev5ue    
,code 9 accordance ) regulations impos$ 
by ! ,secret>y = su* cal5d> qu>t] & su* 
exam9ation level atte/ation %all /ate t 
su* ass]tion is fairly /at$1 9 all      
mat]ial respects4  7#d7 ,controll$ gr\p 
rules ,= purposes ( ! requirem5ts (     
p>agraphs 7#b7 & 7#c71 all pr(essional  
employ] organizations t are memb]s ( a  
controll$ gr\p )9 ! mean+ ( sections    
#dad7;b7 & 7c7 %all be treat$ z a s+le  
organization4  7#e7 ,failure to file    
ass]tion & atte/ation ,if ! c]tifi$     
pr(essional employ] organization fails  
to file ! ass]tion & atte/ation requir$ 
by p>agraph 7#c7 ) respect to any cal5d>
 qu>t]1 !n ! requirem5ts ( p>agraph 7#c7
 ) respect to su* failure %all be treat$
 z n satisfi$ = ! p]iod beg9n+ on ! due 
date = su* atte/ation4  7#f7 ,review    
date ,= purposes ( p>agraph 7#c77;,a71 !
 review date %all be #f mon?s aft] !    

completion ( ! organization's fiscal    
ye>4  7d7 ,susp5sion & revocation       
au?ority ,! ,secret>y may susp5d or     
revoke a c]tification ( any p]son "u    
subsection 7b7 = purposes ( section     
#ceaa if ! ,secret>y det]m9es t su*     
p]son is n satisfy+ ! repres5tations or 
requirem5ts ( subsections 7b7 or 7c71 or
 fails to satisfy applicable acc\nt+1   
report+1 paym5t1 or deposit requirem5ts4
  7e7 ,"w site employee ,= purposes (   
?is title--  7#a7 ,9 g5]al ,! t]m "w    
site employee means1 ) respect to a     
c]tifi$ pr(essional employ]             
organization1 an individual :o--  7,a7  
p]=ms s]vices = a cu/om] pursuant to a  
contract :i* is betwe5 su* cu/om] & !   
c]tifi$ pr(essional employ] organization
 & :i* meets ! requirem5ts ( p>agraph   
7#b71 &  7,b7 p]=ms s]vices at a "w site
 meet+ ! requirem5ts ( p>agraph 7#c74   
7#b7 ,s]vice contract requirem5ts ,a    
contract meets ! requirem5ts ( ?is      
p>agraph ) respect to an individual     
p]=m+ s]vices = a cu/om] if su* contract

 is 9 writ+ & provides t ! c]tifi$      
pr(essional employ] organization %all-- 
7,a7 assume responsibility = paym5t (   
wages to su* individual1 )\t reg>d to ! 
receipt or adequacy ( paym5t f ! cu/om] 
= su* s]vices1  7,b7 assume             
responsibility = report+1 )hold+1 & pay+
 any applicable taxes "u subtitle ,c1 ) 
respect to su* individual's wages1 )\t  
reg>d to ! receipt or adequacy ( paym5t 
f ! cu/om] = su* s]vices1  7,c7 assume  
responsibility = any employee b5efits   
:i* ! s]vice contract may require !     
organization to provide1 )\t reg>d to ! 
receipt or adequacy ( paym5t f ! cu/om] 
= su* s]vices1  7,d7 assume             
responsibility = hir+1 fir+1 & recruit+ 
work]s 9 addition to ! cu/om]'s         
responsibility = hir+1 fir+ & recruit+  
work]s1  7,e7 ma9ta9 employee records   
relat+ to su* individual1 &  7,f7 agree 
to be treat$ z a c]tifi$ pr(essional    
employ] organization = purposes (       
section #ceaa ) respect to su*          
individual4  7#c7 ,"w site cov]age      

requirem5t ,! requirem5ts ( ?is p>agraph
 are met ) respect to an individual if  
at lea/ #he p]c5t ( ! individuals p]=m+ 
s]vices = ! cu/om] at ! "w site :]e su* 
individual p]=ms s]vices are subject to 
#a or m contracts ) ! c]tifi$           
pr(essional employ] organization :i*    
meet ! requirem5ts ( p>agraph 7#b7 7b n 
tak+ into acc\nt ^? individuals :o are  
exclud$ employees )9 ! mean+ ( section  
#dad7q77#e774  7f7 ,det]m9ation (       
employm5t /atus ,except to ! ext5t      
necess>y = purposes ( section #ceaa1    
no?+ 9 ?is section %all be con/ru$ to   
affect ! det]m9ation ( :o is an employee
 or employ] = purposes ( ?is title4  7g7
 ,regulations ,! ,secret>y %all         
prescribe su* regulations z may be      
necess>y or appropriate to c>ry out !   
purposes ( ?is section4  4  7c7 ,con=m+ 
am5dm5ts  7#a7 ,section #ccjb ( !       
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by add+ at ! end ! foll[+ new           
subsection3  7h7 ,treatm5t ( c]tifi$    
pr(essional employ] organizations ,if a 

c]tifi$ pr(essional employ] organization
 7z def9$ 9 section #ggje71 or a cu/om] 
( su* organization1 makes a contribution
 to ! ,/ate's unemploym5t fund ) respect
 to a "w site employee1 su* organization
 %all be eligible = ! cr$its available  
"u ?is section ) respect to su*         
contribution4  4  7#b7 ,section         
#ccjc7;a7 ( su* ,code is am5d$--  7,a7  
by /rik+ ! p]iod at ! end ( p>agraph    
7#c7 & ins]t+ 2 & & by ins]t+ aft]      
p>agraph 7#c7 ! foll[+ new p>agraph3    
7#d7 if ! taxpay] is a c]tifi$          
pr(essional employ] organization 7z     
def9$ 9 section #ggje7 t is treat$ z !  
employ] "u section #ceaa1 su* c]tifi$   
pr(essional employ] organization is     
p]mitt$ to collect & remit1 9 accordance
 ) p>agraphs 7#a71 7#b71 & 7#c71        
contributions dur+ ! taxable ye> to !   
,/ate unemploym5t fund ) respect to a "w
 site employee4  1 &  7,b7 9 ! la/      
s5t5ce--  7i7 by /rik+ p>agraphs 7#a71  
7#b71 & 7#c7 & ins]t+ p>agraphs 7#a71   
7#b71 7#c71 & 7#d71 &  7ii7 by /rik+    

p>agraph 7#a71 7#b71 or 7#c7 & ins]t+   
p>agraph 7#a71 7#b71 7#c71 or 7#d74     
7#c7 ,section #fjec7;c7 ( su* ,code is  
am5d$ by add+ at ! end ! foll[+ new     
p>agraph3  7#h7 ,c]tifi$ pr(essional    
employ] organizations ,= purposes ( any 
report requir$ by ?is subsection1 9 !   
case ( a c]tifi$ pr(essional employ]    
organization t is treat$ "u section     
#ceaa z ! employ] ( a "w site employee1 
! cu/om] ) respect to :om a "w site     
employee p]=ms s]vices %all be ! employ]
 = purposes ( report+ "u ?is section & !
 c]tifi$ pr(essional employ]            
organization %all furni% to ! cu/om] any
 in=mation necess>y to complete su*     
report+ no lat] ?an su* "t z ! ,secret>y
 %all prescribe4  4  7d7 ,cl]ical       
am5dm5ts  7#a7 ,! table ( sections =    
*apt] #be ( ! ,int]nal ,rev5ue ,code (  
#aihf is am5d$ by add+ at ! end ! foll[+
 new item3  ,sec4 #ceaa4 ,c]tifi$       
pr(essional employ] organizations4  4   
7#b7 ,! table ( sections = *apt] #gi (  
su* ,code is am5d$ by ins]t+ aft] ! item

 relat+ to section #ggjd ! foll[+ new   
item3  ,sec4 #ggje4 ,c]tifi$ pr(essional
 employ] organizations def9$4  4  7e7   
,report+ requirem5ts & obligations ,!   
,secret>y ( ! ,treasury %all develop su*
 report+ & recordkeep+ rules1           
regulations1 & proc$ures z ! ,secret>y  
det]m9es necess>y or appropriate to     
ensure compliance ) ! am5dm5ts made by  
?is section ) respect to entities apply+
 = c]tification z c]tifi$ pr(essional   
employ] organizations or entities t h   
be5 s c]tifi$4 ,su* rules %all include--
  7#a7 notification ( ! ,secret>y 9 !   
case ( ! comm5cem5t or t]m9ation ( a    
s]vice contract describ$ 9 section      
#ggje7;e77#b7 ( ! ,int]nal ,rev5ue ,code
 ( #aihf betwe5 su* a p]son & a cu/om]1 
& ! employ] id5tification numb] ( su*   
cu/om]1 &  7#b7 su* o!r in=mation z !   
,secret>y det]m9es is ess5tial to       
promote compliance ) respect to ! cr$its
 id5tifi$ 9 section #ceaa7;d7 ( su*     
,code1 &  %all be design$ 9 a mann] :i* 
/reaml9es1 to ! ext5t possible1 !       

application ( requirem5ts ( su*         
am5dm5ts1 ! ex*ange ( in=mation betwe5 a
 c]tifi$ pr(essional employ]            
organization & its cu/om]s1 & ! report+ 
& recordkeep+ obligations ( ! c]tifi$   
pr(essional employ] organization4  7f7  
,us] fees ,subsection 7b7 ( section     
#gebh ( ! ,int]nal ,rev5ue ,code ( #aihf
 is am5d$ by add+ at ! end ! foll[+ new 
p>agraph3  7#d7 ,c]tifi$ pr(essional    
employ] organizations ,! annual fee *>g$
 "u ! program 9 connection ) ! ongo+    
c]tification by ! ,secret>y ( a         
pr(essional employ] organization "u     
section #ggje %all n exce$ #a1jjj4  4   
7g7 ,effective dates  7#a7 ,9 g5]al ,!  
am5dm5ts made by ?is section %all apply 
) respect to wages = s]vices p]=m$ on or
 aft] ,janu>y #a ( ! fir/ cal5d> ye>    
beg9n+ m ?an #ab mon?s aft] ! date ( !  
enactm5t ( ?is ,act4  7#b7 ,c]tification
 program ,! ,secret>y ( ! ,treasury %all
 e/abli% ! c]tification program describ$
 9 section #ggje7;b7 ( ! ,int]nal       
,rev5ue ,code ( #aihf1 z add$ by        

subsection 7b71 n lat] ?an #f mon?s be=e
 ! effective date det]m9$ "u p>agraph   
7#a74  7h7 ,no inf]5ce ,no?+ conta9$ 9  
?is section or ! am5dm5ts made by ?is   
section %all be con/ru$ to create any   
inf]5ce ) respect to ! det]m9ation ( :o 
is an employee or employ]--  7#a7 =     
,f$]al tax purposes 7o!r ?an ! purposes 
set =? 9 ! am5dm5ts made by ?is         
section71 or  7#b7 = purposes ( any o!r 
provision ( law4