PEOs had standing to sue for FICA refunds

A professional employer organization (PEO) had standing to sue for a refund of the overpayment of the employer’s portion of the FICA taxes because it was the statutory employer. The PEO assumed responsibility for paying wages to its clients’ worksite employees without regard to whether the client first paid such amounts to the taxpayer. Further, the PEO assumed full responsibility for withholding, reporting and paying the payroll taxes to the IRS. Moreover, the PEO used its own bank accounts to pay the worksite employees’ wages, as well as to pay over the payroll taxes to the IRS. In addition, the clients had no authority over, or access to, these bank accounts. Finally, the PEO reported the employer portion of the FICA taxes on Forms 941 using its own name, address, and employer identification number. Therefore, the IRS waived its sovereign immunity for the PEO’s refund claims and that the PEO had standing to sue. Accordingly, the IRS was not entitled to dismiss the refund suit. Reconsideration denied on April 3, 2018. (Paychex Business Solutions, LLC, DC Fla.)

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