Statements on Introduced Bills and Joint Resolutions - S 1269

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. GRASSLEY:

    S. 1269. A bill to amend the Internal Revenue Code of 1986 to clarify the status of professional employer organizations and to promote and protect the interests of professional employer organizations, their customers, and workers; to the Committee on Finance.

    Mr. GRASSLEY. Mr. President, today I am reintroducing the Professional Employer Organization Workers Benefits Act of 2003—legislation that I sponsored in the last Congress. This legislation clarifies certain tax rules for Professional Employer Organizations, PEOs, and will allow PEOs to provide retirement and health benefits for workers at small and medium-sized businesses. By eliminating uncertainty in the current rules, it will also improve the administration of our tax system.

    The PEO legislation makes it clear that a PEO that is certified by the IRS as meeting certain rigorous standards will be able to offer employee benefits and remit Federal employment taxes for workers performing services for the PEO's business customers. The bill has won the support of representatives of the small business community, including the National Federation of Independent Business (NFIB), and has been endorsed by an array of employee benefits experts, such as the American Benefits Council, ABC, the American Society of Pension Actuaries, ASPA, and the Employers Council on Flexible Compensation, ECFC. The legislation also has the support of the National Association of Professional Employer Organizations, NAPEO—the largest organization representing the interests of PEOs. Significantly, then-Internal Revenue Service Commissioner Rossotti stated last year that the IRS believes that the PEO bill could provide useful clarification of the federal employment tax and employee benefits obligations of PEOs and their clients.

    A well-run PEO provides the expertise and the economies of scale necessary to provide health, retirement and other services to small businesses in an affordable and efficient manner. For many of these workers, the PEO's pension or health plan represents benefits that the worker would not have received from the small business directly because they were too costly for the small business to afford on its own.

    We must take every opportunity to encourage businesses to provide retirement and health benefits to their employees through whatever means possible. PEOs offer one creative way to bridge the gap between what workers need and what small businesses can afford to provide them. For example, Merit Resources, based in Iowa, is a PEO that has provided important benefits to many workers in my state. The clarifications provided in the bill I am introducing today would provide PEOs like Merit with the certainty they need. Certainty that will ensure that they can continue to serve small businesses and provide benefits to the workers at those businesses.

    I look forward to working with the Administration and my colleagues, on both sides of the aisle, on these important issues. I ask unanimous consent that the text of the bill be printed in the Record.