Create a controlled group license

The following instructions only apply to Certified Professional Employer Organizations (CPEO) and CPEO applicants that are members of a controlled group (within the meaning of sections 414(b) and (c) of the Internal Revenue Code (IRC)) with other CPEOs or CPEO applicants. If you are not part of a controlled group with other CPEOs or other CPEO applicants, continue to Certified Professional Employer Organization Application.

Controlled groups

“Controlled group” refers to any controlled group of corporations or trades or businesses under common control within the meaning of IRC 414(b) and (c) and related regulations. Only CPEOs and CPEO applicants that are members of a controlled group of which other CPEOs or CPEO applicants are members are permitted to create a controlled group license. CPEOs and CPEO applicants that are members of the same controlled group submit copies of combined or consolidated annual audited financial statements for all CPEO applicants and CPEOs in the controlled group. In addition, CPEOs and CPEO applicants in the same controlled group submit the required quarterly assertions and attestations for all CPEO applicants and CPEOs in the controlled group on a controlled group basis. Finally, All CPEO members of a controlled group are required to be on the same bond. 

The Controlled Group license links members of the same controlled group in the system. This allows for the Surety Bond and the Annual Audited Financial Statements to be submitted once rather than separately for all CPEO and CPEO applicant members of the controlled group.

Note: The Online Registration system does not provide for submitting quarterly assertions and attestations from the controlled group license. So, while CPEOs and CPEO applicants in the same controlled group submit quarterly assertions and attestations for all CPEO applicants and CPEOs in the controlled group on a controlled group basis, CPEO and CPEO applicant members of the controlled group must each separately submit a copy of these quarterly assertions and attestations through their individual CPEO or CPEO applicant accounts.   

Controlled group members

Applicants and existing CPEOs that are members of a controlled group with other applicants or CPEOs must perform a ‘Create a Controlled Group’ transaction to link members of the Controlled Group in the Online Registration system. The CGRP (Controlled Group) license type has been developed to allow CPEOs who are a member of a Controlled Group “link” themselves to a single CGRP entity, enabling them to submit certain documents for all members (for example Form 14571, Surety Bond and Annual Audited Financial Statements). Each Controlled Group license must have a Controlled Group representative. The representative is the only person authorized to submit documentation on behalf of the Controlled Group. To become a Controlled Group representative, an individual must have already gone through Individual Identity Verification and be registered as a Responsible Individual.

To create a Controlled Group license (CGRP) within the online registration system, the Controlled Group representative must access the Voluntary Certification Program for Professional Employer Organizations (CPEOs)  page. The ‘Create a Controlled Group’ transaction is available from the Main Menu. Under the Start or Resume an Application section, select ‘Create a Controlled Group.’

Each Controlled Group license must be given a name that does not exceed 64 characters. The Controlled Group name should not be the same name as any CPEO in the controlled group. However, the Controlled Group name should be similar to the CPEO(s) in the Controlled Group so that the IRS can easily identify which CPEOs belong to the Controlled Group.

Once the ‘Create a Controlled Group’ transaction has been submitted, a Controlled Group license number (CGRP-######) will be generated. The license number should then be shared with members of the Controlled Group. Using the Controlled Group license number, CPEO members of the controlled group can link themselves to that Controlled Group license using the ‘Account Update’ transaction. 

Updating/cancelling a controlled group license

A CPEO must notify the IRS of any change that materially affects the continuing accuracy of any agreement or information that was previously provided to the IRS. Changes in controlled group information is a material change. The Controlled Group representative can View/Update their information under the "Manage your license information" dropdown menu. On this menu, there is an option to "View/Update Controlled Group," which allows the Controlled Group representative to change information such as phone number and mailing address.   

The Controlled Group license that links CPEOs can be cancelled at any time. Please note, cancelling a controlled group license does not result in the voluntary termination of the certification of the individual CPEO members of the controlled group. When a controlled group license is cancelled, the individual CPEO members of the controlled group continue to be certified. A CPEO that wishes to voluntarily terminate its certification must follow the voluntary termination procedures found in Rev. Proc. 2023-18.

If the controlled group license is cancelled, then all documents including a copy of the surety bond and the annual audited financial statements must be submitted separately under each individual CPEO account.

To cancel the Controlled Group license, the Controlled Group representative must submit a written request to the program.

1. From the Main Menu of the IRS Online Registration System, locate ‘Manage Your License Information’ and select the ‘Choose Application’ drop down list next to the CPEO license number. Choose ‘Update CPEO Account Information – Upload Files.’
    
2. Select ‘Other’ from the Attachment List, then follow the on-screen instructions to attach the file containing your cancellation request. If the file exceeds 2MB in size, you will need to open another CPEO Update transaction and repeat the steps for each subsequent file. In the Notes section, type ‘Cancel Controlled Group License’ to identify the document.