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NAPEO

Lobby or trade group

ERC
Type
Company or group
Role
Lobby or trade group
Programs
ERC
Updated

The profile

The trade association for professional employer organizations, the payroll firms that filed Employee Retention Credit claims for their clients on single aggregate returns. It backed the IRS's September 2023 freeze on processing new claims, then spent the next three years pressing the agency to pay the PEO claims already in line.

Identity and role

The National Association of Professional Employer Organizations (NAPEO), based in Alexandria, Virginia, calls itself "The Voice of the PEO Industry." In December 2023 it said its 230 PEO members served "more than 208,000 small and mid-size businesses employing 4.5 million people" and accounted for more than 90 percent of the industry's $358 billion in revenue. Pat Cleary was its president and chief executive.

Pandemic-relief role

A professional employer organization (PEO) co-employs its clients' workers and files their payroll taxes under its own employer identification number. When those clients claimed the Employee Retention Credit (ERC), the PEO filed one amended return covering many of them.

NAPEO's advocacy page lists the paper trail:

  • A 2020 letter to IRS officials Carol Weiser and Vicki Judson.
  • A joint letter with the American Payroll Association, the U.S. Chamber of Commerce and the American Institute of CPAs asking Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig to put more resources into processing ERC claims.
  • A letter to IRS counsel urging that ERC claims filed by an aggregate filer on Schedule R get "the same IRS level of review that is applied to other small businesses."
  • A letter from Cleary to Commissioner Daniel Werfel asking that extra staff assigned to the backlog stay "until all forms filed before 2023 are processed."

When Werfel froze processing of new ERC claims on September 14, 2023, NAPEO supported it, "with the belief that it would enable the agency to focus on weeding out fraudulent claims and processing the legitimate claims, like those filed by PEOs on behalf of their clients." By December 4, 2023 it was counting the cost. The IRS's own figures, it said, put outstanding claims at 1,010,000 as of November 29, and "PEOs file on behalf of dozens, hundreds or even thousands of clients, Yet the IRS counts each PEO claim as one." "The backlog has consistently moved in the wrong direction, and we've now reached a sobering new record," Cleary said.

ADP told its TotalSource clients that at a March 24, 2026 meeting with NAPEO, the IRS said about 185 PEOs' claims, "representing roughly 950 quarters," had not been processed, out of 41,000 outstanding ERC claims. ADP also reported that the IRS said it had added 20 to 30 examiners. By July 2026 NAPEO said it had held its fourth monthly meeting with IRS officials on PEO claims, and it was giving members a guide to asking their members of Congress for casework help with the IRS.

NAPEO is an advocacy group, and we found no suit or government action against it over the ERC. SBA's PPP loan data lists no loan to a borrower by its name.

Sources

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