Why to use Schedule R (Form 940)?

Schedule R (Form 940) is used to report the IRS with client-specific information to support the totals reported on an aggregate Form 940 by the agent. Aggregate filers must file Form 940 Schedule R, which includes:

• CPEO: CPEOs are certified by the IRS and are liable for employment taxes and compliance to simplify the tax filing for the clients.
• Section 3504 agents: 3504 agents are third-party providers authorized by the IRS to report and pay federal employment taxes on an employer’s behalf.
• PEO: PEOs are Non-certified PEOs are the third-party payers responsible for filing the payroll taxes on behalf of your employer.

Tip: If you have 15 or more clients, complete as many Continuation Sheets as necessary. Attach Schedule R, including any Continuation Sheets, to your aggregate Form 940.