Surety Bond Requirements
Rev. Proc. 2016-33, section 2.04(2)
(2) Form 14751. If the IRS approves a CPEO applicant’s application for certification, the CPEO applicant has 30 days from the date the IRS provides notice of certification (see section 6) to submit a properly completed and executed Form 14751 (or, in the case of a CPEO applicant that is a member of a controlled group with existing CPEOs, to post a superseding bond using a properly completed and executed Form 14751, as described in section 6.02) providing for a bond in the amount required by § 301.7705-2T(g)(2) and signed by both a qualified surety and the CPEO (or CPEOs in the case of a bond covering a controlled group).
§ 301.7705-2T (g)(1-2)
(g) Bond—
(1) In general. A CPEO must post a bond for the payment of federal employment taxes issued in the form and containing the terms prescribed by the Commissioner in further guidance and in an amount described in paragraph (g)(2) of this section.
(2) Bond amount—
(i) In general. The amount of the bond described in paragraph (g)(1) of this section must be, for each period beginning on April 1 of any calendar year and ending on March 31 of the following calendar year (or, in the case of a newly certified CPEO, beginning with the effective date of certification and ending on the subsequent March 31) (the bond period), at least equal to the greater of—
(A) Five percent of the CPEO’s liability under section 3511 (or, if applicable, the liability described in paragraph (g)(2)(ii) of this section) during the calendar year preceding the beginning of the bond period, but not more than $1,000,000; or
(B) $50,000.
(ii) Amount of bond in first and second year as a CPEO. If a CPEO does not have any liability under section 3511 for all or a portion of a preceding calendar year because the CPEO was not certified as a CPEO for all or a portion of that preceding calendar year, the liability applied for purposes of paragraph (g)(2)(i)(A) of this section for the entirety or portion of the preceding calendar year during which the CPEO was not certified will be the federal employment tax liability of the CPEO, and of any precursor entity of the CPEO described in § 301.7705–1T(b)(10)(i)(A), that results from one or more service agreements described in § 31.3504– 2(b)(2) of this chapter. With respect to the federal employment tax liability of such precursor entity during a preceding calendar year, the liability will only be applied for purposes of paragraph (g)(2)(i)(A) of this section to the extent it results from service agreements that have been transferred or are intended to be transferred by the precursor entity to the CPEO at the time the bond amount is determined. For purposes of this paragraph (g)(2)(ii), an entity is considered a precursor entity of a CPEO described in § 301.7705– 1T(b)(10)(i)(A) if it was determined to be its precursor entity under that section at the time it was a CPEO applicant.