I have a client who uses a PEO, I asked about the ERC for them and for the first time I've been able to actually view the 941's that they process. The EIN used on the 941's is the client's EIN (interesting point I just realized though is that the EIN on the W-2 is the PEO's). Anyway, the PEO has not applied the ERC, 4th quarter wages should qualify as does the client for both reduced gross revenue and having been shut down. When asked about it this is the response from the PEO:
"We did not claim the credit for ERC. Your 941 is part of our company so it gets combined with 100 other clients under our EIN and then submitted. I have included for Paula the 941's for the 2020 year. She can claim the ERC for employees not working." (bold typeface is mine, as far as I understand it, employees that aren't working have nothing to do with this.)
That explanation doesn't make sense to me. Can anyone comment? How are PEO's being treated for the ERC? This is cross posted with a FB group I also belong to.