Thank you for the reference.
I see two things here:
1. "the annual wage base and withholding threshold apply separately to the remuneration received by the covered employee from the CPEO with respect to services performed for each customer."
This says to me that it is correct that each "employer" (actually, customer of the CPEO) withhold taxes on the employee independently of what the other customers of the CPEO are doing - which results in the possibility of over withholding Social Security taxes.
2. "Sections 3511(a) and (c), provide that, for federal employment tax purposes, a CPEO is treated as the employer of covered employees that are work site employees (section 3511(a)(1)) and covered employees that are not work site employees (non-work site covered employees) (section 3511(c)(1)) with regard to remuneration it pays to these covered employees."
"federal employment tax" refers to the Social Security, Medicare and other taxes that employers pay directly to the IRS.
Here, the IRS is reiterating that the CPEO is the employer of the employee, not any of the customers of the CPEO.
What this section from the Federal Register doesn't seem to address is what do you do when the inevitable happens and the two customers of the CPEO collectively withhold more than the Social Security limit, yet the CPEO itself has only the one EIN because it is the employer of record, so the existing IRS rules are that the employer must refund the excess SS withheld.
I have read this several times, and I don't yet see the solution to the dilemma.
What I will do is pass this on to the company.
As for your last question about getting the tax reimbursement on line 11, all I can tell you is that the software no longer permits that, for the reasons I gave earlier. If you have the CD/download software, you can possibly override that line, but (1) this voids the Intuit guarantee of accuracy, (2) possibly makes it impossible to e-file (someone overrides do, I don't know if all overrides do), and (3), will quite likely cause the IRS to write you a letter telling you not to take this amount on your return, as has happened to TurboTax customers in previous years when we still had the feature that allowed taxpayers in certain situations to claim this amount on the tax return despite "both" employers having the same EIN.
I will let you know if I hear anything.
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