from the ERISA requirements. Passage of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) further encouraged employee leasing by providing a tax shelter for employers who contributed a minimum amount to employee plans. More stringent guidelines in the Tax Reform Act of 1986 later eliminated most of the TEFRA incentive, however. By 1985, there were approximately 275 staff leasing companies in the United States. Abuses State Unemployment Tax (SUTA) arbitrage, commonly referred to as "SUTA dumping," occurs when an employer with a high unemployment insurance rate transfers or "dumps" employees to purchased subsidiaries with lower unemployment insurance rates. In a PEO relationship, the client company takes the Professional Employer Organization's SUTA rate by law, which often lowers their SUTA through SUTA Arbitrage. The only time this wouldn't apply is in client reporting states. Owners of professional employer organizations are in a position to commit fraud by keeping the funds deducted from employee paychecks instead of paying the insurance and government entities for whom the deductions were made. In a case in San Antonio, Texas four executives were convicted of siphoning $133 million from the three PEOs they owned and operated. Certified professional employer organizations In 2014, the United States Congress enacted sections 3511 and 7705 of the Internal Revenue Code, provisions that include special definitions and rules related to the Federal tax treatment of a "certified professional employer organization." Regulation Each state in the U.S. has differing regulations for workers' compensation insurance and state unemployment insurance, so PEOs are typically regulated at the state level. In 2004, President George W. Bush signed into law the SUTA Dumping Prevention Act of 2004, which requires that all 50 states enact anti-SUTA-dumping legislation by 2007. Most states have now done so; however, federal law does not prohibit companies from using a PEO to obtain more favorable SUTA rates. The staff leasing industry itself has also taken steps to address abuses. It formed its first trade association, the National Staff Leasing Association, in 1985. The association changed its name to the National Association of Professional Employer Organizations in 1994 to reflect the term in current usage. As part of the industry's self-regulation efforts, an independent accreditation body, the Employer Services Assurance Corporation (ESAC), was formed in 1995. ESAC verifies accredited PEOs' compliance with important ethical, financial, and operational standards and provides financial assurance of the performance of key employer obligations by these