President Obama on Nov. 21 signed into law a repeal of the controversial 3% witholding tax that would have applied to contractors doing business with government entities beginning in 2013.
Had it not been repealed, the IRS provision would have required that government agencies at all levels withold 3% of payments to vendors and contractors to ensure that the appropriate taxes were paid. This would have created a huge cash flow problem for contractors.
A bill repealing the tax was introduced in the House in February (HR 674). TAUC and other construction associations came out in favor of the bill and worked to build support for it Capitol Hill. Finally, the bill passed the House in October and a few days later won passage in the Senate.
The Financial Services Institute, an advocacy organization for financial advisors and firms, applauded the bill’s passage. “Businesses that provide services to the goverment deserve to be paid in full and due upon receipt,” said FSI President and CEO Dale Brown. “They shouldn’t be forced to lose a percentage of their pay they could be investing throughout the year or using to hire additional employees…We’re glad to see Congress and the White House working together to move our economy forward.”
You can view the approved bill by clicking here.