Tuesday, October 25, 2011

H.R. 674 Seeks to Repeal the 3% Withholding Requirement on US Government Contracts

The 2005 Tax Increase Prevention and Reconciliation Act contained a requirement (Section 511) for Federal, State and Local Governments with annual expenditures greater than $100 million dollars (and most purchases greater than $10,000) to withhold 3% on payments to all vendors and service providers.  This means that in addition to retention on government contracts, an additional 3% would be withheld.

This requirement has been postponed on several occasions and is currently set to be effective January 2013.  In May 2011, Representative Walter Herger (CA) introduced H.R. 674 which would amend the Internal Revenue Code to repeal this 3% withholding requirement.  The bill is scheduled to be debated in the House this week.

If you would like to see H.R. 674 passed, repealing this 3% withholding, it makes sense to write letters to members of Congress expressing your position.  The Associated General Contractors of America sent a letter to Mitch McConnell in support of the repeal.  Also, I found this letter sent by the American Medical Association (this withholding affects all service providers to the government).  These letters can serve as a guideline for any letters you wish to send in support of H.R. 674.  If you wish to sent a letter to your Representative in Congress,  a list of Representatives in the House can be found here.  In addition to writing your Representative, I'd suggest reaching out to those serving on the Budget committee, such as Tom McClintock or John Campbell as well as to Dave Camp, Chairman of the House Ways and Means committee.  Their Washington D.C. addresses are toward the bottom of each of their pages.

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