ABC offered support Oct. 24 for H.R. 674, a bill which would repeal the 3 percent withholding tax for government contractors, and which was passed by the U.S. House of Representatives Oct. 27. The bill has garnered wide bi-partisan support, including that of the administration.
The 3 percent requirement, hidden in the fine print of a 2005 tax law, would require 3 percent to be withheld on all payments for goods and services made by federal, state, and local governments with total expenditures of $100 million or more beginning Jan. 1, 2013.
In advance of the vote, ABC sent a letter to all members of the House strongly supporting the bill, in addition to an action alert to ABC members encouraging them to speak out on the issue. In the alert, ABC pointed out that if enacted, the 3 percent withholding, coupled with a 5-10 percent retainage, could lead to a cash deficit for contractors of up to 13 percent on a project. ABC also pointed out that the tax has been repeatedly postponed by Congress due to staunch opposition and by the Internal Revenue Service, most recently in May, due to the challenges of implementation.
To take action on this issue, visit
ABC’s Advocacy Center.
For more information on the 3 percent withholding tax, visit
ABC’s website.