Thursday, November 10, 2011

Senate Repeals 3% Withholding Tax

In a rare and welcome display of non-partisanship, the U.S. Senate voted 95-0 on November 10, 2011 to repeal a 3% withholding tax that was scheduled to go into effect on January 1, 2013. 

House to Vote on Revised Bill:  The U.S. House of Representatives voted earlier on October 27, 2011 to repeal the withholding tax by a vote of 405-16.  But because the Senate added a provision for tax credits for companies who hire unemployed veterans, the revised bill must go back to the House for a final vote before being sent to President Obama, who is expected to sign the measure.

Who Would the Tax Impact:  The withholding tax would have required all federal, state, and local governments with expenditures of $100 million or more to withhold 3% from every payment over $10,000 to contractors, consultants, and vendors.  Business groups and government agencies both voiced their opposition to the negative financial impact of the law.  Some agencies have already begun spending money to change their financial systems to accommodate the requirement.

More Information:  For more information, click here for an article from Bloomberg Businessweek.
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

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