UPDATE - REPEAL OF 3% WITHHOLDING

[Administrator]

LEGISLATION TO REPEAL THE 3% WITHHOLDING TAX ON FEDERAL CONTRACTS COMING TO A VOTE

The House of Representatives will consider and vote on legislation to REPEAL the 3% Withholding Tax on Federal contracts, set to go into effect in 2013.

WE NEED YOUR HELP TO GET THE BILL THROUGH THE HOUSE.

Please contact your Representative and ask them to cosponsor and vote for the passage of H R. 674. You can find your Representative’s contact here: www.congress.org.

Below are some talking points to use for your message to your Representative. If you need more information, contact Laurence Socci at laurence@theclagroup.com.


Withholding Tax Relief Background: The Tax Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222) was passed by Congress and signed by the President in May 2006. The legislation contains a provision, Section 511, mandating that federal, state and local governments withhold 3% from payments for goods and services. This new tax withholding requirement affects all government contracts as well as any payment to any person for a service or product provided to a government entity. The withholding is based on revenues from government payments with no relationships to a company’s taxable income. Additionally, the withholding will impinge on company cash flow needed for day-to day operation.

Talking Points:

Section 511 requires tax withholdings at a rate of 3% on all government payments for products and services made by the federal government, state governments, and local governments whose total expenditures exceed $100 million.

It affects payments for goods and services under government contracts as well as payments to any person for a service or product provided to a government entity.

It imposes significant administrative costs, as well as information reporting requirements, on governments and companies.

It applies to all payments starting in 2013.

It puts a heavy burden on start-up companies and companies with tight margins and/or irregular cash flow, thus leading to fewer competitive bids.

It increases the cost of doing business with all levels of government. Many contractors may have to take on higher levels of debt or equity in order to ensure regular cash flows necessary for operations.

Action Requested: ACSM and NSPS request Congress to support H.R. 674 (introduced by Rep. Herger).

[Administrator]

The House just passed H.R. 674, to repeal the 3% withholding tax mandate, by a vote of 405 to 16. We are grateful for the leadership of Congressmen Wally Herger (R-CA) and Earl Blumenauer (D-OR) who tirelessly championed the legislation in the House. This resounding and overwhelmingly bipartisan vote is the result of the persistent and diverse efforts of our coalition.

According to the rule adopted by the House, H.R. 674 has been combined with H.R. 2576, which was also approved by the House today with bipartisan support, into one measure. H.R. 2576, in essence the offset, would adjust the income qualifications for purposes of determining eligibility for certain healthcare-related programs, such as Medicaid. Just as the Administration endorsed H.R. 674, it has likewise endorsed H.R. 2576 (Statements of Administration Policy for both H.R.674 & H.R.2576 are attached).

This means the House has approved with bipartisan support and the Administration’s blessing a measure to repeal the 3% withholding tax mandate with an offset that enjoys bipartisan support and the Administration’s support as well. We have great momentum, but our work is not yet done…

The ball is now squarely in the Senate’s court. In the coming days, we will be in communication with coalition members about how we will move forward to urge the Senate to pass the House approved legislation to repeal the 3% withholding tax.

[Administrator]

President Obama signed into law legislation repealing the 3% withholding tax this morning.

[pls7809]

That's great - now we need to fight off this one...


http://www.latimes.com/news/local/la-me ... 6114.story

Are we going to have to charge taxes now on surveying? Does anyone know if surveying is on this list?