UPDATE - REPEAL OF 3% WITHHOLDING
Posted: Tue Oct 04, 2011 7:34 am
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).
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).