Repeal 3% Withholding on Government Contracts

In 2012 a new law will require federal, state, and local governments to withhold 3% from all payments for goods and services as a guard against possible business tax evasion. The Associated General Contractors created a legislative-response website that, in two steps, identifies your congressional representatives and allows you to send a letter to them encouraging them to vote for House and Senate bills that would repeal the witholding law.

The law:

  • Requires withholding of 3% on all government payments for products and services made by the federal, state, and local governments with total expenditures of $100 million or more
  • 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 (e.g. Medicare, certain grants)

The AGC message in the response (which you can easily modify on the internet form):

  • Most construction contracts average about 3% profit
  • Government will over-withhold by 200-300%
  • Tightened cash flow will restrict bonding capacity and ability to pay for labor and suppliers
  • The law places an undue burden on pass-through entities and joint ventures

Take action:

Ask your Representative to co-sponsor H.R. 674 and your Senators to co-sponsor S. 89 or S. 164.

(More at AGC.org . . . )

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