President Barack Obama signed H.R.674 into law this morning, finally repealing the 3% withholding tax that was set to go into effect on most local, state and federal contracts starting in 2013.
The bill also enacted provisions that provide tax breaks to companies that hire recently discharged servicemen and women.
NACM has opposed the 3% withholding tax since it was passed in Section 511 of the Tax Increase Prevention and Reconciliation Act in 2006. Although the withholding requirement was included in the bill to ensure tax compliance for government contractors, the devastating effects that it would’ve had on contractor cash flow would’ve negated any potential gains from the provision.
NACM applauds Congress and the Administration for siding with the nation’s job creators, for respecting the vital importance of cash flow and for finally repealing this harmful withholding requirement. For more information on NACM’s five-year fight to repeal the 3% tax, click here.
Jacob Barron, CICP, NACM staff writer