NSPE Working for You: Withholding Tax Repeal

The House last night passed the Senate-amended version ofH.R. 674by a vote of 422 to 0, ending a protracted battle to repeal an onerous tax-withholding mandate that would place significant financial and administrative burdens on engineering firms that contract with the government. The bill now heads to the president's desk, where he is expected to sign it into law. (Note: H.R. 674 was later signed into law by President Obama on 11/21/11.)

H.R. 674 would repeal Section 511 of the Tax Increase Prevention and Reconciliation Act of 2005 (PL 109-222), which requires federal, state, and certain local governments to withhold as tax 3% of all payments made to government contractors. The withholding mandate was intended to prevent tax cheating by government contractors but would have punished honest, tax-paying citizens as well as those delinquent in their taxes. If not repealed, the mandate would have taken effect on January 1, 2013.

The requirement would have been especially hard on engineering firms, whose profit margin on government contracts is often less than 3%. Firms would eventually have been able to recoup their expenses, but not until the end of the tax year, causing cash flow problems and costing professional engineers the vital funds they need to conduct business.

Since the tax law’s passage in 2006, NSPE has been working with theGovernment Withholding Relief Coalitionand the U.S. Chamber of Commerce to repeal the withholding mandate. The GWRC and NSPE sent five letters to Congress over the month alone urging H.R. 674’s passage. NSPE also sent aletterto House Ways and Means Committee Chairman Dave Camp (R-MI-4) in support of the repeal.

In addition to NSPE’s advocacy of H.R. 674, NSPE members responded to an NSPELegislative Action Centeralert asking them to contact their senators in support of the bill. Your grassroots efforts helped build a critical mass of opinion that ensured the bill passed the Senate, ultimately enabling its success.

NSPE is grateful to Reps. Wally Herger (R-CA-2) and Earl Blumenauer (D-OR-3) and Sens. Scott Brown (R-MA) and David Vitter (R-LA) for spearheading the legislative effort; Chairman Dave Camp (R-MI-4) and Ranking Member Sander Levin (D-MI-12) for their leadership in the Ways and Means Committee; Speaker John Boehner (R-OH-8), Leader Eric Cantor (R-VA-7), and Whip Kevin McCarthy (R-CA-22) for putting the withholding repeal on the House’s agenda; and Leader Mitch McConnell (R-KY) for advocating repeal in the Senate.

This legislative victory demonstrates that together, professional engineers can make a difference.

Published November 17, 2011 by NSPE

Filed under: advocacy, legislation,

The views expressed here are those of the author and do not necessarily represent the views of and should not be attributable to the National Society of Professional Engineers.

Comments

Esteem people of congress:

I am very concerned about this withholding tax because it is my understanding that the economy recesion is not going ever to recover by applying new laws oftax withholding to the middle-class or better known the professional-class.

I propose to take serious IRS actions against the minority elite group of wealthy-class with is about only 1% of total population in this country.  Laws are set, approved, and enforced to the whole citizens in fair and competitive balance not by killing the rest of population in favor and mercy of the already few rich people.

I invite each of you to think about it deeply as well as to estimulate and give proper incentive to the companies, business, and investors that deserve it only and move toward bringing a balance between what is really true full-time permanent employment versus minimum or none turnovers at all, which turns into a dead weight to the existing economy cycle while extending the economy recesion.  It is now time that the whole business world starts to feel empathy with their surroundings, environment, workforce, and sustainable energy sources for the future generations.  We have the technology to solve and bring this balance BUT you political guys in the congress, are you ready and willing to pass on what is right, fair, and competitive for everyone in this planet.

Hopefully, this message can touch the heart of many congressmen who are willing to give more on behalf of the non-wealthy population.

Remember, working together means winning together.

Very Truly yours,

Luis Santiago, PE, PMP

USA citizen and professional

Thursday, November 17, 2011 6:12 PM by LUIS SANTIAGO

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