House Repeals Withholding Tax

Thursday, October 27, 2011

The House passed H.R. 674 by a vote of 405 to 16. The measure would repeal a requirement set forth in the Tax Increase Prevention and Reconciliation Act of 2005 (PL 109-222) that federal, state, and local governments withhold 3% of all payments to engineering firms and other vendors as tax. If the requirement is not repealed, the tax will take effect on January 1, 2013. Earlier this week, NSPE signed on to a Government Withholding Relief Coalition letter to the House of Representatives in support of H.R. 674. NSPE is a member of the Government Withholding Relief Coalition, a group of more than 140 organizations that share the goal of repealing the 3% withholding law. The Obama Administration also issued a Statement of Administrative Policy in support of the bill, citing the need to reduce the burden on government vendors, especially small businesses. The Senate now must act on the House-approved legislation.