The 3 percent withholding provision for contractors, which was scheduled to take effect on January 1, 2013, cleared its first hurdle for permanent elimination. On October 13, 2011, The House Ways and Means Committee overwhelmingly supported the repeal of the withholding provision and passed the measure. Leaders from the House of Representatives have said the repeal of the bill will get a floor vote by the end of October. Repealing the measure has been widely supported by contractors and industry groups, including the American Institute of Certified Public Accountants (AICPA). Moreover, the repeal of the bill is supported by Republicans and Democrats alike, who believe the provision would place burdensome regulation on small business as well as negatively affecting cash flows.
For more background on the 3 percent withholding provision and its impact on contractors, see our earlier blog on this topic. Have questions about this provision? Post a comment below or contact our Real Estate and Construction Group at 440-449-6800.