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On February 9, 2009, FEI’s Committee on Government Business (CGB) and Committee on Taxation (COT) joined more than 75 organizations – representing thousands of business, educational, and labor organizations – in a letter to both House and Senate leadership urging them to support full repeal of the 3% withholding provision as part of H.R. 1, the “American Recovery and Reinvestment Act of 2009.” Similar letters were sent to leadership at both the Senate Finance Committee and the House Ways and Means Committee.
The 3% withholding provision requires that federal, state, and certain local governments withhold 3% from contracts and other payments, such as Medicare payments, grants, and farm payments. This unprecedented withholding mandate was enacted in Section 511 of the “Tax Increase Prevention and Reconciliation Act of 2005” (P.L. 109-222) and was scheduled to start January 1, 2011.
Update:
On February 17, 2009, President Obama signed the $787 billion stimulus bill – H.R. 1, American Recovery and Reinvestment Act of 2009 – into law. The final bill delays by one year (to 2012) the requirement for three-percent withholding on government contracts. This provision is estimated to cost $291 million over 10 years.
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