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News & Press: Arizona Business News Updates

Senate Votes to Repeal Three Percent Withholding

Wednesday, November 16, 2011   (0 Comments)
Posted by: Rhette Baughman
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On Nov. 10, the Senate passed by a vote of 95 to 0, H.R. 674, bipartisan legislation to fully repeal the burdensome three percent withholding tax mandate enacted in Sec. 511 of the Tax Increase Prevention and Reconciliation Act of 2005.

Before final passage, an amendment to H.R. 674 was approved to include tax credits for veterans hiring, a Treasury study of tax delinquency among federal contractors, and a technical clarification about the application of the existing federal levy program to reflect congressional intent that payments for property can be levied along with payments for goods and services.

That amendment was previously offered as a stand-alone bill, the Vow to Hire Heroes Act, which then was offered as an amendment to H.R. 674 and passed 94 to 1. This amendment is the first of three pieces of Obama’s jobs package to garner bipartisan support by the Senate. Under the measure, companies that hire veterans who have been out of work for more than 4 weeks but less than 6 months would be eligible for a $2,400 tax credit. A tax credit of $5,600 would be allocated to companies who hire veterans who have been looking for work for more than 6 months and would double if the potential employee suffers from service-related disabilities.

Now the House must reconsider the Senate version that includes these tax incentives for businesses who hire unemployed veterans. The bill originally passed in the House by a vote of 405 to 16 and was supported by the administration. The House is expected to clear the bill as amended by the Senate later this week, and then it will be sent to the White House for President Obama's signature, who already has indicated his support of the legislation.

The three percent withholding law mandates that federal, state and local governments with expenditures of more than $100 million withhold three percent of payments for products and services. The requirement was scheduled to take effect on Jan. 1, 2011, but was delayed a year in the 2009 American Recovery and Reinvestment Act. On May 5, 2011, the Internal Revenue Service issued regulations that further delayed the implementation of the withholding provision until Jan. 1, 2013. On Sept. 12, 2011, President Obama proposed the American Jobs Act of 2011, which included a section that would delay implementation of the withholding provision until after December 31, 2013.

NSBA has spent countless hours working to repeal this onerous mandate and thanks all small-business owners who contacted their lawmakers on the issue.


Source: http://www.nsba.biz/content/4315.shtml.



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