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Withholding Relief Coalition Hold Press Conference


The Withholding Relief Coalition held a press conference on Capitol Hill on September 14th to call attention to the issue of a detrimental withholding requirement included in tax cut legislation in 2005.  Appearing at the press conference were Reps. Wally Herger (R-CA), Mick Mulvaney (R-SC), Richard Hanna (R-NY) and Joe Walsh (R-IL) along with several small business owners who would be adversely affected by tax withholding provision.  Speakers at the press conference noted that legislation to repeal the 3% withholding tax, H.R. 674, now has 241 co-sponsors.  That is more than enough to pass the House.  ASCE is an active member of the Withholding Relief Coalition.

The three percent withholding law, which was enacted in Section 511 of the Tax Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222) as Section 3402(t) of the Internal Revenue Code, mandates that federal agencies, states, and certain local governments withhold three percent of nearly all of their contract payments.  Compliance with this law will impose significant, unnecessary financial burdens on both the public and private sectors. 

At the press conference, Rep. Herger noted that “this well-intentioned but misguided attempt to combat tax underpayment by certain government vendors will diminish small business’ cash flow, hurting their ability to create jobs and get the economy back on track. And it will ensnare honest taxpayers in its net – not just business owners, but also doctors, farmers, state and local governments, and colleges and universities.” 

More information about the tax and efforts to repeal it are available on the Coalition website. View a video of the press conference.  

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