Repeal 3% Government Contractor Withholding

The U.S. Chamber Supports Legislation to Repeal 3% Government Withholding

The U.S. Chamber is supporting legislation (H.R. 1023) to repeal a 3% federal, state, and local government withholding requirement on all government payments to vendors. The withholding provision, known as Section 511 of the Tax Increase Prevention and Reconciliation Act of 2005, is scheduled to go into effect in 2011.

Section 511 will affect all government contracts, any payment to any person for a service or product provided to a government entity, and any other payments, such as Medicare and grants. The requirement will be administratively burdensome to implement and will impinge on a company's cash flows for day-to-day operations, according to the Chamber.

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