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House Passes Repeal of 3% Withholding on Government Contracts - Emil Estafanous, CPA : Emil Estafanous, CPA

House Passes Repeal of 3% Withholding on Government Contracts

The House of Representatives upheld a check Oct 27 to dissolution a law that commencement in 2013 requires taxation self-denial of 3% of payments to vendors and contractors providing services to federal, state and internal governments and their agencies. The bill, H.R. 674, upheld by a opinion of 405-16 and now goes to a Senate for consideration.

The check would mislay Sec. 3402(t), that Congress enacted as partial of a Tax Increase Prevention and Reconciliation Act of 2005, P.L. 109-222. Sec. 3402(t) requires a self-denial from payments by a sovereign or state governments or their instrumentalities or subdivisions (including multistate agencies) to any chairman for services or property.

As partial of a Government Withholding Relief Coalition, a 100-plus-member bloc of internal governments, industrial and veteran associations, and seductiveness groups, a AICPA has been among advocates for dissolution of a law.

In letters to Congress progressing this year and again this week, Patricia Thompson, chair of a AICPA’s Tax Executive Committee, requested dissolution of a self-denial provision, job it an undue weight for both governments and contractors and nonessential given existent collection that already guard contractors’ sovereign taxation compliance. Thompson conspicuous farmers who accept payments from a U.S. Department of Agriculture and fishermen will be adversely affected, as good as doctors and other medical professionals who accept Medicare payments. Also, even with a extensions of a effective date dictated to concede governments to reprogram their remuneration systems, those governments are still forced to spend singular supports to do so, Thompson wrote.

“Moreover, in a deficiency of repeal, a self-denial law will expected have a conspicuous (but negative) impact on supervision contractors with low distinction margins, potentially melancholy their operations due to a tightening of money flow,” she wrote in her Oct 25, 2011, minute to members of a House of Representatives propelling thoroughfare of H.R. 674.

About Emil Estafanous, CPA
Certified Public Accountant (CPA) Tax Professional committed in representing taxpayers and resolving their tax problems.

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