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House Panel Approves Repeal of Contractor Withholding Tax

Photo: Peter Baxter

The House Ways and Means Committee approved legislation Thursday by voice vote to repeal a requirement that the Internal Revenue Service withhold 3 percent of all government contracts.

Currently, when a company is awarded a $1 billion contract, the government withholds $30 million until the company files its next tax return.

“Repealing the 3 percent withholding rule is a major step toward reducing uncertainty for businesses and allowing job creators to hire,” Committee Chairman Dave Camp said in a statement.

Bloomberg reports the bill has 263 co-sponsors in the House.

The committee also voted 23-12 to toughen eligibility requirements regarding Medicaid and insurance subsidies.

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