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House OKs Contractor Withhold Repeal, Now to White House

Photo: Paul Paladin

The much-maligned contractor withholding tax that never was, thanks to multiple delays, is set to be no more.

The House voted 422-0 Wednesday to repeal a requirement that the federal government, plus state and local governments withhold 3 percent of all government contracts. This unanimous approval comes six days after the Senate approved the repeal by a 95-0 vote.

The Senate amended the legislation to include additional tax credits for businesses (see our story on veteran tax credits here) that hire unemployed veterans before approving the measure, and in its vote the House approved both the repeal and the amendments.

President Obama is expected to sign the legislation once it reaches the Oval Office. A previous White House statement of administration policy strongly supported the repeal and the amendment, saying the effect “would be avoid a decrease in cash flow to these contractors, which would allow them to retain these funds and use them to create jobs and pay suppliers.”

The withhold requirement, originally implemented in 2006, was set to take effect in 2013 after being delayed numerous times. The stimulus law passed in 2009 delayed the start date to 2011, then the Internal Revenue Service ordered another delay in May, according to Bloomberg.

Previous withhold repeal coverage:

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