Associated General Contractors Issue Alert: THREE_PERCENT

Repeal Excessive 3% Withholding on Government Contracts

Background:

In 2012 a new law will require federal, state, and local governments to withhold 3 percent from all payments for goods and services as a guard against possible business tax evasion.
Withholding applies to the total contract, not to the net revenue generated from a project.
Most construction contracts average less than 3 percent profit.
Tightened cash flow will restrict bonding capacity.
Enforcement of current laws would ensure tax obligations are met.
The law places an undue burden on S Corps and joint ventures.
The economic stimulus bill, H.R.1, the American Recovery and Reinvestment Act, delayed the effective date of the 3 percent withholding tax by one year (i.e., 2011 to 2012).
Click here for additional information.

Take Action:

Send the letter below to your Representative and Senators, to make sure your voice is heard and urge them to pass a full permanent repeal of the 3 percent withholding tax.

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