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President Makes 3% Withholding Repeal Law

 November 21, 2011

President Obama has signed into law the 3 Percent Withholding Repeal and Job Creation Act. The law permanently repeals the requirement that federal, state, and large local governments begin withholding 3 percent of each payment of $10,000 or more to a contractor after Jan. 1, 2013.  The bill signing is the culmination of a five-year effort by AGC, chapters, members, and industry stakeholders to repeal the 2006 provision.

For more information, contact Karen Lapsevic at 202-547-4733 or lapsevick@agc.org.

 

November 17, 2011

U.S. House Passes 3 Percent Withholding Repeal, Last Legislative Step for Full Repeal

Today, the U.S. House of Representatives passed H.R. 674, a bill to repeal the 3 percent withholding law. The vote passed 422 to 0 and will be sent to the president for his signature. Today’s legislative victory was the culmination of over five years of work by AGC, AGC Chapters, AGC members and coalition partners.

The multiyear campaign produced a significant bipartisan victory in an era when bipartisanship seldom happens. During the repeal campaign, AGC members made a concerted effort to get cosponsors, educate industry partners such as public officials, subcontractors and suppliers and get 3 percent repealed in 2011. AGC members from all regions of the country, all types of construction and all types of occupations within construction firms sent emails, made phone calls and made visits urging members of Congress to support repeal.

AGC would like to thank the tens of thousands of members who heeded the call and helped make today’s victory possible. I would also like to thank the work of our Government Affairs and Public Affairs team in making today’s vote a success. The industry faces many legislative challenges in the coming months and AGC hopes the membership will remain as politically active in the future.

Stephen Sandherr
AGC Chief Executive Officer

For more information contact Jeff Shoaf at (202) 547-3350 or shoafj@agc.org.
 

On Nov. 10, 2011, the U.S. Senate passed H.R. 674, a bill to repeal the 3 percent withholding law. The vote passed 95 to 0. During debate, the Senate voted to amend the bill with provisions to encourage employers to hire unemployed veterans and to require a study of tax compliance by federal contractors.

The bill now goes back to the U.S. House of Representatives – currently in recess until next week – for final passage. The House is expected to approve the Senate-passed bill as currently written, and then it would go to the president for his signature. The president has stated his support for both H.R. 674 and the veteran employment package.

The House first passed H.R. 674 by a vote of 405 to 16 on Oct. 27.

The legislative victory today could not have been possible without the help of the membership. AGC would like to take a minute to thank the thousands of members who took the time to advocate for repeal by either sending letters, attending in-person meetings or calling their legislators to support repeal.

Use the tools at AGC’s Legislative Action Center to send a final letter to your Representative to vote for H.R. 674 as passed by the Senate when it returns from recess next week.

 

FOR IMMEDIATE RELEASE                                                                                    
Thursday, Nov. 10, 2011                                                                                   

SENATE VOTE TO REPEAL 3 PERCENT TAX WITHHOLDING MANDATE A VICTORY FOR CONSTRUCTION FIRMS, WORKERS AND TAXPAYERS

With Construction Firms in No Position to Provide Interest-Free Loans to Federal Government, Repeal of Tax Withholding Measure Will Boost Economy, Top Construction Official Says

The chief executive officer of the Associated General Contractors of America, Stephen E. Sandherr, issued the following statement today in response to the Senate vote (by a margin of 95 to 0 with one Senator voting present) to repeal the 3 percent tax withholding mandate:

“An overwhelming, bipartisan majority of Senators understand that repealing the 3 percent tax withholding mandate is essential to boosting economic growth.  With construction activity down by $400 billion and the industry’s unemployment rate at 13.7 percent, the last thing construction employers need is to be forced into giving interest-free loans to the federal government.   That is why today’s Senate vote comes as welcome news for construction firms, workers and taxpayers alike.  As our members made clear in a recently released survey, many firms will be better able to offer positions to the veterans this legislation also supports without the enormous cost of this measure looming.”

 

October 28

The U.S. Senate is scheduled to vote Monday afternoon on whether to end debate and consider H.R. 674, a House-passed bill to repeal the 3 percent withholding law. Write to your Senator today to urge them to vote for the bill. Unless this law is repealed, starting January 1, 2013, all federal and state contracts for goods and services will be subject to a 3 percent income tax withholding on each and every payment over $10,000 to a contractor.

The requirement also applies to large local governments that make $100 million or more in annual expenditures for goods and services. This mandate will impose compliance costs in excess of tax revenue raised. It will be bad for construction, bad for federal, state and local governments, and it must be repealed now.

On October 27, the House passed H.R. 674, by a vote of 405 to 16. While the Senate vote to end debate on similar legislation failed on October 20, it did gain bipartisan support. However, Senate Majority Leader Harry Reid (D-Nev.) is now considering offering an amendment to H.R. 674 that would continue to apply 3 percent income tax withholding on contractors found to be delinquent in their taxes.

AGC supports full, permanent repeal and is urging the Senate to take up and pass H.R. 674 without amendment or modification. Reid’s plan would still place an administrative burden on federal, state, and local governments and could apply withholding to innocent taxpaying contractors.

If the Senate votes on the House-passed bill as currently written, it would go President Obama – who supports repeal -- for his signature. That is why we are asking you to continue contacting your Senators to urge them to support passage of H.R. 674 without amendment or modification.

If you have already contacted your Senators, please take another minute and forward this message to your employees, suppliers, and colleagues and ask them contact their Senators in support this important piece of legislation.

To date, more than 20,000 AGC members have heeded the calls to action. Member communications and AGC press materials on this critical topic have not gone unnoticed around the Capitol.

For more information, contact Karen Lapsevic at 202-547-4733 or lapsevick@agc.org.


October 27

AGC’s chief executive officer, Stephen E. Sandherr, issued the following statement in response to the House vote on October 27th (by a margin of 405 to 16) to repeal the 3 percent tax withholding measure:

“An overwhelming majority of Representatives understand that the 3 percent tax withholding measure would force construction firms to provide the federal government with interest-free loans at a time when construction activity has declined by $400 billion and unemployment rates stand at over 13 percent.  Such a measure would force contractors to cut staff, purchase less equipment and raise bid levels for publicly funded projects, as a survey the association released last week found.

“Given the fact that a majority of Senators have already voted to repeal the tax measure and the president has said forcing contractors to forgo 3 percent of their earnings will hurt the economy, we expect the Senate to act swiftly to repeal this measure.  And once that happens, we expect the president will quickly sign this desperately-needed legislation into law before the tax withholding mandate significantly damages our economy.”

For more information on how you can get involved, click here.

President Obama has signed into law the 3 Percent Withholding Repeal and Job Creation Act. The law permanently repeals the requirement that federal, state, and large local governments begin withholding 3 percent of each payment of $10,000 or more to a contractor after Jan. 1, 2013. Today’s bill signing is the culmination of a five-year effort by AGC, chapters, members, and industry stakeholders to repeal the 2006 provision.

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