Thursday, May 12, 2011
Government Contractor Withholding Delayed to 2013
The Internal Revenue Service (IRS) announced that it is delaying the implementation of mandatory 3 percent withholding on payments from government entities to contractors. The law was scheduled to go into effect Jan. 2, 2012, but now will be delayed until Jan. 1, 2013.
The business community welcomed the deferral, but continues to work to repeal the requirement. The funds that would be withheld could impact a contractor’s ability to meet operating expenses to pay for subcontractors, materials and suppliers. There are three bills pending in Congress that would repeal the requirement: H.R. 674 (which has more than 100 co-sponsors), S. 89 and S. 164.
