As you are aware, a federal tax provision has been in process to take effect January 1, 2012, requiring governments at all levels to withhold 3 percent of contract payments for goods and services, including construction. The Internal Revenue Service (IRS) issued proposed final regulations May 5 for implementation of the provision that would delay it until January 1, 2013. At this stage of the regulatory process, it is likely that this delay will take place as proposed.
Efforts have been made for repeal of this provision since its passage as part of a large federal tax bill in 2006. While the latest one-year delay would be a positive step in the process, our goal remains full repeal of this burdensome and costly provision. On that front, a House repeal bill (H.R. 674) currently has more than 100 co-sponsors, while two Senate repeal bills (S. 89 and S. 164) have a total of 16 co-sponsors. MITA and our national affiliate, ARTBA, are working with many other groups including the Government Relief Coalition, to repeal this provision.
For any comments or questions, please contact Keith Ledbetter, Director of Legislative Affairs, at the MITA office either by email at keithledbetter@mi-ita.com or call him at (517) 347-8336.
