On November 21, 2011 President Obama 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 January 1, 2013. The bill is the culmination of a five-year effort by AGC, chapters, members and industry stakeholders to repeal the 2006 provision.
The overwhelming votes in the House and Senate for repeal of 3 percent withholding was the culmination of over 5 years of work by AGC, AGC Chapters, AGC members and our coalition partners. It is important to note that this concerted effort produced a significant bipartisan victory in an era when bipartisanship seldom happens. To read more about the multi-year campaign click here.
The 3 percent withholding tax was signed into law as part of the Tax Increase Prevention Act of 2005 (TIPRA) on May 17, 2006, the same day that Senator Larry Craig (R-ID) introduced the first 3 percent repeal bill in the Senate. The 3 percent withholding provision was snuck into TIPRA without any hearing and this big tax bill was quickly rushed through the House and Senate. Our education efforts began immediately and we slowly gained support for repeal. By the end of 2006 a repeal bill was introduced in the House, HR 6242. In 2009 we were successful in getting the implementation date of the law delayed by a year in the stimulus bill. Finally, in 2011 the bill was singed into law.