AGC Seeks Support on Capitol Hill for Three Percent Withholding Law

AGC is working with coalition partners to ask members of Congress to co-sponsor legislation that would permanently repeal the 3 percent withholding law enacted in 2006.  Effective January 1, 2012, federal, state and local governments with annual expenditures of $100 million or more are required to withhold 3 percent from payments for goods and services, including payments made under government contracts with construction companies. The law was intended to reduce the so-called "tax gap" and tax evasion. AGC has strongly opposed this legislation since it was introduced. In February, Congress enacted a one-year delay in the effective date of the law (i.e., from 2011 to 2012) as part of H.R. 1, the American Recovery and Reinvestment Act. On January 7, Representative Kendrick Meek (D-Fla.) introduced H.R. 275, a bill to repeal the 3 percent withholding law. On January 21, Senator Arlen Specter (R-Pa.) introduced a Senate version, S. 292. AGC has made enactment of this legislation a top priority and encourages members to contact their Representative and Senators using AGC’s Legislative Action Center.