ÎÚÑ»´«Ã½

ÎÚÑ»´«Ã½ recently submitted comments to the Internal Revenue Service (IRS) in response to the agency's December 5, 2008 notice of proposed rulemaking to implement 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.  ÎÚÑ»´«Ã½ has strongly opposed this legislation since it was introduced. IRS' proposed rule clarifies that payments for the construction of a building or other public works projects are subject to 3 percent withholding, which could adversely affect a contractor's cash flow.  To view a copy of ÎÚÑ»´«Ã½'s letter, and for additional information on the proposed rule and ÎÚÑ»´«Ã½'s position, please . Congress recently 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.  ÎÚÑ»´«Ã½ has made full repeal of the onerous 3 percent withholding tax a top priority of the 111th Congress and will continue efforts to urge Congress to enact such legislation. On January 7, Representative Kendrick Meek (D-FL) 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.  ÎÚÑ»´«Ã½ is working with a broad coalition of stakeholders to enact the legislation.