You can take action NOW to repeal 3% withholding law!
In a little more than a year from now, government agencies will be required to increase the amount of money they withhold from companies that perform public work. Congress is debating a bill to stop the withholding, but they need to hear from you to make sure it passes.
The withholding law, which was enacted without any debate or discussion in 2005, mandates that federal agencies, states, and certain local governments withhold three percent of nearly all of their contract payments, starting in 2013. Compliance with this law will impose significant, unnecessary financial burdens on architecture firms that do business with any government agency, including many school districts, and will essentially give government an interest-free loan on the backs of small businesses.
This withholding will be a flat percentage of revenues from government payments, that bears no relationship to companies’ taxable incomes, and will restrict the cash flow that firms need for day-to-day operations and investments. In addition, it will impose substantial administrative and capital investment costs on businesses and governments struggling to comply - hitting small firms the hardest. Ironically, the provision will cost more to implement than it is estimated to raise in new revenue, which completely defeats its intended purpose.
The House will soon take up H.R. 674, authored by Congressmen Wally Herger (D-CA) and Earl Blumenauer (D-OR), which would repeal this provision that is scheduled to take effect on January 1, 2013. Now is the time to tell Congress to repeal this law. Please take just a moment to send your members of Congress a message through the AIA’s advocacy center. Click here to send your message.
Vice President AIA Government & Community Relations,
The American Institute of Architects