Hearing Scheduled in House Small Business Committee
The Internal Revenue Service (IRS) issued final rules last week that delay the 3% withholding requirement on government contracts until 2013. Under this arrangement, the withholding and reporting requirements will apply to payments made after December 31, 2012.
Additionally, the House Small Business Committee will hold a hearing on May 26 in order to more thoroughly address the 3% requirement. A repeal bill in the House, H.R. 674, originally introduced by Rep. Wally Herger (R-CA), has also garnered more than 100 cosponsors.
The delay drew cheers from prominent lawmakers, who were encouraged by the IRS' decision, but are still hopeful for a full repeal. "This decision couldn't come at a better time. Small businesses are pinching pennies and cannot afford to receive reduced payments for government contracts," said Sen. Mary Landrieu (D-LA), chair of the Senate Committee on Small Business and Entrepreneurship. "Many small businesses are already suffering, trying to make payroll and expand their businesses, and this rule would close the book on too many small businesses. While the delay is a move in the right direction, I am also committed to working with the Finance Committee to repeal this requirement that harms small businesses."