After five years of opposition, the National Association of Credit Management (NACM) today welcomed President Barack Obama's signature of H.R. 674, a bill that finally repeals the 3% withholding tax on local, state and federal government contracts.
Had the bill not been signed into law, contractors would've been forced to sacrifice 3% of their profit from government projects in order for the Internal Revenue Service (IRS) to ensure these companies' compliance with tax obligations. While NACM believes that all businesses should pay what they owe in taxes, the devastating effects that the 3% withholding requirement would've had on contractor cash flow would've negated any positive developments in tax compliance. Luckily, Congress and the Administration have finally recognized this, and summoned the political will to repeal this harmful tax.
"NACM's membership of trade creditors and government contractors has waited for five years for this day, and we're glad to see that it's finally arrived," said NACM President Robin Schauseil, CAE. "Cash flow is a company's lifeblood. Small businesses especially depend on a steady level of liquidity simply to make payroll, let alone to develop and grow their business, and simultaneously create jobs."
"The 3% withholding tax would've harmed cash flow, and thereby harmed these businesses when our country needs them the most," she added. "NACM applauds all members of Congress and the President for respecting the importance of cash flow, for siding with the nation's job creators and for repealing this withholding requirement once and for all."
"Since 2006, NACM has fought for the repeal of this 3% tax. Our members have written letters, made phone calls and taken personal trips to their representatives on Capitol Hill in order to impress upon them the seriousness of this issue," said NACM Chairman Kathy Tomlin, CCE. "It may have taken five years, but it's great to see their efforts pay off with the passage of H.R. 674. The overwhelmingly bipartisan support of this bill shows that, when it wants to, Congress can come together to pass a win-win piece of legislation that benefits every American taxpayer."
"On behalf of the thousands of businesses that would've been negatively affected by this tax, I'd like to thank all of Congress and the Administration for striking a blow for small businesses and eliminating this 3% withholding requirement," she added.
NACM congratulates Congress and the President for enacting this important piece of legislation, and hopes that both parties can find more areas of common ground to get America's economy growing again.
For more information on NACM's fight to repeal the 3% withholding tax, visit the association's advocacy page.