NACM Applauds House for Repealing 3% Withholding Tax

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Hopes Senate will quickly follow suit upon their return

Columbia, Maryland: October 31, 2011-The National Association of Credit Management (NACM) applauded the House of Representatives last week, after their approval of H.R. 674, a bill that would finally repeal the 3% withholding tax.

In a bipartisan landslide, the House voted 405-16 in favor of repeal. NACM hopes that the Senate quickly follows suit when they return from recess today.

"The House's repeal of the 3% withholding requirement is a step in the right direction for America's trade creditors and small businesses," said NACM President Robin Schauseil, CAE. "The Senate should recognize the dangers that the 3% tax poses to the nation's continuing economic recovery, and pass a full repeal as quickly as possible."

"While NACM fully supports efforts to curb tax fraud and impropriety among government contractors, the 3% tax would punish all contractors, the majority of which are, in fact, tax compliant," said Schauseil. "Even though the withholding requirement is designed to apply to payments from government entities to general or first-tier contractors, it would have a domino effect on payments from these contractors to their subcontractors and suppliers."

Additionally, Schauseil noted that many contractors on government projects operate on profit margins that are thinner than 3%, meaning that if the withholding tax goes into effect, they'll be faced with the choice of working for free and cutting costs to stay in business, or raising prices and ultimately increasing the cost to the taxpayer.

"Cash flow is a company's lifeblood. The 3% tax would have a severely negative, and in some cases catastrophic effect on a company's ability to pay its obligations as they come due," she added. "NACM hopes the Senate recognizes the importance of this repeal, and congratulates the House for already doing so and overwhelmingly approving H.R. 674."

For more information on NACM's effort to repeal the burdensome 3% withholding tax, visit the association's advocacy page (


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