3% Tax Withholding Update (Only 11 Months Away)
You can review contracts, locate email addresses and learn how to do business with the Air Force by visiting the Air Force Acquisition page.
The NACM-Government Business Group has started a letter-writing campaign to repeal Section 511 of the Tax Increase Prevention and Reconciliation Act (TIPRA, P.L. 109-222).
Section 511 of the Tax Increase Prevention and Reconciliation Act of 2006 (Public Law 109-222) will require, beginning in 2012, to withhold 3% in federal taxes on payments to government contractors for more than $600 in goods and services.
All interested parties need to write to federal Office of Management and Budget director Jacob Lew to ask for his support to fully repeal the act.
January 7, 2009 the House approved full repeal of the 3% withholding in H.R. 275. However, the Senate, in S. 292, would only pass a one-year delay of the 3% withholding provision. With this one-year delay, the provision will go into effect January 1, 2012.
NACM-GBG is a member of the Government Withholding Relief Coalition (GWRC).
Time to Take Action
Contact your representative and senators to make sure your voice is heard. Letâ€™s ensure Congress is aware of how detrimental the 3% withholding tax will be to your business.
IRS Guidance Still Pending
The IRS published proposed rules and regulations for the requirement in the Federal Register in December 2008. However, as of this writing, the IRS has not released finalized rules, regulations or guidance on the withholding requirement.
Click here (http://www.irs.gov/pub/irs-tege/2008_0104_0001_1.pdf) to view the withholding provision in the federal registry.
What is a DoDAAC?
The Department of Defense Activity Address Code (DoDAAC) is a six-digit code that uniquely identifies a unit, activity, or organization that has the authority to requisition and/or receive material. Your contract will state your DODAAC. DoDAACs are also being used to track DoD entities for intra-governmental transactions across the Federal Government.