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Latest News for 3% Withholding Tax

Did you know?

You can read up-to-date information on the 3% Withholding Tax from the IRS at http://www.irs.gov/govt/fslg/article/0,,

The 3% withholding tax now has the Obama administration's support to delay the mandate from its January 1, 2012 start date. This is not the victory NACM-GBG has been working so hard to accomplish, but a delay could give us the time needed to pass two separate Senate bills to repeal the provision. The delay is not for the purposes of seeking repeal; rather, it is in place to give agencies more time to better prepare. The Treasury Department does not have a new implementation date should the current date be postponed, but has said that the time frame will be reasonable.

A new report from the Treasury's inspector general for tax administration stated that more than 11% of all IRS contractors had delinquent federal tax accounts which total $10.6 million. The withholding tax is expected to generate somewhere between $575 million to more than $7 billion annually.

Separately, the Defense Department has reported that they expect implementing the withholding tax will cost the Pentagon more than $17 billion over the first five years. That figure comes from companies no longer doing business with the DoD and the extra cost placed on Defense contracts because of the provision.

Inherently Governmental?

The buzz phrase around the federal government these days is "inherently governmental," but what does that mean? The Federal Acquisition Regulation (FAR) subpart 7.5 defines the term as governmental functions that are not performed by contractors. Standards for inherently governmental were first introduced in 1992, but Congress took issue with the term, recommending in 2009 that the Office of Management and Budget (OMB) more aggressively define the term, which it did the same year. The OMB improved its guidance by defining governmental functions in terms of relative responsibilities of the government and contractors, indicating that the government should not use consultants to administer work of a policy, decision making, or managerial nature.

Now, in an attempt to cut wasteful government spending, the same term is being addressed by the Obama administration, which drafted new guidelines to clearly define it. The guidelines state that tasks directly tied to the public interest must be done by government workers. The tasks include setting agency policy, hiring workers, awarding contracts and other core activities, such as labor inspectors at the Labor Department or airport security screeners at the Department of Homeland Security.

The White House aims to cut $40 billion in high-risk and noncompetitive contracts by the end of fiscal 2011 and hiring more government workers to manage large contracts.

DFAS Columbus Open House

If you have not attended a DFAS Open House, this is a must-do. NACM-GBG worked with DFAS to start this Columbus tradition long ago and it is now one of the best government conferences available to contractors. Not only will you learn the latest DFAS updates, but it's FREE! It is never a bad idea to bring those past-due DFAS payments with you for some one-on-one help.

Event: DFAS Columbus Customer Service Open House
Location: DFAS Columbus; Columbus, Ohio
Dates: 2011 tentatively scheduled: May 25, August 17 and November 16
Cost: Attendance is free. Attendees are responsible for their own travel and accommodation expenses.
Registration: Early registration is encouraged. Send your email request to:
Purpose: To provide private sector contractors/vendors the opportunity to visit the Columbus site and learn about the day-to-day operations and ongoing customer service initiatives.
-DFAS Columbus Customer Support Office
-Contract pay overview
-Vendor pay overview
-MOCAS Data Sharing Initiative (MDSI)
-Wide Area Work Flow (WAWF)
-Central contractor registration (CCR)
-Defense contract management agency (DCMA)
-Other applicable topics

Note: There is a Wide Area Work Flow (WAWF) workshop on the day after the Open House. There is a limit on how many can attend, so you must state on your Open House registration if you plan to attend the WAWF training.

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