Senate Repeals Three Percent Withholding Requirement

H.R. 674, which repeals the three percent withholding requirement Congress passed in 2005 as part of the Tax Increase Prevention and Reconciliation Act, was recently passed in the Senate. The three percent withholding requirement requires federal, state and local governments to withhold three percent on payments made to government contractors, as well as certain other payments such as Medicare. This would force CPAs to incur costly reprogramming of their accounting systems. The effective date of the requirement has been delayed until January 1, 2013.
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