The withholding requirement is supposed to go into effect in 2013. Lawmakers approved it in a 2005 tax bill, as a credit against vendors’ income tax. But industry groups and members of Congress say the provision would stifle job creation.
“The law, basically, requires businesses providing products and services to the government to float the federal government a loan for the year,” said Olga Grkavac, executive vice president for TechAmerica public sector in a statement. “This law also creates significant strains on government resources because of the cost of implementation and would force businesses to use precious resources to comply with unnecessary and burdensome requirements.”
“Repealing the 3 percent withholding rule is a major step toward reducing uncertainty for businesses and allowing job creators to hire,” said Rep. Dave Camp (R-Mich.), chairman of the Ways and Means Committee.