Senate votes to repeal 3 percent withholding provision

The U.S. Senate has voted to repeal a federal mandate that would have required federal, state and local governments to withhold 3 percent of certain payments to contractors and other vendors who do business with the government, according to an article and in American City & County’s sister publication, GovPro.com. The House is expected to clear an amended bill in the next week or so, before it is sent to the White House for President Obama’s signature, and the president has indicated his support of the legislation.

The 3 percent withholding provision was incorporated into the 2005 Tax Increase Prevention and Reconciliation Act (Section 511) in an attempt to guarantee that individuals and companies with outstanding tax debts did not receive new federal payments, according to the GovPro.com article. The provision mandated that federal, state and local governments with expenditures of more than $100 million withhold for tax purposes 3 percent of payments for products and services valued at more than $10,000.

Read the entire GovPro.com article.