ARSA scored another legislative victory as a bill (H.R. 674) to repeal the three percent government contractor withholding tax was signed into law by President Obama on Nov. 21.

Repealing the three percent withholding law has long been an ARSA legislative goal. Created by Sec. 511 of the 2006 Tax Increase Prevention Reconciliation Act, this onerous tax required government entities whose annual expenditures exceed $100 million to withhold three percent of all payments made to any individual or company that provides goods or services to the government. The law effectively forced contractors to make interest-free loans to the federal government. In some cases, the amount will exceed a business’ profit margin. The tax was set to go into effect at the end of 2013.

As an active member of the Government Withholding Relief Coalition, ARSA has been working with more than 100 other organizations to encourage the law’s repeal. A massive grassroots push over the summer built tremendous support for repeal in both chambers, with more than half of the House and a third of the Senate co-sponsoring repeal legislation.

Thanks to all ARSA members who helped show lawmakers the folly of this ill-conceived law using ARSAAction.org.

~~~ published 11/21/11 ~~~

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