Hultgren Statement on the Repeal of Onerous Withholding Tax
Washington, D.C. – U.S. Rep. Randy Hultgren (IL-14) today released the following statement after the bipartisan vote to protect American job creators from a 3 percent withholding tax.
"Today, the House came together in a strong, bipartisan manner and repealed yet another job-crushing burden aimed at our business community," said Hultgren, an original co-sponsor of the bill. "Much like the costly '1099 requirement' that we repealed earlier this year, the 3 percent withholding rule would have imposed substantial new burdens on already cash-strapped employers, hindering cash flows, and further obstructing job creation.
"Our vote today to repeal this requirement also relieves the federal, state, and local governments of the need to comply with significant, unfunded administrative mandates. I urge the Senate to act quickly to send this bill to the President's desk and remove the threat of another tax increase on American businesses."
Background: In 2006, Congress enacted a 3 percent withholding requirement on certain payments made to contractors doing business with federal, state, and local governments. This provision - which was originally enacted as part of a larger package featuring numerous other significant tax changes - was purportedly intended to improve tax compliance.
The 3 percent withholding rule was originally scheduled to take effect on January 1, 2011, but because of strong concerns raised by employers and government entities alike about the potentially significant burdens it could create, the rule's effective date had subsequently been delayed until January 1, 2013.