Obama signs withholding tax repeal

President Barack Obama on Nov. 21 signed legislation that repealed a tax to withhold a percentage of a payment to a contractor.

The 3% Withholding Repeal and Job Creation Act (H.R. 674) amends the tax law to cancel the withholding requirement on payments due to vendors providing goods and services to federal, state, and local government agencies.

The bill also requires the Treasury Department and the Office of Management and Budget to study ways to reduce the amount of federal taxes owed but not paid by contractors. For the study, officials must figure an estimated amount of delinquent taxes and whether having companies certify in bid proposals that their taxes are up to date has helped in compliance. Officials also will have to delve into various aspects of contracts awarded to tax-delinquent companies. The study is due in one year.

Industry groups were pleased with the president’s signature.

“We have been working towards today for five years and couldn’t be more thrilled with the repeal of this nonsensical law,” Olga Grkavac, executive vice president for the public sector at TechAmerica, said in a statement Nov. 21.

“This is a huge weight off the back of businesses,” she added.

The bill passed through Congress Nov. 16 with wide support from Democrats and Republicans. On the final votes on the bill, no members of the House or Senate voted against it.

“We are pleased to see both parties work together to finally prevent the imposition of the burdensome withholding requirement,” said Stan Soloway, president and CEO of the Professional Services Council.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

FCW in Print

In the latest issue: Looking back on three decades of big stories in federal IT.


  • Anne Rung -- Commerce Department Photo

    Exit interview with Anne Rung

    The government's departing top acquisition official said she leaves behind a solid foundation on which to build more effective and efficient federal IT.

  • Charles Phalen

    Administration appoints first head of NBIB

    The National Background Investigations Bureau announced the appointment of its first director as the agency prepares to take over processing government background checks.

  • Sen. James Lankford (R-Okla.)

    Senator: Rigid hiring process pushes millennials from federal work

    Sen. James Lankford (R-Okla.) said agencies are missing out on younger workers because of the government's rigidity, particularly its protracted hiring process.

  • FCW @ 30 GPS

    FCW @ 30

    Since 1987, FCW has covered it all -- the major contracts, the disruptive technologies, the picayune scandals and the many, many people who make federal IT function. Here's a look back at six of the most significant stories.

  • Shutterstock image.

    A 'minibus' appropriations package could be in the cards

    A short-term funding bill is expected by Sept. 30 to keep the federal government operating through early December, but after that the options get more complicated.

  • Defense Secretary Ash Carter speaks at the TechCrunch Disrupt conference in San Francisco

    DOD launches new tech hub in Austin

    The DOD is opening a new Defense Innovation Unit Experimental office in Austin, Texas, while Congress debates legislation that could defund DIUx.

Reader comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

More from 1105 Public Sector Media Group