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3% Withholding Tax - REPEALED!

Section 511 of the Tax Increase Prevention and Reconciliation Act of 2005 was a sweeping requirement that mandated federal, state, and local governments withhold 3% from payments to businesses for goods and services provided. The law was scheduled to take effect in January 2013. Although the provision was aimed at deterring tax evasion, the 3% Withholding Tax primarily would have penalized businesses and honest taxpayers. Consequently, the mandate would have caused significant cash flow problems, and/or prompt companies looking to offset the cost of the 3% Withholding Tax to either increase the price of goods and services, or more likely pass on the cost to their service and material suppliers, such as ready mixed concrete producers.

The response to this onerous law was H.R. 674. Thankfully Congress and the White House were able to agree that the 3% Withholding Tax would have been harmful. On November 21, 2011 President Obama signed H.R. 674 into law, officially repealing its scheduled enactment. 

3% Withholding Tax Factsheet

Government Withholding Relief Coaliation

US Chamber: Repeal Withholding Now