FEDERAL “THREE-PERCENT WITHHOLDING TAX” REPEALED

Thanks in part to the work of a coalition of national local government associations, the so-called three-percent withholding tax has been repealed. 

The federal Tax Increase Prevention and Reconciliation Act of 2005 contained a provision that would have required certain federal agencies and state and local governments (those with total annual expenditures of $100 million or more) to begin withholding three percent of payments to vendors for certain goods and services in 2013.

In November, the House voted 422-0 in favor of the bill repealing the tax. President Obama signed it into law later that month. 


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