President Signs Government Contractor Withholding Repeal, Veterans Job Credits


On Monday, President Barack Obama signed into law the Three Percent Withholding Repeal and Job Creation Act (H.R. 674), which Congress sent to him last week.

The act repeals a requirement that 3% of payments be withheld by the federal or state governments or their instrumentalities or subdivisions (including multistate agencies) to any person for services or property. The requirement had not yet gone into effect.

The act also creates returning heroes and wounded warriors work opportunity tax credits for employers who hire military veterans. These credits will be available for eligible individuals who begin work for the employer after November 21, 2011.

The act also amends the definition of modified adjusted gross income under Sec. 36B(d)(2), which determines eligibility for certain health care benefits and insurance coverage provisions under the Patient Protection and Affordable Care Act of 2010, P.L. 111-148. This change is effective November 21, 2011.

Finally, the act allows the IRS to impose a 100% levy against payment due to a vendor of property sold or leased to the federal government if the vendor has an unpaid federal tax liability. Under previous law only vendors of goods or services were subject to the 100% levy. The act also directs the Treasury Department to conduct a study on tax compliance by vendors to the federal government.

The AICPA called on Congress to repeal the withholding provision, in letters sent in February and October, calling it an undue burden for both governments and contractors and unnecessary given existing tools that already monitor contractors’ federal tax compliance.

More from the JofA:

 Find us on Facebook  |   Follow us on Twitter  |   View JofA videos

SPONSORED REPORT

Revenue recognition: A complex effort

Implementing the new standard requires careful judgment. Learn how to make significant accounting judgments and document them and collaborate with peers for consistent application.

TECHNOLOGY Q&A

How to create maps in Excel 2016

Microsoft Excel 2016 has two new mapping capabilities. J. Carlton Collins, CPA, demonstrates how to make masterful 2D and 3D maps in Excel 2016.

QUIZ

News quiz: Taking an economic snapshot and looking to the future

Recent news included IRS actions that affect individuals and partnerships and a possibly influential move by a Big Four accounting firm.Take this short quiz to see how much you know about the news.