October 31, 2011
Nation's Building News

The Official Online Newspaper of NAHB

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Politics and Government
House Repeals 3% Withholding Rule by Overwhelming Margin

By an overwhelming 405 to 16 margin, the House last week approved H.R. 674, legislation introduced by Reps. Wally Herger (R-Calif.) and Earl Blumenauer (D-Ore.) that would repeal the 3% withholding rule, which aims to improve tax compliance by requiring the IRS to hold back 3% of certain payments made to contractors doing business with local, state and federal governments.

NAHB supports the repeal because the withholding rule can cause cash flow problems for small firms doing government work and imposes an unnecessary administrative burden on companies that must comply with it.

Prior to the House vote, NAHB sent a letter to lawmakers to express support for H.R. 674.

“As an industry, our small business members are dependent on debt-financing secured through local banks,” the letter said.

“The difficulty of accessing credit has created even greater pressure to manage cash flow. On top of the challenges the construction industry already faces, these new withholding requirements will make it even more difficult for construction firms navigating this tough economic climate.”

White House support for the measure and the strong bipartisan backing it received in the House should boost the bill’s chances for passage in the Senate.

To view the legislation, click here and type the bill number in the box at the upper center of the screen.

For more information, email J.P. Delmore at NAHB, or call him at 800-368-5242 x8412.

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