President Obama signed legislation today, November 21, 2011, repealing the 3% government contractor withholding requirement. The withholding requirement was added as part of the Tax Increase Prevention and Reconciliation Act of 2005 and would have mandated that all federal, state and local governments with total annual expenditures of $100 million or more withhold 3% on all government payments for products and services.
The withholding requirement was the subject of immediate criticism from the construction industry upon introduction in 2005. The Associated General Contractors of America and numerous other construction trade associations across the United States worked vigorously to repeal the withholding requirement. The implementation of the withholding requirement had already been delayed twice and was scheduled to go into effect in 2013 until being repealed.
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