Posted on 12/04/2009 7:39:11 AM PST by Night Hides Not
Government contractors are going to receive a nasty surprise on payments received in 13 months: their payments for goods and services provided will be reduced by 3%, thanks to:
IRC SECTION 3402(t), "Required Withholding on Government Payments". That's right, folks. It's not bad enough that vendors have to wait from 30-60 days (or more) to be paid, but their cash flow will be further reduced as the feds want to retain 3% for income taxes. This will simply add more costs and more burdens to businesses throughout the nation.
Basically, any federal, state, or local government agency or entity that makes annual payments of more than $100 million will be subject to this new law. IOW, they're assuming more of the tax collecting role for the federal government, and another unfunded mandate.
Unless I am wrong, there has been no discussion of this, and the public comment period ended last March.
Thank you RINOs, thank you Dubya! ARRRGGGGHHHH!!!
This entire government has gone rogue and criminal.
If there is to be a third party, may I suggest that it be called the "Rogue Party".
The financial rape of the middle class continues........
H.R.275
Title: To repeal the imposition of 3 percent withholding on certain payments made to vendors by government entities.
Latest Major Action: 1/7/2009 Referred to House committee.
Status: Referred to the House Committee on Ways and Means.
Latest Major Action: 1/21/2009 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.
grab your history books now and start studying-up on Andrew Jackson, because that is what is going to be required
Link does not exist.
My prediction? It will languish in committee, and be repealed before the mid-term elections (after the word really gets out), thus ending the "year-long" contract at the six month mark, or less.
You've helped me with my decision. I've been offered a two year contract at another employer, albeit at less money (i.e. bird in the hand). I'll still do the interview, but I'm going to ask them what they know about the prospects for repeal.
http://www.irs.gov/taxpros/article/0,,id=214456,00.html
My apologies.
Hope this helps/is what you're looking for.
I guess I can understand that a company would need to hire IT folks to make this change in their internal AR/AP system.
I would assume SAP, Oracle, etc., would do this automatically for their private and gov’t customers.
The biggest issue that I see is for a government entity (i.e. local, city, state and fed) to change their payment system to withhold the additional 3%?
The other big issue would be subcontractors? There appears to be disagreement if this applies to subs and the conflict with the prompt payment act?
Not sure but will look into. Thanks for the post.
Subs are exempt from withholding.
From the accounting end, it's going to be a major pain, as the regs call for a two-year lookback period to determine which payments the agency will need to withhold.
BTW, that two-year contract (from a different employer) is looking really good at this point. Not that I don't like a challenge, but these new regs are just other obstacles for companies to navigate.
Well, at least we know inflation will be from 4-5% the instant this goes into effect.
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