Georgia Tech Procurement Assistance Center

  • Home
  • About Us
  • Training
    • Class Registration
    • On-demand Training
    • GTPAC COVID-19 Resource Page
    • Cybersecurity
    • Veterans Verification Video
    • GTPAC Community
    • Other Training Audio & Video
  • Useful Links
  • Team Directory
    • Albany Counselor
    • Atlanta Counselors
    • Augusta Counselor
    • Carrollton Counselor
    • Columbus Counselor
    • Gainesville Counselor
    • Savannah Counselor
    • Warner Robins Counselor
  • Directions
    • Atlanta – Training Facility
    • Atlanta – Office
    • Albany
    • Augusta
    • Carrollton
    • Columbus
    • Gainesville
    • Savannah
    • Warner Robins
  • COVID-19
  • New Client Application
  • Contact Us

IRS delays contractor tax withholding

May 12, 2011 By ei2admin

The Internal Revenue Service is pushing off an unpopular requirement that the government withhold a percentage of its payments to most contractors for tax purposes.

The final rule, published in Monday’s (5/9/2011)  Federal Register, delays a mandate that federal, state and local governments with expenditures of more than $100 million withhold 3 percent of payments for products and services worth more than $10,000, including nonconfidential or classified contracts, grants to for-profit companies, and farm and Medicare payments. The requirement, scheduled to take effect on Jan. 1, 2012, now will be delayed to apply to payments on new contracts made after Dec. 31, 2012. The rule will affect all contracts starting Dec. 31, 2013.

The requirement, included in the 2005 Tax Increase Prevention and Reconciliation Act to ensure that individuals and companies with outstanding tax debts do not receive new payments from the federal government, would closely mirror the withholding system on individual salaries and wages. The government would set aside 3 percent of the gross payments and the information and funds would then be transmitted to the IRS. At the end of the year, the amount withheld would be credited toward taxes owed.

Lawmakers earlier this year proposed repealing the controversial provision, and Obama administration officials in March expressed support for delaying the requirement while agencies prepare to implement the change.

Critics have suggested that the provision is unnecessarily burdensome during an economic downturn, noting that other measures exist to ensure contractor tax compliance.

“This is an 11th-hour quasi-reprieve from a temporary tax increase that would have eliminated jobs and helped only the IRS,” said Phil Bond, president and chief executive officer of TechAmerica, a technology-based trade association. “It is a scheme to force companies to pay taxes in advance and then wait for the IRS to send them a refund a year later. A one-year extension of the withholding and reporting requirements is a significant, positive development but far from a solution.”

Roger Jordan, vice president of government relations at the Professional Services Council, a contractor trade group, on Monday also applauded the delay but called the requirement itself “bad policy.”

“The withholding requirement would significantly reduce companies’ cash flow at a time when the current economic environment is already squeezing their ability to meet operating expenses,” he said. “While it’s appropriate to focus on how to ensure that any tax liabilities government contractors and other organizations owe are properly collected, other regulations have been implemented in recent years that effectively ensure contractors are meeting their tax obligations.”

— by Emily Long – GovExec.com – May 9, 2011 – at http://www.govexec.com/story_page_pf.cfm?articleid=47769&printerfriendlyvers=1

Filed Under: Contracting News Tagged With: government contracting, IRS, tax liabilities, tax withholdings

Recent Posts

  • DLA hosting event March 10th with special emphasis on Women-Owned Small Businesses
  • Navy Office of Small Business Programs holding three events in March
  • SBA hosting conversations with contracting officers forum Feb. 25th
  • Final rule, formal training on CMMC could hit this summer
  • Non-compete clauses in government contracting: a case study in enforceability

Popular Topics

8(a) abuse Army bid protest budget budget cuts certification construction contract awards contracting opportunities cybersecurity DoD DOJ False Claims Act FAR federal contracting federal contracts fraud GAO Georgia Tech government contracting government contract training government trends GSA GSA Schedule GTPAC HUBZone innovation IT Justice Dept. marketing NDAA OMB SBA SDVOSB set-aside small business small business goals spending subcontracting technology VA veteran owned business VOSB wosb

Contracting News

Final rule, formal training on CMMC could hit this summer

COFC: “Rule of two” must be analyzed before “any” acquisition

DOD’s cybersecurity certification requirements to appear in DHS contracts

Congressional Research Service publishes updated report on SBA’s 8(a) program

Congressional Research Service publishes new report on SBA’s HUBZone program

Read More

Contracting Tips

Non-compete clauses in government contracting: a case study in enforceability

NDAA for fiscal year 2021 includes numerous provisions impacting government contractors

Beware of the automated email response

Complying with the government’s restrictions on foreign telecommunications equipment

Construction claims in the COVID era: lessons learned and best practices

Read More

GTPAC News

DLA hosting event March 10th with special emphasis on Women-Owned Small Businesses

Navy Office of Small Business Programs holding three events in March

SBA hosting conversations with contracting officers forum Feb. 25th

USACE seeks vaccination center construction support

GTPAC updates cybersecurity resource page to include CMMC guidance

Read More

Georgia Tech News

Collective worm and robot “blobs” protect individuals, swarm together

The Partnership for Inclusive Innovation is now accepting applications for pilot programs

Georgia Tech will help manage DOE’s Savannah River National Laboratory

Dr. Abdallah testifies on U.S. competitiveness, research, STEM pipeline at Congressional hearing

Georgia Tech’s Technology Square Phase III to include George Tower

Read More

  • SAM.gov registration is free, and help with SAM is free, too
APTAC RSS Twitter GTPAC - 30th Year of Service

Copyright © 2021 · Georgia Tech - Enterprise Innovation Institute