Reid Seeks to Add Penalties to Contractor Withholding Repeal

November 9, 2011

Bloomberg News

By Richard Rubin

U.S. Senate Majority Leader Harry Reid said he wants to add penalties for tax-cheating contractors to a bill that would repeal a withholding requirement on contractors.

He said he won’t change a provision that would affect eligibility for Medicaid and other federal health-care programs. That provision offsets the cost of the $11 billion in forgone revenue to the Treasury from repealing the withholding provision.

“We’ll have a provision in there that will still go after the cheaters,” said Reid, a Nevada Democrat who spoke in Washington today.

The Senate is expected to consider Reid’s proposed amendment this week, along with an amendment that would provide tax credits to businesses for hiring unemployed or recent veterans. No vote on the bill or the amendment has been scheduled, and Reid hasn’t released details of his proposal.

Business groups have been lobbying Congress and urging the repeal of the contractor withholding provision, which was enacted in 2006. Under the law, scheduled to take effect in 2013, the federal government, state governments and many local governments would be required to withhold 3 percent from contracts to cover tax obligations.

Read More: http://www.bloomberg.com/news/2011-11-08/reid-seeks-to-add-penalties-to-contractor-withholding-repeal.html

<- Go Back