Rep. Pompeo Lauds Passage of IRS 3% Tax-Withholding Rule Repeal

Statement

In 2006, Congress enacted a 3% withholding requirement on certain payments made to contractors who were doing business with federal, state and local governments. The move purported to improve tax compliance. In reality, the rule ended up raising the specter of substantial new burdens on cash-strapped employers, impeding cash flows and further hindering needed job creation. Originally intended to take effect on January 1, 2011, the rule's effective date was already delayed until January 1, 2013 over concerns raised by employers and government entities alike. Even President Obama has recently acknowledged the need to address this issue and called for another one-year delay the rule's implementation (until 2014).

Rep. Pompeo released the following statement today upon the bill's passage (405-16):

"The looming possibility of this tax requirement has contributed to rampant uncertainty facing our job-creators at an economically challenging time for America. Much like the onerous 1099 business reporting requirement we repealed earlier this year, the repeal of the 3% withholding tax will help re-instill the confidence our job-creators need to turn around this dismal economy. Removing uncertainty produced by anti-growth regulations like this one is precisely what we need to do to foster job growth for Kansas. Additionally, repealing this 3% withholding requirement will relieve federal, state and local governments of the unfunded administrative compliance burden that this rule will impose. Simply put, this is a commonsense, bipartisan step that Congress has taken today and the President should quickly follow suit," said Pompeo.

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