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Legislation passed to extend tax breaks and provide relief from the minimum alternative tax will also require government agencies to withhold 3 percent of governments’ payments to contractors, including motor carriers, to help offset the cost of extending existing tax breaks that otherwise will expire. The new withholding will begin January 1, 2011 unless Congress repeals it.
ATA has taken several actions designed to revoke the withholding requirement, including: a) Testifying before the House Small Business Committee; b) supporting a coalition which has garnered 255 cosponsors of H.R. 1023, a House bill that would strike the withholding law; c) Focusing its efforts in the Senate by supporting S.777, the companion bill which has 14 cosponsors; d) Submitting comments to the Department of the Treasury which is promulgating regulations to implement the new tax collection process; and e) Contributed to a DoD study that determined it would cost DoD $17B to collect $10B after the withholding begins.
In its comments to Treasury, (assuming Congress fails to correct the problem) ATA recommended that fuel surcharges and industry funding fees not be subject to the 3 percent withholding.
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