WASHINGTON – U.S. Senator Mary L. Landrieu, D-La., Chair of the Senate Committee on Small Business and Entrepreneurship, made the following comments after the Senate voted to begin debate on H.R.674, the 3% Withholding Repeal and Job Creation Act. On October 27, 2011, the House of Representatives voted 405-16 to repeal the tax withholding requirement.

“I was pleased to see that the IRS began halting the implementation of this burdensome requirement six months ago,” Senator Landrieu said. “Tonight, I am even happier that the Senate is taking steps to do away with it completely. With tonight’s vote, the Senate is closing in on righting the wrongs of this provision in the 2005 Tax Increase Prevention and Reconciliation Act. Our small businesses need to be compensated fully for their work in a timely manner. In today’s economy, we do not need to constrict any revenue from those struggling to keep their doors open or prevent plans of expansion and hiring new workers.”

The law mandates 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 non-confidential or classified contracts, grants to for-profit companies and farm and Medicare payments. The requirement was scheduled to take effect on January 1, 2011, but was delayed a year in the 2009 American Recovery and Reinvestment Act. On May 5, 2011, the IRS issued regulations that further delayed the implementation of the withholding provision until January 1, 2013. On September 12, 2011, President Obama proposed the American Jobs Act of 2011, which included a section that would delay implementation of the withholding provision until after December 31, 2013.