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 passed H.R.674, the 3% Withholding Repeal and Job Creation Act. The bill was approved by a vote of 94-1. On October 27, 2011, the House of Representatives voted 405-16 to repeal the tax withholding requirement.

“Today’s vote is a win for small businesses across America,” Sen. Landrieu said. “Main Street businesses are already struggling against the lack of demand for goods and services and to retain the necessary customers to keep their businesses afloat. Each dollar counts; they cannot afford to receive only a portion of their compensation. This repeal assures small business owners that they will receive full payment for their work.”

The law required 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.