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NRCA Action Alert: Support Repeal of the 3 Percent Withholding Tax

June 2011

NRCA is working to get Congress to repeal the 3 percent withholding tax on government contracts, which adversely will affect many roofing contractors once implemented. NRCA urges members to contact their representatives in Congress now to urge them to co-sponsor legislation to permanently repeal this job-killing tax.

Background

Congress approved the 3 percent withholding tax in 2006 with the goal of improving tax compliance, and it originally was scheduled to take effect in 2011. Implementation has been delayed twice, and it now is scheduled to take effect Jan. 1, 2013. The law will require federal, state and local governments with total annual contracts exceeding $100 million to withhold 3 percent of the value of every contract worth more than $10,000. The 3 percent is taken off the total value of the contract, not the profit, and thus cash flow and operating capital disruptions will be tremendous burdens for many roofing contractors, particularly small businesses.

NRCA strongly supports legislation in the House (H.R. 674) and Senate (S. 164) to permanently repeal this unfair tax and has communicated support to Congress on numerous occasions. Now we need your help in urging Congress to repeal this tax.

Contact your senators and representatives and urge them to co-sponsor S. 164 or H.R. 674 because:
  • The withholding tax could eliminate profits on government contracts, thus affecting contractors' abilities to grow their businesses and create jobs.

  • The disruption in operating capital negatively will affect a company's ability to become "bonded," which is required to bid on many government projects.

  • Most companies' bookkeeping systems are not set up to account for amounts withheld from invoices, and the withholding tax also will add costs by complicating contractors' tax filings.

  • Many roofing contractors will be forced to stop bidding on government contracts, a critical source of work during these tough economic times.

  • Congress should act NOW because withholding will begin affecting contracts well before the provision takes effect in 2013.
How to contact your representatives in Congress

You easily and quickly can contact your senators and representatives by clicking here to send an e-mail registering your support for repeal of the withholding tax. Sample text is provided, or you can add your own concerns or the bullet points above.

If you prefer to call your senators' or representatives' offices, you may call the U.S. Capitol Switchboard at (202) 224-3121 and ask for the member's office, telling the staff of your "strong support for repeal of the 3 percent withholding tax on government contractors." Ask senators to co-sponsor S. 164 and House members to co-sponsor H.R. 674. Provide your address so they know you are a constituent and can send you a follow-up letter. You may wish to use the previously mentioned bullet points in your conversation with the lawmaker's staff.

NRCA and other associations are asking their members to make grass roots contacts with their members of Congress during the week of June 13 to have maximum effect, so please follow through this week, if possible.

Please let NRCA's Washington, D.C., staff know when you have e-mailed or called your representatives by contacting Duane Musser, NRCA's vice president of government relations, at dmusser@nrca.net, or Brandon Audap, NRCA's director of federal affairs, at baudap@nrca.net, or call (800) 338-5765.



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