IRS Issues Final Regulations for 3 Percent Withholding

The IRS issued final regulations May 6 for the implementation of the 3% withholding law. At first blush, it appears the regulations delay the effective date to 1/1/2013, providing an extra year before payments are withheld. But the final regs also sunset the exclusion of payments under existing contracts after one year so that all payments will be subject to withholding as of 1/1/2014. AGC is analyzing the regulations to discover additional modifications made to the proposed regulations. AGC will continue working with coalition partners toward full repeal of the 3% withholding requirement. Visit AGC's Legislative Action Center to write your legislators and urge them to cosponsor legislation to repeal 3% withholding. For more information, contact Jeff Shoaf at shoafj@agc.org.