CCH Tax Briefing Analyzes New Withholding Tax Repeal, Jobs Creation Act

Riverwoods, IL - 17 November 2011

Congress has cleared legislation, The Three Percent Withholding Repeal and Job Creation Act (H.R. 674), repealing a 3-percent withholding tax imposed on government contractors, and expanding tax incentives to encourage employers to hire military veterans. CCH has issued a new Tax Briefing taking a closer look at the bipartisan measure that now awaits President Obama’s signature. CCH, a Wolters Kluwer business is a leading global provider of tax, accounting and audit information, software and services.

The $12.8 billion cost of the withholding repeal and veterans’ tax incentives is offset by modifying the calculation of modified adjusted gross income (AGI) for determining certain federal health care program eligibility, as well as delaying scheduled reductions in fees for VA mortgage applications.

“The mandatory withholding tax was designed to crack down on federal contractors trying to avoid taxes,” said Mark Luscombe, JD, LLM, CPA, and CCH Principal Federal Tax Analyst. “It was part of the Tax Increase Prevention and Reconciliation Act (TIPRA) of 2005 and was originally supposed to kick in this year, but heavy criticism of the withholding requirement helped delay the effective date and supported House and Senate votes to repeal it.”

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