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Business coalition calls for withholding tax repeal

Washington—Members of an ADA-supported business coalition “strongly urge” the Senate to support House-passed legislation and repeal a 3 percent withholding tax scheduled to take effect Jan. 1, 2013. The Senate was expected to take up repeal legislation early in November.

The Association signed onto the U.S. Chamber of Commerce-organized coalition as the House of Representatives debated repeal legislation that won House approval Oct. 27 by a 405-16 margin.

A never-imposed 2005 tax law would require federal, state and some local governments to withhold 3 percent of payments of more than $10,000 to contractors. A $10,000 single payment criterion is more likely to affect large group or corporate dental practices submitting claims for several dentists at the same time than most general practice dentists.

But the withholding requirement has been postponed several times, and its repeal has unusual bipartisan congressional and White House support. Repeal was on a fast track as Sen. Scott Brown (R-Mass.) on Oct. 31 introduced S. 1762 “to repeal the imposition of withholding on certain payments made to vendors by government entities” and for other tax purposes.

The business coalition, whose organizations include the American Dental Association, said in a letter to Senate members, “Unless repealed before it takes effect on January 1, 2013, the 3 percent withholding tax will have a dramatic, negative impact on millions of honest taxpaying businesses as well as state and local governments, health care providers, farmers and colleges and universities.

“The Government Withholding Relief Coalition, which represents all sectors of the economy, believes it is imperative that the 3 percent withholding tax be fully repealed as soon as possible to limit the damaging impacts to our economy.”