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April 2, 2007: MCAA Urges Congress to Repeal 3 Percent Withholding Provision

April 2, 2007
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WASHINGTON - Lonnie Coleman, the Mechanical Contractors Association of America’s (MCAA’s) treasurer and Government Affairs Committee chairman, testified before the House of Representatives Small Business Committee, urging repeal of a new public contract payment withholding provision of 3 percent, slated to take effect in 2011.

Representing MCAA and the five other union-signatory construction employer associations in the Campaign for Quality Construction (which includes the Sheet Metal and Air Conditioning Contractors’ National Association), Coleman stressed the immediate need for repeal of the added withholding provision as proposed in the Meek-Herger repeal bill, H.R. 1023. The subject of the hearing has attracted the widespread opposition of business groups and public purchasing agencies who oppose the increased administrative and contract financing costs.

Coleman also discussed a wide array of possible procurement and fiscal reforms that could be used to close the tax gap without burdening tax compliant construction contractors with further contract payment withholding. He suggested ways to improve the screening of responsible bidders and offerors with tax compliance certification requirements. He also emphasized the need to reform misclassification of employees as independent contractors as a way to close a big part of the tax gap, and the ongoing need to eliminate retainage and require prompt payment by government agencies at all levels.

MCAA noted that co-sponsorship of the Meek-Herger withholding repeal bill picked up considerably following Coleman's testimony. Five lawmakers signed onto the bill in response to Coleman's request at the hearing.

Publication date: 04/02/2007

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