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H.R. 674 (112th): 3% Withholding Repeal and Job Creation Act
- Introduced:
- Feb 11, 2011 (112th Congress, 2011–2013)
- Sponsor:
- Rep. Walter “Wally” Herger [R-CA2]
- Status:
- Signed by the President
- Slip Law:
- This bill became Pub.L. 112-56.
The bill’s title was written by the bill’s sponsor. H.R. stands for House of Representatives bill.
- Full Title
To amend the Internal Revenue Code of 1986 to repeal the imposition of 3 percent withholding on certain payments made to vendors by government entities, to modify the calculation of modified adjusted gross income for purposes of determining eligibility for certain healthcare-related programs, and for other purposes.
- Summary
-
No summaries available.
- Text
-
Last updated Jan 01, 2012.
25 pages
- Primary Source
-
View on THOMAS (The Library of Congress)
GovTrack gets most information from THOMAS, which is updated generally one day after events occur. Activity since the last update may not be reflected here.
- Citation
-
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Library of Congress Summary
The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.
11/21/2011--Public Law. (This measure has not been amended since it was passed by the Senate on November 10, 2011. The summary of that version is repeated here.)
Title
I
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Three Percent Withholding Repeal and Job Creation Act
3% Withholding Repeal and Job Creation Act - Amends the Internal Revenue Code to repeal the 3% withholding requirement on payments due to vendors providing goods and services to federal, state, and local governmental entities.
Title
II
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VOW to Hire Heroes
VOW to Hire Heroes Act of 2011 -
Subtitle
A
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Retraining Veterans
Section
211
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Directs the Secretary of Veterans Affairs (VA), by July 1, 2012, to establish and commence a program of retraining assistance for veterans who:
(1) are at least 35 but not more than 60 years of age,
(2) were last discharged from active-duty service under conditions other than dishonorable,
(3) are unemployed,
(4) are not eligible for educational assistance under other VA programs,
(5) are not in receipt of compensation for a service-connected disability rated total due to unemployability,
(6) were not enrolled in any federal or state job training program at any time during the 180-day period ending on the date of application for assistance, and
(7) applies for such assistance by October 1, 2013.
Entitles each eligible veteran to up to 12 months of job training assistance toward a high-demand occupation.
Requires the Secretary of Labor to contact each such veteran within 30 days after completion or termination of such training or assistance in order to facilitate employment.
Requires:
(1) such Secretaries to enter into a joint agreement to carry out such assistance, and
(2) the VA Secretary to report to Congress on assistance provided.
Provides funding.
Terminates assistance authority on March 31, 2014.
Subtitle
B
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Improving the Transition Assistance Program
Section
221
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Directs the Secretaries of Defense (DOD) and Homeland Security (DHS) to require the participation of members of the Armed Forces (members) being separated from active duty, and their spouses, in DOD's transition assistance program (TAP). Allows such Secretaries to waive the participation requirement with respect to:
(1) such groups or classifications of members for whom participation is not, and would not be, of assistance since such members are unlikely to face major readjustment, health care, employment, or other challenges associated with transition to civilian life; and
(2) individual members possessing specialized skills who are needed to support a unit's imminent deployment.
Section
222
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Requires the Secretary of Labor to contract with a qualified organization to conduct a study to identify any equivalences between the skills developed by members through various military occupational specialties and the qualifications required for various positions of civilian employment.
Requires a report on study results from the contractor to such Secretary, which shall be transmitted to Congress. Requires the skills equivalencies to be published on the Internet and regularly updated.
Directs the Secretary of Defense to ensure that each member participating in TAP receive an individualized equivalencies assessment and to make each assessment available to the Secretaries of VA and Labor.
Section
223
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Requires: (1) the VA Secretary to contract with appropriate contractors to provide TAP functions at all locations where TAP is being carried out, and (2) such contractors to provide members being separated from active duty, and their spouses, with appropriate TAP services. Requires such contracts to be entered into within two years after the enactment of this Act.
Section
224
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Authorizes the Secretaries of Labor, VA, DHS, and DOD, in carrying out TAP, to contract with private entities that have experience with instructing members on relevant topics on job training and job searching, including academic readiness and educational opportunities.
Section
225
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Authorizes the Secretaries of DOD and DHS, as part of TAP, to permit an eligible member to participate in an apprenticeship or pre-apprenticeship program that provides them with the education, training, and services necessary to transition to meaningful employment.
Section
226
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Directs the Comptroller General (CG) to conduct a review of TAP, and to submit review results and recommendations to Congress.
Subtitle
C
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Improving the Transition of Veterans to Civilian Employment
Section
231
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Amends the Wounded Warrior Act to extend through 2014 the authority of the VA Secretary to provide the same rehabilitation and vocational benefits to members with severe injuries or illnesses as are provided to veterans.
Section
232
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Expands the authority of the VA Secretary to make payments to employers to provide on-job training to veterans to include veterans who have not been rehabilitated to the point of employability.
Section
233
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Entitles certain veterans with service-connected disabilities who have exhausted their rights to unemployment benefits to participation in an additional VA rehabilitation program. Limits the duration of such a program to 12 months. Makes the 12-year period of eligibility for a VA rehabilitation program inapplicable under such additional program. Directs the CG to review the VA training and rehabilitation program, and report review results to Congress.
Section
234
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Directs the VA Secretary to award grants to up to three nonprofit organizations under a two-year collaborative veterans' training, mentoring, and placement program for eligible veterans seeking employment. Requires such Secretary to: (1) report to Congress on the process for awarding such grants, (2) assess the performance of grant recipients, and (3) report assessment results to Congress. Authorizes appropriations.
Section
235
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Treats an individual as a veteran, a disabled veteran, or a preference eligible for purposes of appointments to federal competitive service positions if the individual meets all other qualifications except for the requirement of discharge or release from active duty under honorable conditions, as long as such individual submits to the federal officer making the appointment a certification that he or she is expected to be discharged or released under honorable conditions within 120 days after submission of the certification.
Requires the Director of the Office of Personnel Management (OPM) to:
(1) designate agencies to establish a program to provide employment assistance to members being separated from active duty, and
(2) ensure that such programs are coordinated with TAP.
Section
236
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Authorizes the DOD Secretary to establish a two-year pilot program to assess the feasibility and advisability of providing to members on terminal leave work experience with civilian employees and contractors of DOD to facilitate the transition of such members from military service to employment in the civilian labor market. Requires a pilot program report from such Secretary to Congress.
Section
237
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Requires (under current law, authorizes) the Assistant Secretary for Veterans' Employment and Training to carry out a two-year demonstration project on the credentialing and licensing of veterans.
Requires the Assistant Secretary of Labor of Veterans' Employment and Training to:
(1) conduct a study comparing the costs incurred by DOD in training members for military occupational specialties selected for the demonstration project with costs incurred by the VA and Department of Labor in providing employment-related assistance to veterans who previously held such military occupational specialties, and
(2) report study results to Congress.
Section
238
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Requires the inclusion of TAP performance measures in annual Department of Labor reports on veterans job counseling, training, and placement programs.
Section
239
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Directs the Secretary of Labor to include in such annual reports with respect to the 2003 program year and thereafter an evaluation of whether eligible veterans are receiving priority of service and are being fully served by qualified job training programs.
Section
240
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Directs the VA Secretary to require that each disabled veterans' outreach program specialist and local veterans' employment representative who receives training by the National Veterans' Employment and Training Services Institute is given a final training examination.
Section
241
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Requires each of the above specialists and representatives to perform only duties related to the employment, training, and placement needs of veterans, and not other duties that detract from their ability to perform such duties. Directs the VA Secretary to conduct regular audits to ensure compliance with such requirement.
Subtitle
D
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Improvements to Uniformed Services Employment and Reemployment Rights
Section
251
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Includes the terms, conditions, or privileges of employment within the benefits and rights of employment for purposes of the Uniformed Services Employment and Reemployment Rights Act.
Subtitle
E
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Other Matters
Section
261
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Amends the Internal Revenue Code to:
(1) increase the amount of wages eligible for the work opportunity tax credit for veterans who are hired after being unemployed for six months or more during the one-year period ending on the hiring date ($14,000 of first-year wages) or disabled veterans who are either hired within one year after discharge from active duty ($12,000 of first-year wages) or who are hired after being unemployed for six months or more during the one-year period ending on the hiring date ($24,000 of first-year wages), and
(2) allow tax-exempt organizations to claim the lesser of the amount of the work opportunity tax credit for hiring veterans or the amount of the payroll taxes paid by such organizations during the calendar year.
Extends through 2012 such credit with respect to such veterans.
Provides a credit against payroll taxes for qualified tax-exempt organizations employing such veterans.
Section
262
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Extends through FY2016 the current $90 limit on VA pension paid to veterans residing in nursing homes when their nursing costs are paid through title XIX (Medicaid) of the Social Security Act.
Section
263
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Limits VA payments for ambulance services to the lesser of the actual charges or the rates permitted under title XVIII (Medicare) of the Social Security Act.
Section
264
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Extends through FY2016 VA authority to obtain veterans' income verification information from the Commissioner of Social Security or the Secretary of the Treasury.
Section
265
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Extends through FY2016 VA authority to charge a loan fee for certain subsequent housing loans made to veterans.
Title
III
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Other Provisions Relating to Federal Vendors
Section
301
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Amends the Internal Revenue Code to extend the 100% continuing levy for delinquent taxes to payments due to a vendor of property (currently, goods or services) sold or leased to the federal government.
Section
302
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Directs the Secretary of the Treasury, in consultation with the Director of the Office of Management and Budget (OMB) and federal agency heads, to conduct and report on a study on ways to reduce the amount of federal tax owed but not paid by persons submitting bids or proposals for the procurement of property or services by the federal government.
Title
IV
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Modification of Calculation of Modified Adjusted Gross Income for Determining Certain Healthcare Program Eligibility
Section
401
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Amends the Internal Revenue Code to include social security benefits that are excluded from gross income in the calculation of modified adjusted gross income for purposes of determining eligibility for the tax credit for coverage under a qualified health plan.
Requires the Secretary of the Treasury, annually, to estimate the impact of the modification to adjusted gross income made by this title on the income and balances of the social security trust funds and, not less frequently than quarterly, to transfer from the general fund an amount sufficient to prevent any reduction in the income and balances of such trust funds.
Title
V
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Budgetary Effects
Section
501
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Provides for compliance of the budgetary effects of this Act with the Statutory Pay-As-You-Go Act of 2010.
House Republican Conference Summary
The summary below was written by the House Republican Conference, which is the caucus of Republicans in the House of Representatives.
This summary can be found at http://www.gop.gov/bill/112/1/hr674.
Background
On May 17, 2006, the Tax Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222) was enacted. Among a number of other provisions, the bill included Section 511, titled, “Imposition of Withholding on Certain Payments Made by Government Entities.” Section 511 required the imposition of a preemptive 3 percent withholding tax on payments for goods and services to contractors made by all branches of the federal government and its agencies and all units of state and local governments, including counties and parishes. Traditionally, wages and certain other payments are already subject to withholding of income tax, which employers are required to collect and submit to the government. Generally, the withheld amount is held as a credit against the taxpayer’s tax liability and is refunded if the tax liability is less than the amount withheld, or additional taxes may be due if the amount withheld is less than the actual tax liability. Prior to the passage of P.L. 109-222, a withholding tax was not required from payments made by government entities. Under the law (and subsequent delays), the 3 percent withholding tax on payments by government entities will become effective on January 1, 2013.
According to the Congressional Research Service (CRS), the 3 percent withholding tax on payments by government entities was conceived of as a means for the IRS to improve tax compliance and lower its tax gap, which is the difference between the amount of money the IRS is legally due in a given year and the amount of money the IRS actually receives. In addition, the provision served as means to increase revenue and offset other revenue reductions in the bill. Under the legislation, the 3 percent withholding tax was scheduled to take effect on January 1, 2011. According to the Joint Committee on Taxation’s (JCT) original estimate for 2006, this provision would have raised revenues by $6.97 billion over the FY 2011 – FY 2015 period. However, the Democrat’s original $1.2 trillion “stimulus” (P.L. 111-5) was enacted on February 17, 2009, and it included a provision to delay implementation of the 3 percent withholding tax until after December 31, 2011. On May 5, 2011, the IRS issued final regulations (T.D. 9524) that delayed the implementation of the 3 percent withholding tax on government contractors until January 1, 2013. Thus, without the enactment of legislation to repeal the 3 percent withholding tax on government payments to vendors, the tax will go into effect on January 1, 2013.
Opposition to the imposition of the 3 percent withholding tax began relatively soon after the passage of P.L. 109-222. As early as March 22, 2007, the House Small Business Committee held a hearing on the “Potential Effects on Small Businesses of 3 Percent Withholding Provisions on Government Contracts.” When the provision was delayed by the first stimulus bill, JCT explained the delay by saying, “The Congress believes that the three-percent withholding requirement was not appropriately targeted to the noncompliant taxpayers for whom it was originally intended and may impose significant and costly administrative burdens on state and local governments.” Indeed, the cost of complying with the withholding tax could adversely affect many businesses, especially those businesses with relatively small profits and tax liabilities. Overwithholding will occur if a business has a low profit margin or an income tax liability that is relatively low. Thus, some businesses would effectively provide the federal government with an interest-free loan. In addition, compliance costs would impose new burdens on financially strapped small businesses and impede necessary cash flow during an unemployment crisis. These added costs would almost certainly translate into fewer private-sector jobs and higher costs for the government and taxpayers.
A number of outside organizations and employer advocates have publicly opposed the imposition of the 3 percent withholding tax and have called for its permanent repeal. Notably, the Chamber of Commerce has repeatedly called for the repeal of the 3 percent withholding tax. According to the Chamber, which represents the interests of more than 3 million businesses, “The 3% Withholding Tax will mandate that federal, state, and local governments withhold 3% from payments for goods and services, not only causing an unprecedented paperwork burden for the government and companies who provide goods or services to them, but forcing firms to increase costs to offset the impact of delayed payments and disrupting businesses’ cash flows.” Calls for the total repeal of the withholding tax from job creators have prompted bipartisan support for H.R. 674, which as of October 25, 2011, had 269 co-sponsors, 62 of whom were Democrats.
Summary
H.R. 674 would amend the Internal Revenue Code of 1986 to permanently repeal the imposition of 3 percent withholding on certain payments made to vendors by government entities. Currently, the imposition of the 3 percent withholding is set to take effect on January 1, 2013. If the 3 percent withholding tax were implemented as scheduled, government entities would be required to withhold 3 percent of payments to persons providing property or services. For example, on an invoice for $20,000 the government would pay the business $19,400 and withhold $600 as a preemptive tax. Government entities include the government of the United States, as well as every state and local government. However, local governments with less than $100 million of annual expenditures for property or services would be exempted from the requirement.
According to the Joint Committee on Taxation, repealing this requirement would reduce federal revenues by $11.2 billion over the 2012–2021 period.
Cost
According to the Joint Committee on Taxation, repealing this requirement would reduce federal revenues by $11.2 billion over the 2012–2021 period. To offset the revenue reduction caused by H.R. 674, the House will also consider H.R. 2576, a bill to modify how eligibility for certain healthcare programs is calculated. According to JCT, H.R. 2576 would increase revenue over the same period by $12.9 billion.
House Democratic Caucus Summary
The House Democratic Caucus does not provide summaries of bills.
So, yes, we display the House Republican Conference’s summaries when available even if we do not have a Democratic summary available. That’s because we feel it is better to give you as much information as possible, even if we cannot provide every viewpoint.
We’ll be looking for a source of summaries from the other side in the meanwhile.
The bill contains the following citations to other parts of U.S. law:
Slip Laws
Slip laws refer to enacted bills and joint resolutions in their original form as enacted by Congress, that is, before other laws amend them. Slip laws are cited as “Public Law XXX-YYY”, where XXX is the number of the Congress in which the bill or resolution was introduced.
- Public Law 110-181
United States Code
The United States Code is the compilation of permanent laws enacted by Congress. Temporary and other non-permanent laws do not appear in the United States Code. (About half of the United States Code is the law itself, called positive law. The other half is merely a compilation of the laws but has no legal significance.)
- Title 5: GOVERNMENT ORGANIZATION AND EMPLOYEES
- Part I: THE AGENCIES GENERALLY
- Chapter 1: ORGANIZATION
- Section 105: Executive agency
- Part III: EMPLOYEES
- Subpart A: General Provisions
- Chapter 21: DEFINITIONS
- Section 2108: Veteran; disabled veteran; preference eligible
- Title 10: ARMED FORCES
- Subtitle A: General Military Law
- Part II: PERSONNEL
- Chapter 55: MEDICAL AND DENTAL CARE
- Section 1071: Purpose of this chapter
- Chapter 58: BENEFITS AND SERVICES FOR MEMBERS BEING SEPARATED OR RECENTLY SEPARATED
- Section 1144: Employment assistance, job training assistance, and other transitional services: Department of Labor
- Title 26: INTERNAL REVENUE CODE
- Subtitle C: Employment Taxes
- Chapter 23: FEDERAL UNEMPLOYMENT TAX ACT
- Section 3304: Approval of State laws
- Title 29: LABOR
- Chapter 4C: APPRENTICE LABOR
- Section 50: Promotion of labor standards of apprenticeship
- Chapter 30: WORKFORCE INVESTMENT SYSTEMS
- Subchapter I: WORKFORCE INVESTMENT DEFINITIONS
- Section 2801: Definitions
- Title 31: MONEY AND FINANCE
- Subtitle II: THE BUDGET PROCESS
- Chapter 13: APPROPRIATIONS
- Subchapter II: TRUST FUNDS AND REFUNDS
- Section 1324: Refund of internal revenue collections
- Title 38: VETERANS’ BENEFITS
- Part I: GENERAL PROVISIONS
- Chapter 1: GENERAL
- Section 101: Definitions
- Section 111: Payments or allowances for beneficiary travel
- Part III: READJUSTMENT AND RELATED BENEFITS
- Chapter 30: ALL-VOLUNTEER FORCE EDUCATIONAL ASSISTANCE PROGRAM
- Subchapter II: BASIC EDUCATIONAL ASSISTANCE
- Section 3015: Amount of basic educational assistance
- Chapter 31: TRAINING AND REHABILITATION FOR VETERANS WITH SERVICE-CONNECTED DISABILITIES
- Section 3102: Basic entitlement
- Section 3116: Promotion of employment and training opportunities
- Chapter 34: VETERANS’ EDUCATIONAL ASSISTANCE
- Subchapter I: PURPOSE—DEFINITIONS
- Section 3452: Definitions
- Chapter 36: ADMINISTRATION OF EDUCATIONAL BENEFITS
- Subchapter II: MISCELLANEOUS PROVISIONS
- Section 3695: Limitation on period of assistance under two or more programs
- Chapter 37: HOUSING AND SMALL BUSINESS LOANS
- Subchapter III: ADMINISTRATIVE PROVISIONS
- Section 3729: Loan fee
- Chapter 41: JOB COUNSELING, TRAINING, AND PLACEMENT SERVICE FOR VETERANS
- Section 4103A: Disabled veterans’ outreach program
- Section 4107: Administrative controls; annual report
- Section 4109: National Veterans’ Employment and Training Services Institute
- Section 4113: Transition Assistance Program personnel
- Section 4114: Credentialing and licensure of veterans: demonstration project
- Chapter 42: EMPLOYMENT AND TRAINING OF VETERANS
- Section 4215: Priority of service for veterans in Department of Labor job training programs
- Chapter 43: EMPLOYMENT AND REEMPLOYMENT RIGHTS OF MEMBERS OF THE UNIFORMED SERVICES
- Subchapter I: GENERAL
- Section 4303: Definitions
- Part IV: GENERAL ADMINISTRATIVE PROVISIONS
- Chapter 53: SPECIAL PROVISIONS RELATING TO BENEFITS
- Section 5317: Use of income information from other agencies: notice and verification
- Chapter 55: MINORS, INCOMPETENTS, AND OTHER WARDS
- Section 5503: Hospitalized veterans and estates of incompetent institutionalized veterans
- Title 42: THE PUBLIC HEALTH AND WELFARE
- Chapter 7: SOCIAL SECURITY
- Subchapter II: FEDERAL OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE BENEFITS
- Section 401: Trust Funds
- Subchapter XVIII: HEALTH INSURANCE FOR AGED AND DISABLED
- Section 1395: Prohibition against any Federal interference
Statutes at Large
The United States Statutes at Large is the compilation of all laws enacted by Congress.
- 50 Stat. 664
Other Citations
- 5 U.S.C. Chapter 21
- 38 U.S.C. Chapter 31
- 38 U.S.C. Chapter 41