June 20, 2011 to the MEMBERS of the UNITED STATES
June 20, 2011 TO THE MEMBERS OF THE UNITED STATES CONGRESS: The undersigned organizations, individuals and businesses of every size and industry, and employing millions of American workers, stand united in calling for Congress to repeal the burdensome 3% Withholding Tax that was enacted in Section 511 of the Tax Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222) before it takes effect on January 1, 2013. Unless repealed, the 3% Withholding Tax will have a dramatic, negative impact on millions of honest taxpaying businesses, farmers, doctors and hospitals, as well as state and local governments. Under this provision, the Internal Revenue Service (IRS) was given new broad sweeping authority to hold hostage 3% of nearly every transaction between the public and private sector—giving the federal government an interest free loan on the backs of many honest taxpayers. The onerous nature of this unfunded mandate can best be described by example. After January 1, 2013, should a covered local fire department elect to replace an outdated ambulance with a new one, 3% of the sales price of the vehicle will be withheld from the ambulance seller and sent by the local government to the IRS. In order to compensate for the loss of cash flow, this business will likely increase the cost of the vehicle, which will in turn negatively impact the local fire department’s budget. In order to track, handle and reconcile the transaction, additional paperwork and complex accounting systems will be needed by the IRS, the local government, and the ambulance seller. As federal, state and countless local governments will be mandated to withhold 3% on their payments for many of their purchases, Medicare payments, and farm payments, this example will be multiplied many times over.
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