Withholding measure targets government contractors

Description

Abstract: If you’re a contractor that performs work for federal, state or local governments, you may want to rethink taking on public projects after Dec. 31, 2010. That’s when Uncle Sam will begin withholding 3% from your total payments under a little-known tax code provision. Internal Revenue Code Section 3402(t) is designed to close the “tax gap” — the difference between what taxpayers should pay and what they actually pay. This article explains how Sec. 3402(t) could affect your construction company.