More than five years after the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) was enacted, President Barack Obama signed a bill into law Monday (November 22, 2011) that repeals the 3 percent withholding requirement contained in section 511.

The bill, H.R. 674, was passed in a 422-0 vote by the U.S. House of Representatives on November 16 and was approved a week earlier by a unanimous vote in the Senate. H.R. 674 amends the Internal Revenue Code to repeal the 3 percent withholding tax for government contractors.

The withholding mandate, hidden in the fine print of TIPRA, would have required 3 percent to be withheld on all payments for goods and services made by federal, state and local governments with total expenditures of $100 million or more beginning January 1, 2013. Implementation of the provision had been subject to annual delays by Congress and regulators, respectively, until bipartisan support for repeal coalesced during the recent focus on jobs legislation.