Delay of contractor withholding rule is good for small biz, says Landrieu

5/13/2011

U.S. Senator Mary L. Landrieu, who acts as the chair of the Senate Committee on Small Business and Entrepreneurs, has applauded the Internal Revenue Service for delaying the contractor withholding rule, which will now go into effect on December 31, 2012.

The law would have forced federal and state governments to withhold as much as 3 percent of payments for products and services worth more than $10,000 until a later period. As Landrieu notes, small businesses are already cash-strapped, so delaying payments could have posed a serious consequence to those companies affected.

"This decision couldn’t come at a better time. Small businesses are pinching pennies and cannot afford to receive reduced payments for government contracts," Senator Landrieu said. "Many small businesses are already suffering, trying to make payroll and expand their businesses, and this rule would close the book on too many small businesses."

Fortunately, funding is becoming less of an issue as financial intuitions ease their small business lending practices, which has many companies looking for new ways to expand.