On November 16, the House of Representatives by a vote of 422 to 0 passed H.R. 674, the “3% Withholding Repeal and Job Creation Act,” as amended by the Senate on November 10. Thus, the measure is on its way to the White House for the President's expected signature. H.R. 674:

• Repeals the controversial 3% withholding requirement under Code Sec. 3402(t) on payments due to vendors providing services to federal, state, and local governmental entities.
• Tightens eligibility for a refundable health-related tax credit under Code Sec. 36B.
• Amends the Code Sec. 51 work opportunity tax credit (WOTC) to give employers a tax credit of up to $5,600 for hiring veterans who have been looking for a job for six months or more (up to $9,600 for hiring disabled veterans). The boosted credit amounts apply for those beginning work for the employer after the enactment date. The WOTC, which under current law doesn't apply to workers starting work after Dec. 31, 2011, is extended for one year for those hiring qualified veterans.
• Effective for levies issued after the enactment date, the Code Sec. 6331(h)(3) continuous 100% tax levy on “specified payments” to vendors for goods and services sold or leased to the federal government is extended to include payments for property, goods, or services sold or leased to the federal government.
• No more than 12 months after the enactment date, Treasury will have to submit to the appropriate Congressional committees 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.

Click on this line for a more detailed analysis of the new tax law.