3% Withholding Rule From Payments for Goods and Services

A law scheduled to go into effect in 2013 requires federal, state, and local governments to withhold 3 percent from payments for goods and services.  The law would be a constant cycle because funds would br withheld one year, recouped the following year, but then also withheld again. 

Withholding funsa amounts to floating the federal government an interest-free loan.  Businesses would have 3 percent less to spend, affecting day-to-day operations and future growth.  State and local governments would stress their already strained budgets administering this program.

Tax Delinquents May Be Prohibited from Passport Renewals

More than 224,000 people who received passports in 2008 owed a total of over $5.8 billion in federal income taxes, but Congress would need to change the laws to enable the State Department to coordinate with the IRS on denying them passports, according to a new government report.

The report, by the Government Accountability Office, noted that federal law currently prohibits the IRS from divulging taxpayer information, including unpaid federal taxes, to the State Department, unless the taxpayer consents. In contrast, federal law permits certain restrictions on the issuance of passports to individuals, such as individuals owing child support debts over $2,500 or with outstanding felony warrants.