One of the keys to success as an advocate for small business in the Nation’s Capitol is patience.  It can take years to secure a change in a federal law or federal regulation.   But we just got rid of one this week- the 3% withholding requirement for federal, state and local government contractors.  This law was slated to go into effect in 2013. 

Passed in 2006 as part of an enormous tax bill, the law required federal, state and local governments with revenues exceeding $100 million, to withhold a tax in the amount of 3% of any contract for a good or service provided.   The original implementation date was 2011.  The rationale behind it was that any business that does work for a public entity should not be a tax deadbeat.  Fair enough, but it felt an awful lot like the teacher was making the entire class lose recess because one student acted up. 

The IRS told Congress that this was almost impossible to enforce, and state and local governments wasted precious money trying to plan for this requirement.    According to the testimony of Curtis Loftis, State Treasurer of South Carolina before the House Small Business Committee, “…the requirement presents an administrative nightmare. Modifications to accounting systems and other administrative processes will have to be resolved. Add up the manpower and dollar costs of the withholding provision for all of the local and state governments across the county and you will find the amount is astronomical.”  In short, this law lacked common sense both on the compliance side and its burden on contractors.

That was not enough to push repeal, however.  It was the 155 business organizations who banded together under one umbrella to form a coalition to fight for repeal.  It was all the letters that individual small businesses sent to Congress.  It was small businesses who made appointments with their Legislators, urging repeal. 

The repeal bill sailed through Congress but not without the bipartisan leadership of  Reps. Wally Herger, Eric Blumenauer, Dave Camp and Sander Levin –all who sit on the powerful Ways and Means Committee. 

Patience and persistence pay off not only in business, but also in affecting change.  Repealing a law is extremely difficult, especially one that promises to raise revenue.  But if we work together, nothing is impossible.  Small businesses have a tremendous voice in the direction of government if they choose to exercise it.