Repeal of contractor tax withholding is sign of economic times

Friday - 10/28/2011, 7:06pm EDT

Scott Amey, general counsel and contracting specialist, Project for Government Oversight

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The House has repealed a law to withhold money from federal contractors. The law had required the government to hold onto 3 percent of what contractors are owed until they pay their taxes.

The repeal is a sign of the economic times, said Scott Amey, general counsel and contracting specialist at the Project for Government Oversight, in an interview with In Depth with Francis Rose.

The five-year-old law was set to take effect in 2012. However, a repeal received overwhelming support as a way to let companies keep money that could help create jobs.

The government, however, must still figure out how to go after contractors who still haven't paid their taxes. A Government Accountability Office report released this summer found contractors who received Recovery Act funds owed $757 million in back taxes.

"The government still has a problem here it needs to struggle with," Amey said.