Contractor tax withholding off to a delayed start

Tuesday - 5/10/2011, 9:08am EDT

Steve Charles, co-founder and executive vice president, immixGroup

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Back in 2005, Congress passed a tax law that included a really tough provision. It requires agencies to withhold three percent of contractors' payments against their future tax bills. The day of reckoning has come, and IRS issued a final rule yesterday. The good news is, agencies have a year to figure out how to deal with this controversial rule. The bad news is, the work starts now. Steve Charles, executive vice president of the immixGroup, a company that represents hundreds of contractors selling to the federal government, explains what's ahead and what's at stake.