WASHINGTON--(BUSINESS WIRE)-- CompTIA urges the Senate to repeal the 3 percent reporting requirement as an amendment to S. 493, the “SBIR/STTR Reauthorization Act of 2011.” Enacted in 2005, this requirement would force federal, state and local governments to withhold 3 percent on most of their contract payments to small businesses, including Medicare payments, farm payments and certain grants. As an organization representing small and medium sized IT businesses, CompTIA encourages swift action to repeal the 3 percent withholding requirement in the Senate so that small IT firms with government contracts will not be penalized.

The following statement can be attributed to Todd Thibodeaux, President and CEO of CompTIA.

“As the Senate prepares to vote on amendments the SBIR/STTR Reauthorization Act of 2011, Senators from both sides of the aisle must keep in mind the needs of small businesses with government contracts. Many small IT companies work with federal, state and local governments to service the needs of the public sector, and this provision would reduce cash flow to these solution providers. At a time when IT firms are updating and enhancing information technology infrastructure across the country, withholding 3% of contract payments would short-circuit small businesses striving to weather the economic storm.

“If this requirement is allowed to become effective, it would shut out more and more small IT business from competing for federal government procurement opportunities. Under this 3 percent withholding requirement, there is no consideration of revenue or profit, just a flat fee skimming off the top. Unlike the traditional structure of federal tax payments, this withholding requirement bears no relation to anticipated taxable income. IT firms with slim profit margins and a government contract could actually experience a net loss for the tax year, but that business would still be subject to the 3% withholding.

“As the Senate considers the SBIR/STTR Reauthorization Act of 2011, small businesses with government contracts must not be overlooked. The 3 percent withholding requirement would harm small IT firms that drive innovation and allow the U.S. to modernize its technology and reboot the economy. CompTIA urges the Senate to vote yes on this amendment to repeal this unnecessary withholding requirement.”

About CompTIA

The Computing Technology Industry Association (CompTIA) is a non-profit trade association representing the information technology (IT) industry. CompTIA represents over 2,500 IT companies. Our members are at the forefront of innovation and provide a critical backbone that supports broader commerce and job creation. These members include major computer hardware manufacturers, software developers, technology distributors and IT specialists that help organizations integrate and use technology products and services. CompTIA is dedicated to serving its membership by advancing industry innovation and growth through its educational programs, market research, networking events, professional certifications and public policy advocacy. For more information, visit www.comptia.org or follow CompTIA on Twitter at http://www.twitter.com/comptia.

CompTIA’s Public Advocacy group focuses on a broad array of issues affecting the IT industry, with particular emphasis on representing the interests of small and mid-sized IT companies and entrepreneurs, supporting an innovation and competitiveness agenda and addressing secure technology issues such as cybersecurity, data breach, privacy and more. For more information, visit http://www.comptia.org/publicpolicy.aspx

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for CompTIA
Media Contact:
Jennifer Spector, (202) 295-8790
jennifer.spector@harbourgrp.com

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