Last week, the U.S. House of Representatives passed H.R. 674, that prevents a planned 3 percent tax-withhold for many Medicare payments, by a vote of 422-0. The Senate passed this legislation on November 10 by a vote of 95 to 0. The statute, originally passed in 2006 and delayed several times, called for all federal, state, and local government payments to those providing services or goods to have 3 percent of their payment withheld until the following tax year in an effort to increase tax compliance. However, the original statute was overly broad and would have applied even to Medicare payments made to physicians.
The legislation, now headed to President Obama for his expected signature, repeals this provision of law and eliminates the planned withholding.