Comment on FR Doc # E9-85

3% Withholding on Vendor Payments Page 74084 Payments subject to Section 3402(t) Withholding “Under the proposed rules, the withholding requirements of section 3402(t) will not apply to any payment that is less than the payment threshold amount, which is $10,000.” Clark County, when making payments to vendors, aggregates invoices from a vendor and pays multiple invoices on a single payment. This practice is more efficient and does save time and money. Example: A utility company issues 20 invoices based on 20 individual meters each for $500. The county aggregates these invoices and makes payment of $10,000 to the utility. Is the County required to withhold 3% (or $300) on the payment of $10,000? Are we required to withhold 3% on individual payments of $500 to the same utility if we write 20 individual checks? As many invoices are less than 10,000 are we required to pay each of these invoices “alone” for the payment to be excludable form withholding? Clark County is located in the State of Washington. Purchases in Washington State are subject to sales tax. Does the threshold amount include purchase of goods and services plus sales tax, or should sales tax always be excluded from the payment amount? Example: County purchases an item at a cost of $9,233.61. Sales tax on the item is $766.39. Total payment amount is $10,000. Is this payment subject to withholding? Page 74084 Anti-abuse rule Is the government entity responsible for monitoring that vendors are not “abusing” the rules under 3402(t), or is the vendor responsible for not abusing the rules? What is the consequence to the government of failing to withhold in this situation? Example: A vendor who historically has billed monthly for services begins billing twice per month in 2010 for services. The vendor has indicated they are billing more frequently due to cash flow issues. Is this an abuse? Who is liable? What if they were to begin billing more frequently on 1/1/2011 due to cash flow issues? Page 74086 Section 3402(t)(2)(D) “…provides that payments for real property are not subject to section 3402(g). Because the exception is not limited to payments for fee ownership..” Are payments for the purchase of right-of-way excludable?