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IRS Delays Start of Contractor Withholding Rule for One Year

The Internal Revenue Service is delaying by one year the start of a rule requiring federal, state and many local governments to withhold taxes from payments to contractors.

The IRS said today that the rule, which requires governments to withhold 3 percent of all contract funds, would apply to payments made after Dec. 31, 2012. The agency had planned to implement the rule on Jan. 1, 2012.