Red Alert!

Stop Proposed Tax Withholding Change!

The Legislature will shortly be considering a budget proposal that, among other things, would require a
 3% withholding on all payments to independent contractors. C.A.R. is adamantly OPPOSED to this proposal.

Action Item

Please call BOTH your legislators RIGHT NOW to OPPOSE this provision!!

Call your Assembly Member at (916) 319-2006.

Call your Senator at (916) 651-4003.

Talking Points

•  There is no evidence that independent contractors are failing to pay their income tax obligations.
  The proposed withholding requirement is merely intended to accelerate income tax payments so
  that the state can make money from the interest (the “float”) that’s earned while the funds are
  in its possession.
• The proposal fails to recognize the significant administrative burden that would be placed on individuals
  who are now required to file 1099MISC information reports with the Franchise Tax Board. Under the
  proposal these individuals would now need to also calculate the required withholding amount and remit
  that amount to the state.
• There will be significant administrative costs to the Franchise Tax Board that will be faced with making
  refunds to those independent contractors whose withholding amount remitted to the state exceeds their
  income tax obligation.
• The withholding proposal fails to address the systemic problems associated with formulation of the state
  budget and is nothing more that the “smoke and mirrors” with which state government has attempted to
  meet its budget obligations in recent years.

For More Information

 Contact DeAnn Kerr at deannk@car.org or Christopher Carlisle at christopherc@car.org or call C.A.R.’s
Government Affairs office at 916-492-5200.