In February, California legislators considered a proposal that would have mandated a 3 percent withholding of fees paid to independent contractors. But the proposal has since been placed on hold, much to the delight of Insurance Brokers and Agents of the West (IBA West) members.
Under the proposal, businesses in the state would have been required to withhold 3 percent of payments to independent contractors, who now pay their state income taxes only in quarterly installments. If it had passed, the proposal is predicted to have generated $1.7 billion in revenue. The withholding requirement would have affected businesses such as painters, plumbers, mechanics and landscapers, as well as professionals who derive their incomes from contracting out their services, such as insurance agents, attorneys, doctors, real estate agents, architects and entertainers.
According to the Cal Chamber of Commerce, the proposal was an “onerous, never-ending mandate” that would have affected more than 1 million businesses and agencies for a “one-time money-grab.”
“Small businesses would have effectively been providing interest-free loans to the state,” IBA West said.
Topics California Agencies Contractors
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