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Understanding TIPRA: Tax Increase Prevention and Reconciliation Act Summary

The Tax Increase Prevention and Reconciliation Act (TIPRA), authorized by Public Law No. 109-222 in May 2006, mandates that federal, state, and local governments withhold 3% of certain payments to entities providing goods and services. This rule applies to payments exceeding $10,000 to private vendors under government contracts. Implementation faced delays and challenges, including unfunded mandates and inadequate infrastructure. The act is currently under scrutiny for possible repeal. For further inquiries, contact Yvette Dunbar at 304-480-7053 or yvette.dunbar@bpd.treas.gov.

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Understanding TIPRA: Tax Increase Prevention and Reconciliation Act Summary

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  1. TIPRA Tax Increase Prevention and Reconciliation Act

  2. What is TIPRA? • Authorized by Public Law No. 109-222, Section 511 in May 2006 • Requires federal, state, and local governmental entities to withhold 3% of specified payments due to any entity providing property or services to government agencies • Implementation date: December 31, 2011

  3. Who and What TIPRA Affects • Payments to private vendors for goods/services under government contract • Agencies with > $100,000 of applicable payments • Only payments > $10,000 • Note: TIPRA does not apply to Travel payments

  4. Challenges To Implement TIPRA • Unfunded mandate / cost of implementation • Infrastructure not in place to capture and report data • Lack of processes to collect and remit payments • IT system modifications and maintenance • Impact to small business population

  5. Status of TIPRA • Pending legislation to repeal TIPRA??? • Implementation date has been pushed back • ARC and Oracle applications are set up to handle TIPRA transactions if necessary

  6. ARC’s Role in TIPRA • Test system functionality to ensure compliance • Develop procedures, reporting tools, etc. • Participate in task force workgroup meetings headed by OMB when offered • Business Process Change Group • System Change Group • Legislation Change Group

  7. For More Information On TIPRA • If you have specific questions or would like additional information, please contact: Yvette Dunbar 304 480 7053 yvette.dunbar@bpd.treas.gov

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