TaxNewsFlash-Exempt Organizations

March 11, 2008
No. 2008-21

IRS Requests Comments Concerning 3% Withholding on Payments Made by Government Entities for Services and Property

The IRS today released an advance copy of Notice 2008-38 which states that the Treasury Department and IRS intend to issue guidance to government entities concerning the mandatory 3% withholding requirements on payments made by federal, state, and local governments (or their paying agents) for services and property after December 31, 2010.

The IRS is requesting comments on the proposed guidance under section 3402(t)—the Code provision that generally requires all government entities to withhold 3% of payments for services and property. Comments must be submitted with 45 days after today’s release.

For an electronic version of today’s notice: Notice 2008-38

Notice 2008-38 will appear in a future edition of the Internal Revenue Bulletin.

For more information, contact Rick Speizman, National Partner-In-Charge, KPMG’s Exempt Organizations Tax Practice (ExoTax), at (202) 533-3084 or rspeizma@kpmg.com

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