Engineering Inc. - November/December 2007 - 13

Mark Bernhardt (center) of Burgess and Niple and ACEC Government Affairs Vice President Steve Hall (right) greet Rep. David Wu (D-Ore.), chairman of the House Science and Technology Committee’s Technology and Innovation Subcommittee, prior to a hearing on the safety of critical infrastructure. Bernhardt testified before the full committee on behalf of ACEC on current and future bridge inspection technology. Highways Administration, AASHTO and the academic sector. Bernhardt briefed the panel on inspection techniques and technologies. He also discussed the value of Structure Health Monitoring technology that uses strain gauges, fiber optics, cameras and corrosion sensors to provide decision-makers with reliable, real-time information they can use to monitor and respond to problems with bridge structures. House Approves delay in implementation of 3 Percent Withholding Mandate The House of Representatives voted in October to delay implementation of the 3 percent withholding mandate for one year from 2011 to 2012 and to require the U.S. Treasury Department to complete a study of the burdens this provision would place on governments and businesses. This latest action comes as support for legislation to repeal the mandate continues to build. A lobbying effort led by ACEC and the National Association of Counties has secured a majority of the House as co-sponsors of H.R. 1023, legislation introduced by Reps. Kendrick Meek (D-Fla.) and Wally Herger (R-Calif.). The Meek/Herger bill would repeal Section 511 of the Tax Increase Prevention and ReconcilWally Herger (R-Calif.) iation Act of 2005, which requires that federal, state and local governments withhold 3 percent from payments for goods and services starting in 2011. During floor consideration, supporters of the repeal legislation, including Herger, made clear that the House action to delay implementation until 2012 was the first step toward full repeal. tax legislation Preserves cash Accounting option Rep. Allyson Schwartz (D-Pa.) has introduced key ACEC tax legislation to preserve engineering firms’ use of the cash method of accounting. H.R. 3770, the Qualified Personal Service Corporation Clarification Act, would update the federal tax Allyson Schwartz (D-Pa.) code and allow engineering firms to continue using the cash accounting method—where taxes are paid in the tax year when payment for services is rendered—as opposed to the accrual method, which requires taxes to be paid in the tax year the service is performed. Congress last addressed this issue in the 1986 tax law that required most C corporations with annual revenues greater than $5 million to use the accrual method. In doing so, Congress recognized that certain service providers, such as architecture and engineering firms, should continue to use cash accounting, since they neither manufacture a product nor carry any inventory. Since 1986, however, the nature of the engineering industry has evolved, as more clients want firms not only to design facilities, but also to build, operate, maintain and even finance those facilities. Engineering firms have evolved to meet these demands but, in doing so, they have changed their internal structure in a way that puts at risk their ability to continue to use cash accounting. H.R. 3770 will remedy this looming problem by updating the tax code’s ownership and function tests to ensure that A/E firms can continue to use cash accounting. President threatens veto of WrdA; override Anticipated President Bush has threatened the veto of the Water Resources Development Act (WRDA) of 2007, objecting to its $21 billion price tag. The legislation had been passed by wide bipartisan majorities in Congress to fund hundreds of backlogged U.S. Army Corps of Engineers projects throughout the country that have been put on hold for the past seven years. ACEC is pushing House and Senate leadership to schedule an immediate floor vote to override when the veto occurs. The bill authorizes the Corps to proceed with critical project planning and studies; without an authorization bill, Congress cannot appropriate the needed funding. n For MorE nEWS JorGe rey/aP ImaGeS For weekly legislative news, visit acec’s Last Word online at www.acec.org. NovEmbER / DECEmbER 2007 ENGINEERING INC. 13

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Engineering Inc. - November/December 2007

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