Washington, D.C. - Many small business owners and a number of lawmakers in Congress have galvanized around efforts to repeal an expansion of Form 1099 tax reporting included in the new health care bill.

According to the Cato Institute, a libertarian think tank, “The changes will force millions of businesses to issue hundreds of millions, perhaps billions, of additional IRS Form 1099s every year.” In other words, it would require businesses of all sizes to track all spending, from electric bills to property purchases, and send 1099 forms to all those providers. The Cato Institute calls it an attempt “to raise revenue for an increasingly rapacious Congress.”

As a result, alarmed businesses have pushed their congressional representatives in recent months to amend or repeal that part of the healthcare bill- so far with no success.

Recent amendments that died in the Senate in September were sponsored by Senators Mike Johanns (R-Nebraska) and Bill Nelson (D-Florida). Johanns would have repealed Section 9006 entirely, paying for it with cuts to spending from a new public health fund, while Nelson proposed scaling back reporting requirement to total purchases of more than $5,000 per year and excluding companies with fewer than 25 employees.

Other amendments have also been proposed or are in the works.

The Obama Administration reportedly supports amending the section in some form, but does not support a full appeal.

Section 9006 is slated to go into effect for payments made after Dec. 31, 2011, requiring businesses to get a head start on record keeping.

“Businesses would have to report almost every transaction to another business during the course of a year,” says Bill Rys, tax counsel for the National Federation of Independent Business, in an interview with Compliance Week. His group is part of a coalition of more than 120 organizations calling for the provision’s repeal. “This will basically turn every small business owner in the country into an accountant,” he said.

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