Reid, Baucus move to repeal 1099 provision

The two Democratic leaders in the Senate most responsible for enactment of the healthcare reform law last year are now pushing for a change in the law, even as they fight off Republican efforts to make other changes or repeal the entire measure.

Senate Majority Leader Harry Reid (D-Nev.) and Max Baucus (D-Mont.), chairman of the Senate Finance Committee, introduced legislation Tuesday that would repeal the healthcare law's requirement for businesses to report every vendor payment valued at $600 or more to the IRS using Tax Form 1099. The provision has drawn near-universal scorn from business advocates for creating a new regulatory burden for little benefit and none related to healthcare.

“Small businesses, the engine of our economy, told us the 1099 provision was burdensome, and we are responding quickly to ensure that they can keep running smoothly,” Reid said in a written statement.

An effort to pass a 1099 repeal in the last Congress fell apart over objections from some patient advocates and Democrats that the loss of tax revenue expected from canceling the program would be offset by cuts to a preventive-care fund. Reid plans to use an as-yet-unspecified alternative cost offset, he said during a Tuesday news conference.

The Reid-Baucus bill also will face competition from another 1099 repeal measure sponsored by Mike Johanns (R-Neb.) and Joe Manchin (D-W.Va.).

“I think you're going to see a lot of erroneous tax penalties if this goes into effect,” Manchin said during a Tuesday call with reporters about the 1099 program. “You're going to have small businesses who are penalized because they didn't get this 1099 or that one.”