Bipartisan Effort to Repeal ObamaCare Tax Reporting Provision Moves Ahead in Senate

By Matt Cover | January 26, 2011 | 3:33 AM EST

Sens. Mike Johanns (R-Neb.), left, and Joe Manchin (D-W.Va.) take part in joint media call to discuss their bipartisan effort to repeal a tax reporting provision in the health care law. (Photo: Sen. Johanns Web site)

( – The effort to repeal a widely disliked provision of ObamaCare is gaining steam in the U.S. Senate after a bipartisan coalition of 54 senators introduced a bill to get rid of the mandate that both sides agree will prove burdensome for business.

The provision, outlined in Section 9006 of the law, requires businesses to report to the Internal Revenue Service any transaction -- the sale of goods  or services -- engaged in with another business that is valued at more than $600. This would mean that a business would have to file a 1099 tax form in many cases for such transactions as hotel stays, meals, and purchases of office supplies.

Businesses also would have to send copies of the form to the other company involved in the applicable transaction.

Introducing their bill Tuesday, Sens. Mike Johanns (R-Neb.) and Joe Manchin (D-W.Va.) said the tax reporting provision would be harmful to American business.

“This provision has gotten a lot of attention for impacting businesses, but actually family farms and ranches, churches, charities, local governments all have to comply with its provisions,” Johanns said during a conference call with reporters.

“We’re going to work hard to repair this part that basically is so onerous on the small jobs that people depend on that come from the businesses that would have to be reporting,” Manchin added, favoring the term “repair” over “repeal.”

Both senators downplayed claims that the move was in any sense an opening salvo in an attempt to repeal the persistently unpopular ObamaCare law, the Patient Protection and Affordable Care Act.

“You know, there are many out there that have attempted to make this out as an attempt to bring down the health care bill or repeal it step-by-step or whatever,” Johanns said. “I never saw this as an appropriate part of the health care bill.  I think it was really thrown in there to try to raise some revenue. It has nothing to do with health care whatsoever.”

“This is a step I think in the most logical order of repairing and seeing where we go,” added Manchin.

Senate Majority Leader Harry Reid (D-Nev.) and Finance Committee Chairman Max Baucus (D-Mont.) also introduced legislation to repeal the so-call 1099 provision Tuesday.

The Reid-Baucus bill would accomplish the same end as the Johanns-Manchin measure but would not account for $19 billion in lost revenue.(Congress’ Joint Committee on Taxation has estimated that the tax reporting provision would raise that sum in revenue between 2012 – when it is scheduled to take effect – and 2020.)

The bill introduced by Johanns and Manchin would account for the lost revenue by directing the Office of Management and Budget to recoup unspent federal funds.

House Republicans have offered their own 1099 repeal bill, HR 4, which would also repeal the provision, although it has yet to come up for a vote.

Should the Johanns-Manchin effort – or the Reid-Baucus bill – succeed it would have to wait for the House to act.