Businesses may get the relief they're seeking from an onerous tax reporting provision that was tucked into the healthcare reform law.

The Senate, in an 81-17 vote on Feb. 3, approved an amendment offered by Senator Debbie Stabenow (D-Mich.) to repeal a provision that would require businesses to file an IRS Form 1099 for each vendor from whom they make purchases of $600 or more. Under the current tax law, companies report money spent with unincorporated businesses including contractors and sole proprietors on 1099s, but not money spent with other corporations, or spent on the purchase of goods or property.

The repeal is backed by several business groups, including the U.S Chamber of Commerce, the National Federation of Independent Business, the American Institute of Certified Public Accountants, and the U.S. Small Business Administration, who feared that it would create a paperwork nightmare, particularly for small businesses. Previous efforts to repeal the measure fell short, largely due to disagreement over how to offset the cost.

The reporting requirement under Section 9006 of the Patient Protection and Affordable Care Act is currently slated to take effect for payments made after Dec. 31, 2011.

The Stabenow amendment, added to a bill on funding the Federal Aviation Administration, repeals Section 9006. It mirrors legislation floated previously by Sen. Mike Johanns (R-Neb.) by paying for the loss of revenue with unspent federal funds. The Stabenow amendment won't use unobligated funds from the Department of Defense, Department of Veterans Affairs, or the Social Security Administration to pay for the offset.

The repeal must still pass the House before it can be sent to the president. A bill to repeal the provision, the Small Business Paperwork Mandate Elimination Act of 2011, has already been introduced by Rep. Daniel Lundgren. The bill, which has been referred to the House Committee on Ways and Means, has 263 cosponsors.

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