GOP, business lobby continue assault on new IRS filing mandate in health law

Sen. Mike Johanns (R-Neb.) this week continued his push to eliminate a controversial tax-reporting provision of the new healthcare reform law, vowing to offer his repeal bill at every turn.

“I will file this amendment on every viable vehicle that comes to the Senate floor,” Johanns said Monday at a healthcare forum hosted by the U.S. Chamber of Commerce. “Sooner or later, we’ll get a vote and we’ll see who stands with our job creators and who does not.”

Under the Democrats’ new healthcare reform bill, companies, nonprofits and government offices are required to file 1099 forms with the IRS when goods purchased from another business exceed $600 in a year. Under previous law, the reporting requirement pertained only to services exceeding that amount.

The new mandate goes into effect at the start of 2012.

Conservatives on Capitol Hill have joined many in the business community in slamming the provision, arguing that it will hobble small businesses with onerous new paperwork mandates amid a fragile economy when the resources would be better spent hiring new workers.

“The most routine business expenses will be subject to this new burdensome paper trail,” Johanns said Monday. “This mandate has nothing to do with improving the healthcare of this country and should not be part of this law or any other.”

The Chamber of Commerce is backing Johann’s effort, launching a website Monday where small businesses can register their complaints with the new reform law. 

“Nothing could be more important than for Congress to hear about what this healthcare law is doing, and to hear it directly from the small-business owners who are being affected by it,” said Randel Johnson, the Chamber’s senior vice president of labor and employee benefits. “As businesses begin to feel the impact of 1099 requirements, the employer mandate, and new taxes, our website will serve as a resource for business owners to become informed, speak out, and be heard.”

Johnson also warned that, “if necessary,” the Chamber will “consider legal options.”

Democratic leaders are defending the new 1099 mandate, arguing that it will close the business tax gap. Indeed, the Congressional Budget Office estimated that the change will increase government revenues by $17 billion over the next decade. 

That places a high hurdle before supporters of the repeal effort, who would face pressures to offset that amount with cuts or revenue hikes elsewhere in budget.

Meanwhile, some consumer advocates are battling against the claims that healthcare reform is bad news for business. Families USA, a Washington-based healthcare advocate, issued a series of reports this month detailing the benefits of new tax credits on small businesses in each state.