Senators Reintroduce Bill To Repeal Small Business Reporting Requirement From Health Law

As President Obama prepares to defend the Affordable Care Act in tonight’s State of the Union address, a bipartisan group of senators have reintroduced two separate bills to repeal a portion of the law. Both measures seek to eliminate a requirement that businesses fill out a 1099 tax form for purchases over $600:

– SEN. MIKE JOHANNS’ (R-NE) BILL 52 CO-SPONSORS, 12 DEMS: The bill would repeal the reporting requirement and would pay for the loss in revenue by directing Office of Management and Budget (OMB) to identify $39 billion in unspent and obligated accounts. In November, the bill failed 61 to 35, but 21 Democratic voted for the measure.

– SEN. MAX BAUCUS’ (D-MT) BILL CO-SPONSORED WITH REID: The bill would repeal the reporting requirement, without making up the $17 billion in lost revenues.

Both sides have played politics with the issue, although everyone — including Obama — agrees that the measure would present a serious paperwork burden to employers were it to go into effect in 2012. But at the end of last year, Republicans twice objected to attaching a repeal measure to the tax compromise and Democrats have failed to come up with an alternative way to pay for repeal.

Johanns’ measure has its problems, but it’s not clear what Democrats stand to gain by drawing out the debate — if they want to produce their own repeal alternative, then they best find some way to pay for it. One thing worth highlighting, however, is that Johanns is asking the OMB to identify $39 billion in savings while the revenue lost from eliminating the 1099 requirement is just $17 billion. He pays for it and then some.

The 1099 provision was originally designed to bolster the tax compliance of sole proprietors and pay for the coverage expansion in the law.