WASHINGTON -(Dow Jones)- Congressional Democrats may water down or repeal new tax reporting rules that is supposed to raise $16 billion for health-care legislation, facing a chorus of criticism about the rules.
House Democrats were forced to postpone a vote late Thursday on a GOP motion calling for repeal of the reporting requirement. That, in turn, delayed action on an $11 billion bill that expands federally-subsidized bonds for infrastructure projects. House lawmakers may add language to the infrastructure bill to weaken or repeal the IRS reporting regime, Democratic aides said.
"This is an issue we want to address and now we have an opportunity to do so," said Kristie Greco, a spokeswoman for House Majority Whip James Clyburn (D., S.C.).
A vote on a revised infrastructure package could come as early as Friday, but House Democratic aides said no final decisions have been made.
In the Senate, Sen. Mike Johanns (R., Neb.) is seeking to add language repealing the requirement to a package of small business tax breaks.
Starting in 2012, businesses will be required to file a 1099 to the Internal Revenue Service for each supplier or service provider to which payments exceed $600 in a single year. They are already required by law to report payments to non-corporate service providers, but the health-care law broadened that to include corporate vendors and purchases of goods.
"When small businesses are focused on filling out paperwork and filing more tax forms, they aren't focused on creating jobs," said Rep. Dave Camp (R., Mich.), author of the House motion.
The National Federation of Independent Business, an influential small business group, put House lawmakers on notice Thursday that it would include the Camp motion in the vote ratings it assigns lawmakers annually.
The reporting rules have also come under fire from the National Taxpayer Advocate, an independent office within IRS. It said in a July report that the costs to businesses may outweigh any benefit the IRS gleans from the added information.
Four Senate Democrats, led by Sen. Mark Begich (D., Alaska), also called on IRS in a letter earlier this month to minimize the burden on businesses from the provision. They said they weren't looking to repeal it.
The IRS has already said that small businesses will not be required to report payments made by credit card. It is accepting public comments on implementation of the law and mulling additional ways to ease the requirement.
The problem congressional Democrats face, if they make changes to the law, is how to replace the revenue that was to be generated for the health-care overhaul.
At the same time, House leaders are anxious to pass the infrastructure bill before they leave town at the end of this week for a six-week summer recess.
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