NU Online News Service, Sept. 15, 12:41 p.m. EDT

WASHINGTON–The Senate rejected the first efforts to revise or repeal a provision of the health care reform law that puts stringent tax-reporting mandates on small businesses.

The mandate requires businesses and others to issue Form 1099s to vendors from whom they purchase goods totaling $600. The provision has garnered opposition from a broad coalition of businesses.

Yesterday, an amendment to the Small Business Jobs Act (H.R. 5297) proposed by Sen. Ben Nelson, D-Fla., and supported by the administration, failed a 60-vote procedural test 56-42.

At the same time, the votes cleared the way for further action on the legislation, which is designed to create jobs by reviving tax cuts that expired in December.

That vote came shortly after the Senate also rejected, by 46-52, an amendment by Sen. Mike Johanns, R-Neb., that would have repealed the reporting requirement.

Insurance trade groups, including the National Association of Mutual Insurance Companies, the Independent Insurance Agents and Brokers of America, and the National Association of Insurance and Financial Advisors, joined dozens of other groups seeking repeal of the provision.

The provision is designed to raise $18 billion in revenue over 10 years.

It mandates that all businesses, tax-exempt organizations, and federal, state and local government entities issue Form 1099s to vendors from whom they purchase goods totaling $600 or more during a calendar year beginning in 2012.

A staff official of the National Association of Insurance and Financial Advisors who is tracking the issue

said the organization welcomes modifications to the new 1099 requirements.

Charles Symington, senior vice president for government affairs at the IIABA, called the Senate vote "disappointing."

He added that this "is a critical issue for small businesses across the country, including independent insurance agencies. We will continue to work with those in Congress to repeal this onerous provision of the health care bill before it goes into effect."

Jimi Grande, senior vice president of federal and political affairs for NAMIC, said in a statement after the vote: "This provision will significantly increase costs and bureaucratic red tape for businesses and charities across the country. At a time when our economy is foundering, it's troubling to see the Senate vote against this common-sense amendment. Instead, money that could be used to hire new employees or re-invest in a business will go to government coffers."

The Nelson amendment would have exempted firms with 25 or fewer workers from the reporting mandate and raised the reporting threshold to $5,000 for the rest.

The Johanns amendment would have repealed the provision and paid for the repeal by diverting $11 billion from the health care reform law's new prevention and public health fund. The fund was established to shore up anti-tobacco and obesity programs, fortify public health departments, and offer more services to underserved communities, among other things.

In a statement on the Senate floor, Sen. Nelson accused Republicans of trying to start repeal of health care reforms now. Sen. Johanns' amendment would have reduced some of the subsidies available under the health care law.

Republicans essentially responded they'll be back.

"Whether this was an intended consequence, or an unintended consequence, this is a disaster for small businesses around the country," said Mr. Johanns.

Most major business groups back his approach.