The U.S. Senate fell six votes short today (Nov. 30) in its bid to repeal the federal health reform law’s provision requiring businesses to report on 1099 tax forms anyone to whom they pay $600 or more in a year.

Max Baucus

The insurance industry and business groups have been fighting the provision in the health law, passed in March, saying it will be burdensome. The intent of the provision is to improve tax law compliance and it would generate an estimated $17 billion in the next 10 years, money that will be used to pay for health reform.

The National Association of Professional Insurance Agents (PIA) said it was “disappointed” that the Senate effort failed, 61-35. It needed 67 votes to include the amendment as part of a food safety bill. Another attempt at considering the repeal of the provision failed, 44-53.

The provision would affect businesses of all sizes, as well as governments and nonprofits. They would have to file a 1099 form with the Internal Revenue Service reporting any purchases they make of goods or services of $600 or more in a tax year from any individual or business, including corporations.

The PIA called the requirement “an onerous burden on small businesses, including independent insurance agencies,” according to a statement.

“However, we are optimistic that repeal will be successful,” the PIA said. “When it comes to repealing the 1099 requirement, it’s not a matter of if, but when, and when is soon.”

But Senate Finance Committee Chairman Max Baucus (D-Mont.) told Reuters, “We have plenty of time.” The provision doesn’t take effect until 2012, but its repeal has won widespread bipartisan support just weeks before the end of the lame-duck session of Congress. A new Congress, featuring a Republican majority in the U.S. House of Representatives, takes office in January.

The provision was to be implemented in 2011, but was delayed a year.