The House moved one step closer to repealing the expanded 1099 information reporting requirements in the Affordable Care Act and Small Business Jobs Act on Wednesday by approving a controversial offset to the cost of the repeal.

In a 252-175 vote, lawmakers approved a rule that would require people who have received tax credits under the health care reform law, but who earned too much income that year to qualify for the subsidies, to have to repay the money. House Democrats argued against the rule during floor debate, particularly Rep. Joseph Crowley, D-N.Y., according to The Hill’s Floor Action blog, claiming it amounted to a tax increase.

However, Republicans countered that the subsidies would not take effect until 2014 anyway, and Health and Human Services Secretary Kathleen Sebelius had supported a similar change in the law last year. In the end, only 14 Democrats voted in favor of the rule. The vote approving the rule, however, sets up a vote for Thursday on repealing the 1099 requirements.

The bill, H.R. 4, introduced by Rep. Dan Lungren, R-Calif., would repeal the provision in the health care reform bill requiring businesses to report any purchases of goods or services of over $600 in a calendar year from another business to the IRS on a Form 1099-MISC. It would also repeal a provision in the Small Business Jobs Act that apply the same requirements to rental property businesses.

The Senate passed its own repeal last month of the 1099 provisions in the Affordable Care Act as part of a larger reauthorization bill modernizing air traffic control technology at the Federal Aviation Administration (see Senate Passes FAA with 1099 Repeal). However, that bill relies on unspecified cuts in federal spending to pay for the cost of the repeal. It also does not include provisions repealing the rental property owner 1099 requirements in the Small Business Jobs Act.

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