WASHINGTON — The House voted overwhelmingly on Thursday to repeal burdensome tax-reporting requirements that were imposed on small businesses to help pay for the expansion of health insurance coverage under the new health care law.
But no immediate relief for small business is in sight because the House and the Senate disagree on how to pay for the expected loss of revenue, more than $20 billion over 10 years. The White House, while supporting repeal, has not recommended a way to offset the cost.
The vote on the House bill was 314 to 112, with 76 Democrats joining 238 Republicans in support of the measure. All of the no votes were cast by Democrats.
Lawmakers said the goal of repealing the paperwork mandate had nearly universal support in Congress. The Senate approved a similar change last month, financed in an entirely different way.
The deadlock shows the difficulty of making even small changes in the health care law, one of President Obama’s proudest achievements, which was passed last year without any Republican votes.
Stephanie Cathcart, a spokeswoman for the National Federation of Independent Business, said the uncertainty was frustrating to small businesses. “Only in Washington can you have something so universally agreed to, and yet we still cannot get it done,” Ms. Cathcart said.
Under the law, businesses must file reports with the Internal Revenue Service on Form 1099 identifying most providers of goods or services to whom they pay $600 or more in a year.
Tax experts said the reports would improve compliance by encouraging vendors of goods and services to pay more of the tax they owe, just as individuals are more likely to pay tax on dividends and interest if they know that such income has been reported to the I.R.S. by banks and mutual funds.
But small businesses said the law would impose a huge administrative burden, requiring them to hire accountants and buy computer software to report routine purchases of office equipment, food, gasoline, lumber and thousands of other items.
Representative Cathy McMorris Rodgers, Republican of Washington, said: “The 1099 reporting requirement is an administrative nightmare for employers. It has the potential to devastate small businesses.”
The new health care law requires most Americans to carry health insurance, starting in 2014. People with modest incomes will be eligible for subsidies, or tax credits, to help them afford the premiums. The amount of the subsidy is based on a person’s income, estimated from tax returns for prior years. People may be required to repay some or all of the tax credit if their actual incomes prove to be higher than estimated.
The House bill increases the amount that people may have to repay.
Democrats denounced this as a tax increase on the middle class and said that honest taxpayers might find themselves owing large sums to the I.R.S.
But Representative Dave Camp, Republican of Michigan and chairman of the Ways and Means Committee, said, “Paying back money that you were not entitled to is not a tax increase.”
Representative Kevin Brady, Republican of Texas, said, “If you get a subsidy you don’t deserve, you will have to pay it back.”
Representative Joseph Crowley, Democrat of New York, said: “We all believe the 1099 reporting requirement needs to be repealed. We, too, want to help small business, but not on the backs of middle-class taxpayers.”
To illustrate how the Republican bill would work, Mr. Crowley gave this example: A family of four with an annual income of $88,000 buys a typical family insurance policy costing $13,000. The family would have to pay $8,360 in premiums and could qualify for a federal tax credit of $4,640, which the Treasury would pay directly to the insurance company. If the breadwinner receives a $250 bonus at work, the family would become ineligible for the tax credit and would have to repay the full amount, $4,640, with its income taxes.
Representative Ron Kind, Democrat of Wisconsin, described the repayment obligation as “a Republican tax trap.” Representative Lloyd Doggett, Democrat of Texas, said it was “a tax on success” that would penalize people whose incomes had increased because of a raise, a bonus or additional hours of work.
The Senate voted in February to repeal the reporting requirement. It would give the White House Office of Management and Budget broad discretion to offset the cost by refusing to spend money already appropriated by Congress.
Mr. Obama strongly supports repeal of the reporting requirement, but objects to the financing used in the House and Senate bills. He has not proposed an alternative.
