Remember that 1099s tax filing requirement that was a part of the new health care reform law, the one that would require small businesses to file forms for every vendor they paid over $600 for in goods in any given year, greatly expanding the paperwork burden for most small businesses? The House failed on Friday to fix it (insert expletive here).

The requirement would hit about 38 million businesses, charities and tax-exempt organizations, many of them small businesses already swamped by government paperwork, according to a recent report by the National Taxpayer Advocate. It would also create an avalanche of paperwork that could strain the IRS itself, wrote the advocate, an independent watchdog within the IRS.

Businesses that repeatedly make small purchases from the same vendor would have to keep good records in case the total exceeded $600 in a year. Companies would also have to get vendors’ tax identification numbers to include in the filings.

“Tax paperwork and compliance are already major expenses for small businesses,” a coalition of 80 business groups recently wrote lawmakers. “This new and expanded requirement means that almost every business-to-business transaction is potentially reportable to the IRS.”

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Paperwork nightmare: A struggle to fix new law