(Kitco News) - Republican and Democratic Senators say they are introducing bills to repeal so-called Form 1099 reporting requirements that are broadly opposed by businesses, including gold-coin dealers.

Senate Finance Committee Chairman Max Baucus (D-Mont.) and Senate Majority Leader Harry Reid (D-Nev.) issued a statement Tuesday saying they have introduced a bill for repeal of the controversial rules that otherwise are scheduled to go into effect in 2012. Additionally, Sen. Mike Johanns (R-Neb.) said in a column posted on his Web site Monday that he intended to introduce legislation Tuesday continuing his past efforts to repeal the 1099 rules.

The law, as it currently stands, would require entities to file a Form 1099 with the International Revenue Service whenever they make transactions paying out $600 to another party.

The provision was included in health-care legislation passed last year. The measure does not create a new tax, but instead establishes a paperwork trail to force those who should be paying taxes to do so, if they aren’t already. However, the rules are opposed by a wide range of business groups who say it creates a paperwork burden, including farmers, truckers, shop owners and self-employed Americans.

Precious-metals shops may be one of the most heavily impacted sectors since the $600 threshold is less than half of the current price for one ounce of gold, meaning a substantial percentage of transactions will require increased paperwork. A spokeswoman for the Industry Council for Tangible Assets (ICTA) has said this is the issue on which the organization gets the most telephone calls from members. ICTA is a national trade group for the rare coin, precious metals and tangible assets industry.

Both Republicans and Democrats previously have sought repeal, although measures so far have failed largely due to differences on how to deal with any revenue that purportedly would be lost by nixing the new 1099 rules.

“Small businesses need to focus on creating good-paying jobs – not filing paperwork,” Baucus said.  “Many of my colleagues on both sides of the aisle want to work with the small-business community to eliminate these requirements, and it is my hope we can come together to pass legislation quickly.”

Lawmakers are looking to respond to concerns of small business owners, said the senators.

“Making it easier for small businesses to thrive should be something Republicans and Democrats can agree on,” Reid said. “I hope we can come together on common-sense reforms like these to improve a law that is already saving money and saving lives.”

Baucus and Johanns both introduced efforts to repeal the 1099 rules in November, although neither got the 67-voted super majority that was needed at the time.

“With our economy stuck in neutral, much of the talk in Washington rightfully is about the need for job creation and economic growth,” Johanns said this week. “While this administration is trumpeting a plan to rid the books of outdated federal regulations, Nebraska business owners find themselves bracing for a new one with the potential to cause a tsunami of unproductive paperwork: the 1099 tax mandate.”

By Allen Sykora of Kitco News; asykora@kitco.com

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