Section 9006 of the Patient Protection and Affordable Care Act, signed into law in March, modifies tax rules governing reporting requirements for business-to-business transactions.

Under current law, whenever a business receives more than $600 worth of services from a sole proprietor, partnership or limited liability corporation, they are required to report that transaction to the Internal Revenue Service by filling out a Form 1099.

These forms are designed to capture various forms of income other than wages, salaries and tips that would not otherwise be reported to the IRS.

However, beginning in 2012, businesses will have to begin filing the forms whenever they purchase more than $600 worth of services or goods from any individual or corporation within a given tax year.

The move is estimated to raise $17 billion dollars in revenue over 10 years and help offset the costs of the nearly $1 trillion health care package and narrow the nation's tax gap -- the amount of tax revenue the government is owed versus how much it actually collects. Current estimates place that tax gap between $290 and $345 billion a year.

However, business and taxpayer advocates say the new reporting requirements place an undue burden on small businesses.

"This disproportionately is going to harm small business," said National Federation of Independent Businesses spokeswoman Stephanie Cathcart.

The NFIB estimates that small businesses spend $74 per hour when filling out tax paperwork in compliance with current law. They also say that small businesses, which lack the in-house finance divisions of larger corporations, also spend 66 percent more than their larger counterparts on complying with the tax code.

With the new reporting requirements, some say small businesses will soon be overwhelmed with the new paperwork requirements.

House Ways and Means Committee Ranking Member Dave Camp, R-Mi., said, "Let's say you are a small business owner: Buy a computer from Apple? File a form. Paper from Staples? Another form. Groceries from a local supplier? Keep filing. The list goes on and on for millions of job providers."

Cathcart added, "If you're self-employed and work at home and have a plumber come, that's 1099 material."

The Internal Revenue Service's Taxpayer Advocate office issued a report last month also raising concerns over the measure.

"The Office of the Taxpayer Advocate is concerned that the new reporting burden, particularly as it falls on small businesses, may turn out to be disproportionate as compared with any resulting improvement in tax compliance," the report said.

Since 2004, the Taxpayer Advocate's office had recommended legislation to improve reporting requirements of services rendered, but not for goods provided.

The report cited several areas of concern that the advocate's division felt could "significantly impair the normal course of commerce."

Among those was the fact that businesses must obtain tax identification numbers from vendors prior to completing transactions. The report raised privacy concerns for vendors because some sole proprietors use their Social Security number as a tax identification.

Also, if a vendor did not provide a correct tax ID number, the small business is required to withhold 28 percent of the purchase price. The report says that could lead to vendors refusing to sell an item unless the purchaser agrees to pay the full price.

"No business should have to choose between compliance with back-up withholding and losing access to vendors," the report says.

The report also says the provision could funnel business to larger corporations who promise better tracking methods of purchases than smaller, independent businesses.

"Small businesses seeking to minimize recordkeeping burden thus will have an incentive to use large vendors that can produce these reports for them," the report states.

"As a consequence, small businesses that lack the capacity to track customer purchases may lose customers, leaving the economy with more large national vendors and less local competition."

Lawmakers have already begun to push for a repeal of the new reporting requirements.

Rep. Shelley Moore Capito, R-W.Va., is one of 124 co-sponsors of a House Resolution that would repeal the section. A similar bill is pending action in the Senate.

"Small businesses cannot afford to fill out complicated and expensive tax paperwork every time they purchase office supplies or food for an event or even postage for shipping," Capito said.

"With unemployment hovering around 10 percent and small businesses reluctant to hire workers for fear of new and higher taxes, it's wrong to punish our nation's job creators with unnecessary costs."

However, Sens. Rockefeller and Goodwin, both D-W.Va, support the increased reporting requirements contained in the health care bill, which they noted will ease the financial burden on small businesses by lowering health care costs.

"Sen. Rockefeller believes the Patient Protection and Affordable Health Care Act will help small businesses and make sure thousands of West Virginians get the quality health care they deserve," said a spokesperson from Rockefeller's office. "This provision promotes more accurate filing that will serve the people and improves reporting requirements for small businesses."

Goodwin's office said in a statement, "Sen. Goodwin is overall supportive of this provision as it is designed to increase accuracy and make sure that all businesses are paying their fair share. He will be reviewing this and other provisions in the coming weeks."

Goodwin and Rockefeller's statements echo those made by Sens. Mark Begich, Ben Nelson, Jeanne Shaheen and Evan Bayh in a June 12 letter to IRS Commissioner Douglas H. Shulman.

"We appreciate the intent of the 1099 provision to level the playing field," the letter states. But the senators did acknowledge the new paperwork burden on small businesses.

"Not only will the 1099 form be necessary for millions of new transactions, the stricter requirements force business owners to collect taxpayer identification information from vendors, contractors and other companies," they said.

They asked the IRS, which will also be forced to deal with the influx of new paperwork, to consider ways to ease the burden on small businesses.

"We insist that the IRS develop ways in which small businesses can reduce expected paperwork from this requirement -- possibly through consolidating existing forms," the letter states.

The senators asked the IRS to report its proposals to the Senate prior to the law's implementation in 2012.

The IRS is currently conducting a public comment period on how to most effectively implement the change in reporting requirements.

More information on how to comment is available at www.irs.gov. The public comment period runs until Sept. 29.