President Barack Obama gave a boost late Tuesday to efforts to remove from the health care reform package a provision that would force building material dealers and other small dealers to issue huge numbers of 1099 tax forms to vendors, suppliers, and contractors.

Obama didn't specifically cite the 1099 tax form issue in his State of the Union address, but he did reference the need to correct "a flaw in the legislation that has placed an unnecessary bookkeeping burden on small businesses."

At issue is a provision of the health care reform act requiring all business that spend at least $600 with a vendor, supplier, or contractor must file a 1099 tax form with the Internal Revenue Service identifying who got the money. It was included because the requirement is expected to generate $17 billion in new revenue, thus helping pay for health care initiatives. But small-business groups such as the National Lumber and Building Material Dealers Association have blasted the provision as a huge administrative burden.

"We are glad that both the president and Republicans recognize this part of the healthcare reform bill,” NLBMDA president Michael O'Brien told ProSales today. "They have made several attempts to repeal it, and now the challenge that Democrats and Republicans face is to work together to repeal it." On Nov. 29, the Senate rejected two initiatives that would have repealed the 1099 provision. While general support for change was strong, there weren't enough senators who agreed on the details to provide the two-thirds vote needed to attach the repeal to a food-safety bill now on the Senate floor.

"We continue to encourage all members of the LBM industry to contact their legislators," O'Brien said.