The Senate last week voted to repeal a provision in the health care reform law that would have next year required all businesses, farmers and ranchers included, to record and report virtually every purchase or series of purchases of goods and services totaling more than $600 to a single person or entity.

We trust the House will soon take up the measure.

Under current law, all business operations are required to report to the Internal Revenue Service payments totaling $600 or more for services performed by a person not treated as an employee; payments of rent totaling $600 or more; payments of prizes to one individual of $600 or more; and payments of royalties of $10 or more. Purchases of raw materials -- fuel and seed, for example -- are not reported.

The reportable, cumulative payments are recorded each year on a Form 1099. Filers send a copy to the IRS, a copy to the payee and keep a copy for their records. The forms are meant to keep the person receiving the payment honest.

But the federal government says an underground economy produces untaxed transactions, and estimates that $290 billion in tax revenues go uncollected each year. The IRS attributes the gap to individuals and businesses who either fail to file returns, understate income and overstate deductions on returns they do file, or fail to pay the full amount of tax indicated on the return.

To narrow that "tax gap," and provide additional revenue with which to offset the staggering costs of the health care reform bill, Democrats who wrote the reform law inserted the new reporting requirements. Though it was only a few obscure lines buried in more than 2,000 pages, the provision quickly came to light and was universally renounced by businesses large and small. The Heritage Foundation estimated that it would cost businesses an additional $9 billion a year to comply. That would have amounted to a 9 percent surcharge on honest businesses to capture the $87 billion the IRS said it could realize through the program.

And though Democrats continued to defend the provision early last month, it fell victim to President Barack Obama's separate pledges to tweek health care reform and eliminate burdensome regulations that harm small businesses.

It's a good start on the latter. The measure would have been a boon to accounting firms, but a costly burden to farmers and ranchers.

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