The House of Representatives last week took the first step in repealing a major looming paperwork hassle for small business.

President Obama's health care reform law requires small businesses, starting in 2012, to report to the IRS all payments of more than $600 on 1099 forms. The provision is intended to catch tax cheats.

But critics say it will create a big burden for struggling small firms and cost more to comply with than it would raise in tax revenue.

“It's a reporting requirement. I call it a snitch act. It's basically assuming the people you do business with are cheating”, said Rep. Dan Lungren (R-CA). “So therefore, the government requires paperwork on your side because of something they believe may or may not be occurring with respect to somebody on the other side of a business transaction.”

The Senate is expected to pass the House measure and the President has said he will sign it.

“The President thinks it's bad. Democrats think it's bad. Republicans think it's bad. Even the Senate thinks it's bad,” said Rep. Charles Boustany (R-LA).  “It's taken long enough to move on this. Let's do it. Let's get it done.”

The Senate is expected to pass the change within weeks.

Peter Barnes joined FOX Business Network (FBN) in September 2007. He serves as FBN's senior Washington correspondent.