Senator Max Baucus, chairman of that chamber's tax-writing committee, said he would introduce legislation to repeal that part of the law, which requires filing so-called 1099 forms, after small business groups complained it would become a paperwork nightmare.
Republicans, who won control of the U.S. House of Representatives election and gained seats in the Senate in the recent elections, have vowed to try to repeal the entire healthcare law. They have also sought repeal of the 1099 provision separately.
Baucus noted that the change was originally proposed under former Republican President George W. Bush.
Baucus said he was convinced by business groups' complaints that it was an administrative burden.
"I have heard small businesses loud and clear and I am responding to their concerns," Baucus said in a statement.
Obama last week said that he would fight any attempt to repeal the legislation, but would be willing to consider some Republican ideas. He suggested the two sides work together to change the new business transaction reporting requirement.