What This Notice Means
The IRS applied the sequestration reduction rate to the refundable portion of your credits. The Balanced Budget and Emergency Deficit Control Act (BBEDCA) of 1985 requires it. The IRS made the adjustment using the information you provided.
Which Filings This Covers
The IRS received your forms, which may include:
- Form 990-T, Exempt Organization Business Income Tax Return, with
- Form 8941, Credit for Small Employer Health Insurance Premiums, claiming that credit for the period on the notice, or
- Form 3800, General Business Credit, claiming the Elective Payment Election (EPE).
What to Do
You don't need to take action. Keep the notice with your records for that tax period, and make sure your books show the reduced refundable amount, not the amount claimed.
Can You Appeal?
No. The change is required by BBEDCA, as amended, so it can't be appealed through the regular appeal process. If you have questions about the adjustment, the IRS will answer them. Call the number on your notice.
Where to Learn More
- For the small employer health insurance credit, the IRS covers sequestration in its Small Business Health Care Tax Credit questions and answers on calculating the credit.
- For an Elective Payment Election, the IRS publishes guidance on the effect of sequestration on Inflation Reduction Act elective payment elections.
When to Look Closer
Sequestration reduces only the refundable portion of the credit. If the adjustment on your notice looks larger than a sequestration reduction should be, or something other than the refundable credit changed, call the IRS and ask. You can authorize a representative with Form 2848.
If your organization received a CP156 notice and the adjustment doesn't look right, call us at (813) 229-7100.