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Understanding your CP157 Notice

We reduced the amount of the credit you claimed on Form 8827, Credit for Prior Year Minimum Tax – Corporations, you filed with your Form 1120, U.S. Corporation Income Tax Return.

Your notice includes the rate by which we reduced your refund. We’ll apply this sequestration (reduction) rate until the end of the IRS’s fiscal year, September 30, 2017, or until intervening Congressional action, at which time the sequestration rate may change.


What you must do

  • Read your notice carefully. It explains the changes we made to your tax account
    • If you agree, update your records.
    • If you disagree, contact us at the toll-free number on the top right corner of your notice for an explanation of how we reduced your refund.

Answers to common questions

Why did you reduce my credit?
The Balanced Budget and Emergency Deficit Control Act of 1985, as amended, required certain automatic reductions to take place as of March 1, 2013. These required reductions include a reduction to the refundable portion of the credit for prior year minimum tax for corporations.

What do I say when I call the IRS?
Mention that you received a CP157 notice and you need to review your account with a customer service representative. Be sure to have a copy of your notice and your tax return before you call.

What should I do if I disagree with the changes you made?
If you disagree, contact us at the toll-free number listed on the top right corner of your notice.

Can I appeal the decision to reduce my refund?
No, the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, require a reduction in the amount of your refund and you cannot appeal this reduction.


Tips for next year

If you claim the Form 8827 credit next year, we’ll reduce any refundable portion of the credit. That is, if the Form 8827 credit exceeds the tax, penalty, and interest on the return, we’ll reduce your refund before offsetting any amount to other balance dues or credit elected to the following year. Therefore, you may need to adjust your estimated tax payments for the reduction in the amount that will be credited to the next year.

Page Last Reviewed or Updated: 20-Mar-2017

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