Effect of Sequestration on Small Business Health Care Tax Credit for Fiscal 2017

Oct. 1, 2016

Pursuant to the requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, refund payments issued, as well as credit elect and refund offset transactions, for certain small tax-exempt employers claiming the refundable portion of the Small Business Health Care Tax Credit under Internal Revenue Code Section 45R, are subject to sequestration.

This means that refund payments processed on or after Oct. 1, 2016, and on or before Sept. 30, 2017, as well as credit elect and refund offset transactions processed on or after Jan. 1, 2017, and on or before Sept. 30, 2017, will be reduced by the fiscal year 2017 sequestration rate of 6.9 percent, irrespective of when the original or amended tax return was received by the IRS. The sequestration reduction rate will be applied unless and until a law is enacted that cancels or otherwise impacts the sequester, at which time the sequestration reduction rate is subject to change.

Affected taxpayers will be notified through correspondence that a portion of their requested payment was subject to the sequester reduction and the amount.