Sequestration Reduction to Health Care Tax Credit
As a result of the federal budget cuts required by Sequestration, the IRS has announced an 8.7% reduction in the amount of the refundable health insurance tax credit for nonprofit organizations. The automatic budget cuts went into effect on March 1, 2013, and the reduced tax credit rate will be in effect until September 30, 2013 (or intervening Congressional action), at which time the rate may be changed. The refundable health care tax credit is available for small employers, including nonprofit organizations, who provide health insurance for employees. For nonprofit organizations, the credit is a refund of payroll taxes which were required to be paid in during the year. See the IRS announcement at http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions.