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IRS to Return Sequestered Funds Affected by OMB Determination

July 10, 2020 Priya Comments Off

The IRS will return sequestered funds to businesses that were affected by a recent Office of Management and Budget (OMB) determination regarding the Balanced Budget and Emergency Deficit Control Act of 1985, as amended. The OMB determination corrects and reverses the previous determination by which refund payments issued to, and credit elect and refund offset transactions for, corporations claiming refundable minimum tax credits for prior year alternative minimum tax liability were subject to sequestration.

The OMB determined that the refundable corporate minimum tax credit claimed under Code Sec. 53 and Code Sec. 168(k)(4) in effect for tax years beginning before January 1, 2018, is not subject to sequestration.

The IRS will restore any amounts sequestered since 2013 under Code Sec. 168(k)(4). Funds and applicable interest will be sent out during fiscal year 2020. Funds due a company will be used to offset current tax liabilities first.

Taxpayers do not need to take any action, because the IRS has a complete list of all taxpayers affected. Less than 1,000 businesses were affected by the OMB determination.