What this notice is about We received your Form 8038-CP, Return for Credit Payments to Issuers of Qualified Bonds, and are providing you with an explanation for the reduced credit payment amount. What you need to do You don't need to do anything. You may want to Keep a copy of this notice for your records. Frequently Asked Questions Will I receive a notice for each Form 8038-CP I filed? Yes. We'll send a separate acknowledgement for each form. Why was my credit payment reduced? Pursuant to the requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, refund payments issued to and refund offset transactions for certain state and local government filers claiming refundable credits under section 6431 of the Internal Revenue Code applicable to certain qualified bonds are subject to sequestration. This means that refund payments and refund offset transactions processed on or after October 1, 2020, and on or before September 30, 2030, will be reduced by the fiscal year 2021 5.7 percent sequestration rate, irrespective of when the IRS received the Form 8038-CP with amounts claimed by an issuer. The sequestration reduction rate will be applied unless and until a law is enacted that cancels or otherwise affects the sequester, at which time the sequestration reduction rate is subject to change. Can I appeal the decision to reduce my refund? Reduction in the amount of your refund is required of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended and can't be appealed. Reference tools Publication 1, Your Taxpayer Rights Publication 5027, Identity Theft Information for Taxpayers PDF Full list of tax forms and instructions Need help? You can authorize someone to contact the IRS on your behalf. See if you qualify for help from a Low Income Taxpayer Clinic. If you can’t find what you need online, call the IRS number at the top of your notice or letter. If you didn’t receive a letter or notice, use telephone assistance. If you can't resolve the penalty on your own, contact Taxpayer Advocate Service, an independent organization within IRS.
