Sequestration, a series of across-the-board cuts totaling $1.2 trillion over 10 years to government agencies, may potentially affect many tax credits in part of the government’s attempts to get a handle on the growing national debt.

One of the credits that will feel the effects immediately is the Small Business Health Care Tax Credit, which puts money back in the pockets of small employers with fewer than 25 full-time equivalent employees, who pay an average wage of less than $50,000 a year, and pay at least half of employee health insurance premiums.

Pursuant to the requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, certain automatic cuts will take place as of March 1, 2013. These required cuts include a reduction to the refundable portion of the Small Business Health Care Tax Credit for certain small tax-exempt employers under Internal Revenue Code section 45R. As a result, the refundable portion of your claim will be reduced by 8.7% percent. The sequestration reduction rate will be applied until the end of the fiscal year (Sept. 30, 2013) or intervening Congressional action, at which time the sequestration rate is subject to change.