Treasury, IRS push back on small-business credit

The IRS and the Treasury Department are pushing back on a new report that found that fewer small businesses than expected were claiming a tax credit tucked into the health care law.

The report, from Treasury’s inspector general for tax administration, said that around 228,000 taxpayers had claimed more than $278 million from the small-business credit by mid-May.

Those figures came after the IRS had tried to reach out to more than 4 million taxpayers that could have been eligible for the credit and after the Congressional Budget Office estimated that taxpayers might claim up to $2 billion from the credit in 2010.

But the IRS and Treasury say that the inspector general’s figures are outdated, asserting that more recent statistics found that $435 million in credits had been claimed.

“Many small businesses file their taxes in September or October,” Emily McMahon, the acting assistant Treasury secretary for tax policy, wrote in a post on the department’s blog. “That means that a substantial number of employers had not filed returns when this information was collected, and an even smaller percentage of shareholders and partners of those employers had filed.”

In a statement of its own, the IRS added that: “Given the mid-year implementation of this new credit, some employers may not have been able to take full advantage of the credit in 2010 because health coverage choices for the year had already been made.”

In general, the businesses are eligible for the credit if they pay more than half of their employees' insurance costs, have fewer than 25 employees and pay an average annual wage of less than $50,000.

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