What is the purpose of the Superfund Chemical Excise Taxes? A12. Reg. Tax Senior Manager Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. Second, an importer or exporter of a substance (or other interested person) can petition the Secretary to add the substance to or remove the substance from the list of taxable substances. President Joe Biden called for reinstating the Superfund taxes as part of his $2 trillion infrastructure proposal . At the time of publication of these FAQs, 151 substances are listed as taxable substances. The Superfund Excise Tax is imposed on the manufacturer or importer of the listed chemicals, and the tax becomes due upon the first use or sale in the United States.15. A1. A2. In order to pay for the provisions in The Infrastructure Investment and Jobs Act (also referred to as the Bipartisan Infrastructure Bill), Superfund was reinstated with double the tax . Inferences, however, can be made from the absence of any mention in the law. Corporate A6. The proposal would essentially create a new excise tax on the manufacture, production, or importation of 42 chemicals. 4661. See question 3 for more information on taxable chemicals and question 6 for more information on calculating the tax imposed by section 4661 (section 4661 tax). Will Changes to the Option To Tax Regime Impact UK Insolvency Sales? The IRS has yet to issue detailed guidance or a Frequently Asked Questions (FAQ) document to clarify the nuances of applicability of the reinstated Superfund excise tax. The tax on 4661 chemicals is imposed on a rate per ton of taxable chemical and can range from $0.44 to $9.74 per ton. As reinstated, the Superfund excise tax will apply to a list of taxable chemicals and taxable substances, as ofJuly 1, 2022,throughDecember 31, 2031, if not extended. The two most significant excise tax provisions of HR 3684 are (1) reinstatement of the Section 4661 taxes on sales by a taxpayer that manufactures, produces, or imports certain chemicals and (2) reinstatement of Section 4671 taxes on an importer's sale or use of specified substances. 4671(b)(2). The taxes apply only to imported chemicals or substances, not those for export. Butane and methane users Draft the To Each Their Own: Agency Must Consider Experience of Each Partner in CMS Updates List of Telehealth Services for CY 2023, What You Need to Know About the New Tariffs on Imports from Russia. IT'S HAPPENING! November 24, 2021. Are there any available exemptions for the Superfund Chemical Excise Taxes? Home Guidance Superfund Excise Taxes on Chemicals and Substances: How to Prepare. The Superfund was to be financed through environmental excise taxes, including: (1) excise tax imposed on domestic crude oil; (2) excise tax imposed on imported crude oil and petroleum products; and (3) domestically produced and imported petrochemicals and inorganic chemicals. From 1987 through 1995, an excise tax also applied to the sale by the manufacturer, producer or importer of 42 specified chemicals. Los Angeles | IRC section 4672 additionally directed importers and exporters to request a determination from the IRS as to whether a specific unlisted chemical substance should be included in the list of taxable substances. The Superfund Chemicals tax previously expired in 1995. To obtain certainty prior to IRS issuing guidance on this matter, companies that import taxable substances as part of articles can seek clarification from the IRS. The IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. The New York City Council Sets its Sights on Non-Profit Housing DOJ Announces New Voluntary Self-Disclosure Policy for U.S. Attorney Supreme Court: Salary, Not Daily Pay, Required for FLSA Overtime Time Is Money: A Quick Wage-Hour Tip on the Tip Credit, EDPB issues its Opinion on the EU-U.S. Data Privacy Framework, Hunton Andrews Kurths Privacy and Cybersecurity. The latest reiteration of the excise tax will be comprised of two separate taxes on (1) chemical sales and (2) chemical importers. 2022 Superfund excise taxes. The tax is assessed based on the amount per ton sold by the taxpayer, with applicable tax rates ranging from $0.44 per ton to $9.74 per ton. accounts, Payment, At what point in a transaction do the new taxes kick in? Notice 2021-66 suspended the existing procedure inNotice 89-61for an importer or exporter to petition the IRS to add or remove substances from the list, pending the issuance of additional guidance. In addition to having deep tax technical knowledge surrounding federal excise taxes, Deloitte leverages leading technology tools and processes. Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. See section 4671(b)(1). As part of the Infrastructure Investment and Jobs Act signed into law November 15, 2021, the Superfund Excise Taxes go into effect July 1, 2022. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. It is imposed on any taxable chemical sold or used by a manufacturer, producer, or importer on or after July 1, 2022.It also is imposed on any taxable substance sold or used by the importer on or after July 1, 2022.The Superfund Tax funds the Hazardous Substance Superfund Trust Fund . on chemicals through 31 December 2031 at double the 1995 rates, when superfund taxes were last implemented. Systems and processes will also need to be established in order to properly calculate and remit taxes that are due, as well as apply for refunds or exemptions. During the first, second, and third calendar quarters of2023, the IRS will not withdraw a taxpayers right to use the deposit safe harbor rules of the Excise Tax Procedural Regulations at 26 C.F.R. L. 96- 510, 42 U.S.C. If you would ike to contact us via email please click here. Section 4662(c)(2) provides an additional exemption from tax liability where a company imports a taxable chemical and exchanges that chemical as part of an inventory exchange with another person. Amendments. Often collectively referred to as the superfund taxes, Congress imposed excise taxes on domestic crude oil, imported petroleum products and identified chemicals, as well as imported substances comprised of such chemicals. The initial list of 50 taxable substances is found in IRC 4672(a)(3). This would be for the periodJuly 1-September 30, 2022. What is a taxable substance? 4661 and the other applying solely to "any taxable substance sold or used" by importers pursuant to 26 U.S.C. A third excise tax on crude oil and petroleum products was reinstated in the Inflation Reduction Act . _____________________________________________________________________________________________. statement, 2019 sarsmith@deloitte.com, Frank Falvo A8. 4671. The specified. Waters of the United States and Winston Churchill. Some deposit amount is still required by July 29 to satisfy the relief provisions set out in Notice 2022-15. EC Appeals European General Court Decision Annulling the Harmonized Weekly Bankruptcy Alert February 28, 2023. All Rights Reserved. The Carter administration established the Superfund in 1980 to offset the high price tags associated with remediating uncontrolled or abandoned hazardous waste sites. The Superfund tax is assessed on the manufacturer or importer of these chemicals. (added June 24, 2022), Q10. A3. Companies that import taxable chemicals or taxable substances will be liable for the excise tax. No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. Analyzing and assisting in documenting available exemptions (e.g., certain taxable chemicals used in the production of fuel). Desperate Times, Desperate Measuring Cups FTC Brings Enforcement Trending in Telehealth: February 20 26, 2023, IRS Sets Deadline For Using 401(K) Plan Forfeitures, How Generative AI Generates Legal Issues in the Games Industry, DOJ Announces New Nationwide Voluntary Self-Disclosure Policy. The current list is published in IRC section 4672(a)(3) and attached as Exhibit B. The unique considerations of butane and methane require taxpayers further down the supply chain to be aware of the procedural issues affecting chemicals. Notice 2021-66. See section 4671(b)(3). First, the Section 4661 chemical excise tax rate was doubled from its prior iteration to a range of $0.44 per ton up to $9.74, depending on how a chemical (from a list of 42) is sold or used. There are several potential issues related to taxpayer liabilities, refund considerations, and other recordkeeping requirements to consider with regards to the Superfund Excise Taxes. DTTL and each of its member firms are legally separate and independent entities. As reinstated, the tax rates of chemicals have doubled from the amounts in the previous iteration of the Superfund tax, applied in the 1980s and 1990s. 15I.R.C. healthcare, More for 17Prop. Even companies that have been on the market for decades may not have many employees who were around when the previous excise tax applied. (added June 24, 2022), Q9. What do companies need to do in order to prepare for these taxes? IT and tax departments in particular will need to collect transactional data all along the supply chain, as well any applicable master data. Some highlights on the petroleum products tax are as follows: Imposition of the Tax The Superfund is a federal excise tax on various hazardous chemicals. Section 4671(a) imposes an excise tax on the sale or use of a taxable substance by the importer of the taxable substance. Providence | Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. 429, Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), How Modern Manufacturing Plants Can Protect Against Ransomware, Cyberattacks, FTC Will Host May 23, 2023, Workshop on Recyclable Claims and the Green Guides. Page Last Reviewed or Updated: 24-Jun-2022, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), Fact Sheets for Frequently Asked Questions, Q1. Under the new law, the excise tax applies to the use, sale, or import of 42 taxable chemicals and 151 hazardous substances. The IRS has issued lists for both the chemicals and substances included (under Section 4661 and 4671 of the Internal Revenue Code, respectively), but has cautioned importers that items on the list could change as chemicals or substances are either added or removed from the list over time. Prior to 1996, the rates of tax on those chemicals ranged from $0.22 per ton to $4.87 per ton. | Privacy Policy These taxes have not been in effect since 1995, so companies that havent had to deal with them for the past 27 years are now scrambling to understand the complexities and requirements of this new iteration of the law. There are two separate Superfund chemical excise taxes: a tax on the sale or use of "taxable chemicals" under section 4661 of the Internal Revenue Code and a tax on the sale or use of imported "taxable substances" under section 4671 (all section references are to the Internal Revenue Code unless otherwise stated). Social login not available on Microsoft Edge browser at this time. (added June 24, 2022), Q12. There are two separate Superfund chemical excise taxes: a tax imposed on the sale or use by the manufacturer or importer of "taxable chemicals" listed in section 4661, and a tax on the sale or use by the importer of "taxable substances" listed in section 4672 and IRS Notice 2021-66. DOL Provides Snapshot of ERISA Enforcement Statistics for Fiscal Year 2022, TPA Escapes Liability for Sending COBRA Notice to Employees Former Address, but Claims Proceed Against Employer, For on a wide range of chemicals and substances. The Superfund Excise Taxes will be reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. The information here is by no means comprehensive, but it does provide a basic understanding of the law and its implications for affected companies. The applicable rates of tax and related provisions are also modified since the expiration of these taxes in 1995 (Infrastructure Investment and Jobs Act, November 15, 2021). 429.Section 80201 of the IIJA reinstates the Superfund excise tax on certain chemical substances under Sections 4661 and 4671 of the Internal Revenue Code (Tax Code), effective July 1, 2022.Section 80201(c)(1) of the IIJA modified the method for determining . Sec. and services for tax and accounting professionals. L. No. There are three ways to arrive at a tax determination for the Superfund Tax: 2. Analyzing Superfund Excise Tax calculations and reporting requirements based on a companys unique business scenario. Semi-monthly payments should be made by the 15th and 30th of each month, but the IRS is providing relief from penalties for non-payment up through the first quarter of 2023. The Reinstated Superfund Excise Tax for Chemicals and Imported Substances As of July 1, 2022, The Infrastructure Investment and Jobs Act (IIJA) has reinstated excise taxes imposed on certain chemicals and imported chemical substances. Form 6627 must be led alongside Form 720 on a quarterly basis. 96-125 at 14878 (1979). Part II of Form 6627, Environmental Taxes, will be updated to reflect the tax rate per ton of each taxable chemical. However, the IRS released a number of IRS Notices between 1990 and 1995 concerning taxpayer requests for a determination as to whether a listed chemical substance met the definition of taxable substance. This increased the taxable substances list to more than 100 individual chemical substances. This direct tax hike on American producers would result in higher prices for consumers, threaten thousands of jobs, and undermine domestic . Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. The taxes, which should go in effect on 1 July 2022, are estimated to raise approximately $14.45bn over a 10-year period To accomplish this, the current system capability should be assessed. Please enable JavaScript to view the site. 4662(e). The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. Importers When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. Treas. Instead, Section 4671(b) provides that the amount of tax imposed with respect to any taxable substance is equal to the amount of tax that would have been imposed by Section 4661 on the taxable chemicals used as materials in the manufacture of the taxable substance, if such taxable chemicals had been sold in the United States for use in the manufacture or production of the taxable substance. Under certain state laws the following statements may be required on this website and we have included them in order to be in full compliance with these rules. However, Notice 2022-15, 2022-18 I.R.B. brands, Corporate income Among the many provisions in that legislation . The Superfund tax is assessed on the manufacturer or importer of these chemicals. Does the Supreme Court have the stomach to tackle the super fun SECs Pay vs. Cherry Bekaert LLP is a licensed CPA firm that provides attest services, and Cherry Bekaert Advisory LLC and its subsidiary entities provide tax and advisory services. The Infrastructure Investment and Jobs Act, signed at the end of 2021, reinstates the Superfund chemical excise taxes under Sections 4661 and 4671 of the Internal Revenue Code. Page Last Reviewed or Updated: 24-Jun-2022, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), News Releases for Frequently Asked Questions, Recent Developments for Form 6627, Environmental Taxes, Treasury Inspector General for Tax Administration, synthetic linear fatty alcohol ethoxylates, IRS issues Superfund chemical excise tax rates. 14Joint Committee on Taxation, Estimated Revenue Effects of the Provisions in Division H of an Amendment in the Nature of a Substitute to H.R. Carter administration established the Superfund in 1980 to offset the high price tags associated with remediating uncontrolled or abandoned waste. At double the 1995 rates, when Superfund taxes as part of his $ trillion. These FAQs, 151 substances are listed as taxable substances hike on American producers would in... 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