For purposes of claiming refunds under section 4662(e) for section 4661 tax paid on chemicals used in the production of an exported substance, in the case of a petition of an importer or exporter (i) that is filed and accepted by the Secretary before January 1, 2023, (ii) that seeks to add the substance to the list of taxable substances, and (iii) based on which the Secretary adds the substance to the list of taxable substances, both the filing date of the petition and the date the substance is added to the list of taxable substances will be deemed to be July 1, 2022. 4672(b)(1). If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. Historical reporting requirements for Superfund excise taxes Prior to the expiration of the Superfund excise taxes in 1995, taxpayers were required to register under Form 637, Application for Registration (For Certain Excise Tax Activities), activity letter G (Persons making inventory exchanges of taxable chemicals under section 4662(c)(2) or persons selling or buying Importers
California Assembly Bill Pushes for Womens Designated Restrooms on Mississippi Legislature Takes Up Pass-Through Entity Election FTC Signals Increased Scrutiny of Technology Sector Through Understanding the Corporate Transparency Act and Ensuring Compliance. The Infrastructure Investment and Jobs Act (the IIJA), signed into law on November 15, 2021, reinstated two environmental excise taxes that had been terminated over twenty-five years ago. Abusive Arbitrage Devices Its Time to Get Reacquainted (Episode 2 B&C Biobased and Sustainable Chemicals Practice Group Bergeson & Campbell, P.C. They were reinstated by section 80201(c)(3) of the Infrastructure Investment and Jobs Act (Public Law 117-58, 135 Stat. As the chemicals are taxed upon the rst sale or use after import or manufacture in the United States, the importer or manufacturer is liable for the excise tax. Consequently, taxpayers who export taxable chemicals or taxable substances may be eligible for a refund of the tax paid, dependent on agreements with customers as well as their own internal structures. CERCLA (and therefore the Superfund Excise Taxes) expired in 1985 but was extended for another five-year period through the Superfund Amendments and Reauthorization Act of 1986 (SARA), effective January 1, 1987.7 SARA expanded the Superfund Excise Tax on chemicals to include an additional tax on imported substances derived from taxable chemicals, effective January 1, 1989.8 This additional tax on taxable substances was structured to ensure that the amount of the tax correlated to the composition of the chemicals within the taxable substances.9 In other words, had the substance been purchased domestically, the Superfund Excise Tax on chemicals would have been included as part of the overall price of the substance. brands, Social This box/component contains JavaScript that is needed on this page. ONESOURCE Determination gives companies the ability to quickly comply with Superfund Excise and Hazardous Substance taxes by automatically and accurately calculating the amount of excise tax owed. This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. Certain non-fuel and agricultural uses of some of these chemicals were exempted from the excise tax. 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. All organic chemicals are derived from petrochemical feedstocks. Corporate Charlotte | The Leaking Underground Storage Tank (LUST) Fund adds an additional $0.001/gal federal fee. Due to the complicated nature of the Superfund Excise Tax and the granularity of the tax rate structure, gaps in existing systems and processes may exist. The information here is by no means comprehensive, but it does provide a basic understanding of the law and its implications for affected companies. 4661. Excise Tax on Chemical Sales The Superfund excise tax on chemical sales is imposed on 42 listed taxable chemicals on a per-ton basis by taxpayers that manufacture or produce a listed chemical in the United States or import it for consumption, use, or warehousing in the United States. 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. These taxes were in place until 1995 to fund the Federal Hazardous Substance Superfund, but expired in 1995. IRC section 4662 directs the IRS to release guidance as to the appropriate manner of reporting exempt sales or claiming refunds. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. 11001 (2021). 96-125 at 14878 (1979). The excise taxes are effective July 1, 2022. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. The tax expired under its terms in the mid-1990s but has now been reinstated. Please see www.deloitte.com/about to learn more about our global network of member firms. research, news, insight, productivity tools, and more. governments, Business valuation & While the majority of the 42 listed chemicals are taxable by the manufacturer or importer upon the first sale or use, butane and methane only become taxable upon the first use other than as a fuel.23 This creates a potential liability for downstream product sales such that the first company that uses the methane or butane in a manner other than as a fuel will have to report and remit the Superfund Excise Tax. firms, CS Professional Please join our EY cross-functional panel of professionals for a webcast focused on the recently enacted Infrastructure Investment and Jobs Act, specifically the reinstatement and expansion of the Superfund chemicals excise tax. The Superfund tax is assessed on the manufacturer or importer of these chemicals. 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. Key considerations for dealings with the reinstated Superfund Tax include: For producers, importers, exporters, and customers of businesses making and distributing identified chemicals and substances, action is needed quickly. msulayman@deloitte.com, Stephane Lunan
Nashville | 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. In these cases, the other person would be liable for paying the excise tax, not the initial importer. 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. What are the Superfund chemical excise taxes? 52.4661-1 4662-4, 48 Fed. A cloud-based tax IRS announces Superfund chemical excise tax rates June 24, 2022 Download pdf (363.6 KB) The IRS today announced the prescribed tax rates for 121 taxable substances that are subject to the Superfund chemical excise tax imposed by section 4671 (a). | Agreed Terms of Use 17Prop. What is the purpose of the Superfund Chemical Excise Taxes? and accounting software suite that offers real-time Try our solution finder tool for a tailored set Effective July 1, the Infrastructure Investment and Jobs Act (IIJA) reinstated the excise taxes imposed on certain chemicals and imported chemical substances under IRC Sections 4661 through 4672 (Superfund excise taxes). ADVANCED! Chemical manufacturers and importers
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. Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. Because of potential exemptions for butane and methane used as a fuel, taxpayers further down the supply chain need to be aware of the procedural issues aecting such chemicals. Cherry Bekaert Advisory LLC and its subsidiary entities are not licensed CPA firms. Therefore, a chemical substance could qualify as a taxable substance if taxable chemicals listed in IRC section 4662 constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce such substance.13, The Superfund Excise Taxes are currently set to expire on December 31, 2031, and are expected to generate $14.4 billion of revenue (or approximately $1.2 billion annually).14, IRC section 4661(b) lists 42 chemicals, identified in Exhibit A. Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. Additionally, Form 6627, Environmental Taxes, was previously used to report the Superfund Excise Taxes when the taxes were last in effect, and this form will be used again to report the taxes owed. Similarly, if an FAQ turns out to be an inaccurate statement of the law as applied to a particular taxpayer's case, the law will control the taxpayer's tax liability. Matt Levin Jul 2, 2021. (added June 24, 2022), Q5. Your online resource to get answers to your product and NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. . Substances. Along with the quarterly reporting requirements, taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the Superfund Excise Taxes. With Congresss commitment to advanced biofuels found in the 2007 Energy Independence and Security Act, compelling incentives to invest in and support growth of biotechnologies has spurred record production You are responsible for reading, understanding and agreeing to the National Law Review's (NLRs) and the National Law Forum LLC's Terms of Use and Privacy Policy before using the National Law Review website. corporations. A1. Each chemical has a specified rate of tax, imposed on a per-ton basis, as identified in Exhibit A. Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. A substance may be removed from the list of taxable substances if the Secretary determines that taxable chemicals constitute 20 percent or less of the weight and 20 percent or less of the value of the materials used to produce the substance (determined on the basis of the predominant method of production). 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. Under what circumstances is registration required? When the IIJA reinstated these two taxes, it doubled the previous rates. The NLR does not wish, nor does it intend, to solicit the business of anyone or to refer anyone to an attorney or other professional. (All oil and almost all hazardous substances are products of the oil industry, chemical and allied industries, and heavy metals industries. The first return, for the. Helping businesses navigate financial due diligence engagements and domestic and cross-border transactions. Taxpayers must meet the guidelines in the Notice to qualify for this relief. This would be for the periodJuly 1-September 30, 2022. The Treasury Department and the IRS (collectively the IRS) have released Notice 2021-66, providing guidance on the reinstatement of the Superfund chemical excise taxes (SCET) under the Infrastructure Investment and Jobs Act (sometimes referred to as the Bipartisan Infrastructure Bill, or IIJA) enacted on November 15. The IRS published IRS Notice 2021-66 on December 13, 2021, which included the list of approximately 100 taxable substances previously considered by the IRS in the early 1990s via individual IRS Notices, which will now be subject to the Superfund Excise Taxes (see Exhibit C).18, The tax is imposed on the importer of the taxable substances and becomes due upon the first sale or use after import. Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. *Note: Self-assessing based on 10% of appraisal value will almost always yield a higher tax rate than either of the other methods. Form 6627, Environmental Taxes, previously used to report the Superfund Tax, will likely be used again to report the tax owed. A2. policy, Privacy The statute provides an initial list of 50 taxable substances and instructs the IRS to add any substance in which taxable chemicals constitute more than 20% of the weight or value. When are the new Superfund Chemical Excise taxes due? The term " Superfund " refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. Many in the industrial chemical community are unfamiliar with the Superfund excise tax legacy, and the IRS is seemingly unprepared for the learning curve challenge the reactivation of the tax has created. For example, methane or butane used as a fuel, or nitric acid, sulfuric acid, ammonia, or methane used in production of fertilizer are exempt. Because these FAQs have not been published in the Internal Revenue Bulletin, they will not be relied on or used by the IRS to resolve a case. As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. Tampa | Attorney Advertising Notice: Prior results do not guarantee a similar outcome. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. Yes. EC Appeals European General Court Decision Annulling the Harmonized Weekly Bankruptcy Alert February 28, 2023. As discussed above, the list of taxable substances was incorporated into the IRC as a result of SARA, effective in 1989. 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 . Exporters
Additionally, prior versions of these FAQs will be maintained on IRS.gov to ensure that taxpayers, who may have relied on a prior version, can locate that version if they later need to do so. Reporting
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 . In our experience, it generally takes at least three months to fully implement and test a new business process and system implementation. The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. 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). The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. The National Law Review is a free to use, no-log in database of legal and business articles. A3. The latest reiteration of the excise tax will be comprised of two separate taxes on (1) chemical sales and (2) chemical importers. The list of 42 chemicals and their respective excise tax rates is found in Internal Revenue Code (IRC) 4661(b). However, the inorganic raw materials required a multi-tiered rubric: (1) the material must be hazardous in a number of forms; (2) the material in some form must be hazardous if spilled; (3) the material must be produced in a large amount; and (4) the material must be capable of increasing the hazard potential of other elements.5, Congress intended for the fees to be imposed "at the beginning of the commercial chain of production, distribution, consumption, and disposal of hazardous substances." | Privacy Policy Explore all A9. The law imposes a tax on any taxable chemical sold by the manufacturer, producer, or importer. The relevance of this guidance to the new tax is unclear. A list of taxable chemical substances and procedures for the reinstated Superfund chemical taxes are in Notice 2021-66. View Full Firm Disclosure. Who is responsible for reporting and paying Superfund chemical excise taxes? For purposes of this part, if any organic taxable chemical on which no tax was imposed by reason of subparagraph (A) is isolated, extracted, or otherwise removed from, or ceases to be part of, an intermediate . The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. For example, butane and methane are exempt if they are being used as fuel, but NOT if they are being used for some other purpose. For example, if load of scrap metal contains 50% nickel (taxed at $8.90 per ton) and 20% chromite (taxed at $3.04 per ton), the tax rate would be calculated as: ($8.90 x .50 = $4.45) + ($3.04 x .20 = .61) = $5.06 per ton. 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. 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 original excise tax expired on December 31, 1995. chrigong@deloitte.com. (added June 24, 2022), Q8. Effective July 1, 2022, as required by the Infrastructure Investment and Jobs Act (IIJA)passed last November, the Internal Revenue Service (IRS) has reinstated the Superfund Chemical Excise Tax on a wide range of chemicals and substances. Some companies did not yet exist when the previous excise tax applied and have no experience with the old tax and thus no internal processes for determining their liability for the Superfund excise tax. 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