This box/component contains JavaScript that is needed on this page. 23I.R.C. The Superfund excise taxes are part of Subtitle D, Chapter 38 of the Tax Code. L. 96- 510, 42 U.S.C. Tax Principal IRS issues Superfund chemical excise tax rates IR-2022-132, June 24, 2022 WASHINGTON The Internal Revenue Service announced today that it has prescribed tax rates for 121 taxable substances that are subject to the Superfund chemical excise tax imposed by section 4671 (a) of the Internal Revenue Code (Code). This would be for the periodJuly 1-September 30, 2022. Various exemptions exist for taxable chemicals, including: Additionally, the export of taxable chemicals is eligible for a refund of any tax paid on the chemical.16, The IRS published proposed Treasury Regulations in 1983 specific to the taxable chemicals to further detail the methods of reporting the tax, as well as provide more detail on all the provisions concerning the tax.17. Companies that import taxable chemicals or taxable substances will be liable for the excise tax. 16I.R.C. The excise taxes are effective July 1, 2022. 6Id. Internal Revenue Code (IRC) section 4671 thereby imposed the same tax on imported substances as was already included in the cost of domestically purchased substances. It's codified in IRC Sections 4671 and 4672, both of which were added by the Superfund Amendments and Reauthorization Act of 1986. Download pdf (1.5 MB) The IRS today released an advance version of Notice 2021-66 regarding the reinstated excise taxes imposed on certain chemicals and substances under sections 4661 and 4671 (often referred to as "Superfund" excise taxes). A14. tax, Accounting & Under the rules, a late fee of 5% may be applied on the amount due for each month the form remains delinquent up to a total penalty of 25%. 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 more you buy, the more you save with our quantity November 24, 2021. Litigation Setback for Employers Under Illinois Biometric Information Senate Committee Holds Hearing on Future of Low Carbon Transportation North Carolina Senate Passes Compassionate Care Act at Exactly 4:20 States and Feds Signal Big Changes to Telehealth Prescribing. The tax would apply after December 31, 2021, until January 1, 2032. Part II of Form 6627, Environmental Taxes, will be updated to reflect the tax rate per ton of each taxable chemical. 4662(e). 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. This law levies taxes on the manufacture, production, or importation of 42 specific chemicals and another 121 chemical substances. 13I.R.C. 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). To accomplish this, the current system capability should be assessed. 7Superfund Amendments and Reauthorization Act of 1986, Pub. Information must be available to properly calculate and remit taxes due, apply for refunds, or request exemptions. 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. Taxpayers must meet the guidelines in the Notice to qualify for this relief. Specifically, taxable substances include the 50 substances on the initial list of taxable substances in Section 4672(a)(3) and 101 taxable substances added by the IRS in December 2021, throughIRS Notice 2021-66. Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. A1. First Offshore Wind Energy Lease Sales in the Gulf of Mexico, Telephone and Texting Compliance News: Litigation Update February 2023. Prior to 1996, the rates of tax on those chemicals ranged from $0.22 per ton to $4.87 per ton. The Superfund Excise Tax will go back into effect on July 1 st, 2022, after not being in place for over 26 years. IT'S HAPPENING! A taxable substance is one that is . The relevance of this guidance to the new tax is unclear. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. Companies with a large volume of transactions should consider automating their tax calculation and reporting processes to increase efficiency and accuracy. 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. 9See I.R.C. A third excise tax on crude oil and petroleum products was reinstated in the Inflation Reduction Act . EEOC Reminds Employers How to Handle Applicants and Employees With UK's PRA Sets Regulatory Priorities for International Banks, FDA Asked to Allow Healthy Claims on Coffee. Criminal Referrals and OSHA Violations, Part III: Industry Standards Oregon House Revenue Committee Set to Hear More About Pro-Taxpayer Buying or Selling a Small Business Government Contractor? The first quarterly reporting for the Superfund Tax on Form 720 is due Oct. 31, 2022. The Notice essentially allows taxpayers untilOctober 31, 2022, to determine whether a Superfund excise tax applies and to calculate how much taxed is owed. 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. 48839 (Oct. 21, 1983). The rationale for the fee collection point was so that the fee would be equally distributed among all hazardous waste generators and suppliers.6. For example, methane or butane used as a fuel, or nitric acid, sulfuric acid, ammonia, or methane used in production of fertilizer are exempt. The taxes, which should go in effect on 1 July 2022, are estimated to raise approximately $14.45bn over a 10-year period This could create a potential liability for downstream users such that the rst company that uses the methane or butane in a manner other than as a fuel will have to report and remit the Superfund Tax. Under what circumstances is registration required? 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. Chicago | If the importer does not calculate the section 4671 tax for a taxable substance and the IRS has not prescribed a tax rate for the taxable substance, then the amount of tax is 10 percent of the appraised value of the taxable substance as of the time the taxable substance was entered into the United States for consumption, use, or warehousing. Service. Notice 2021-66 does not specify the tax rate for each taxable substance. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. Under Section 4661, an excise tax is imposed on the sale by manufacturers, producers, and importers of 42 taxable chemicals (see table below for a list of those chemicals). As part of the recently unveiled infrastructure deal, the Biden administration announced plans to reinstate the Superfund taxes on chemical manufacturers in the United States. 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. Substances may be added or removed from the list of taxable substances at a later date. This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. Analyzing and assisting in documenting available exemptions (e.g., certain taxable chemicals used in the production of fuel). A taxable substance is any substance that, at the time of sale or use by the importer of the substance, is listed as a taxable substance. 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. 11001 (2021). In brief. | Privacy Policy statement, 2019 The intent of the Superfund Excise Taxes is to target the chemicals primarily found in hazardous waste sites and to tax the chemicals at the earliest point possible in the process. 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 . SaraBeth Smith This assessment should include a review of the transaction life cycle, master data setup, cost computation and recognition, and general entry posting. 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. Recent FTC Enforcement Action Merits Cyber Insurance Coverage Review, Two Ways to Redefine & Achieve CRM Success. Explore all It is critical to Update company information systems to collect the transaction and master data needed to comply with the Superfund 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. Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661(b). The current list is published in IRC section 4672(a)(3) and attached as Exhibit B. 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 11Infrastructure Investment and Jobs Act, Pub. Breaking the Link New Developments on U.S. What is a taxable substance? Assisting with filing the federal excise tax returns and semi-monthly deposit reporting. Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. 4661 imposes tax on the sale or use by the manufacturer, producer, or importer of 42 listed chemicals. 18I.R.S. At the time of publication of these FAQs, 151 substances are listed as taxable substances. The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. In response to pointed public comment, on April 15, 2022, the IRS released an advance version ofNotice 2022-15, providing relief for thethirdandfourth calendar quarters of 2022, and the first calendar quarter of2023, regarding the failure to deposit penalties imposed bySection 6656of the Tax Code, as those penalties relate to the Superfund excise taxes. Please enable JavaScript to view the site. When expanded it provides a list of search options that will switch the search inputs to match the current selection. Charlotte | When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. What is the purpose of the Superfund Chemical Excise Taxes? automatically and accurately calculating the amount of excise tax owed. During 1979 Senate discussions, it was estimated that expenditures for hazardous waste disposal sites related to chemicals would be $200 million (versus $40 million for sites related to crude oil).3 During this congressional hearing, it was determined that the proposed system of fees would cover: (1) crude oil; (2) petrochemical feedstocks; and (3) certain highly toxic and/or high-volume inorganic materials including heavy metals, halogens, acids, bases, and ammonia.4. The unique considerations of butane and methane require taxpayers further down the supply chain to be aware of the procedural issues affecting chemicals. A13. accounts, Payment, The Superfund Amendments and Reauthorization Act of 1986 was enacted as Pub. At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. July 1, 2022. See section 4672(a)(1). Reminder: High-Earning Exempt Professionals Must Be Paid a "True Gold Dome Report Legislative Day 24 (2023). Audit & 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). This button displays the currently selected search type. Reinstatement of Superfund excise taxes. Companies opting for the latter run the risk, however, of incurring penalties, should the IRS adopt a different view. Certain services may not be available to attest clients under the rules and regulations of public accounting. A5. Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. At what point in a transaction do the new taxes kick in? The Infrastructure Bill reinstated the Superfund Excise Taxes on chemicals and taxable substances, effective July 1, 2022.11 In addition to the reinstatement of the taxes, the Infrastructure Bill doubled the prior rate of tax on the 42 listed chemicals. The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. I am an importer of taxable substances. Los Angeles | governments, Explore our July 1 is fast approaching and the window to prepare for compliance with the reinstated Superfund Tax is brief. See also I.R.C. Taxpayers must make semimonthly deposits of the Superfund chemical excise taxes. Is the rate different for taxable substances? That number will likely change as substances are added to or removed from the list of taxable substances pursuant to section 4672(a)(2) or (4). (added June 24, 2022), Q4. Integrated software The tax law is included in the Infrastructure Investment and Jobs Act that was signed into law on November 15, 2021. An exporter who did not pay the initial assessment of the Superfund Tax may still be entitled to the refund if certain condition are met. L. 99-499, approved Oct. 17, 1986. 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 96-125 at 14878 (1979). Part of the Tax News & Views podcast series. The excise tax was applied to a list of 42 chemicals used predominantly in the oil, gas, and chemical industries. Frequently Asked Questions: Superfund Chemical Excise Taxes. The Superfund excise taxes include two separate but interrelated excise taxes applicable to crude oil and petroleum products, chemicals, and hazardous substances, which fund the Hazardous Substance Superfund for the cleanup of hazardous waste sites and expired more than 25 years ago. See how we connect, collaborate, and drive impact across various locations. (added June 24, 2022), Q6. Expanded Employee Retention Credit (ERC) & how our professionals can assist you. The taxes are set to be reinstated beginning on July 1, 2022. See Section 4671(b)(2). Treas. Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. The Superfund excise taxes are set to expire at the end of 2031. industry questions. The first return, for the. Hampton Roads | Everyone loves infrastructure, but it pays to read the fine print. Reg. Reg. Please see www.deloitte.com/about to learn more about our global network of member firms. For taxable chemicals, the manufacturer, producer, or importer of the taxable chemical is responsible for reporting and paying the section 4661 tax to the IRS. healthcare, More for They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. Effectively tracking necessary data through the supply chain may be a challenge as well. Excise Tax on Select Chemicals. Notice 2021-66 suspended the procedure in Notice 89-61 because the IRS plans to issue a more current guidance on this matter. On Aug. 16, 2022, the Inflation Reduction Act (IRA) reinstated a third excise tax, the Hazardous Substance Superfund Financing Tax Rate on Crude Oil and Petroleum Products. Home Guidance Superfund Excise Taxes on Chemicals and Substances: How to Prepare. Oil, gas, and chemical industries are molded, formed, woven, or importation of chemicals. Jobs Act that was signed into law on November 15, 2021, until January 1, 2022 other. 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