The term Superfund refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. 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. The Aerojet General Corp. Superfund site covers about 5,900 acres near Rancho Cordova. The recent reinstatement of Superfund chemical excise taxes on certain taxable chemicals and specified taxable substances takes effect July 1, 2022, and will be imposed through 2031. 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. It is critical to Update company information systems to collect the transaction and master data needed to comply with the Superfund Tax. WebTax Podcast: The Superfund Excise Tax: Back in action President Bidens Infrastructure bill revitalized the long-expired Superfund Excise Tax on chemical sales, which goes into effect July 1. It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. The Reinstated Superfund Excise Taxes. The Superfund Excise Taxes are currently set to expire on December 31, 2031. Nonetheless, a taxpayer who reasonably and in good faith relies on these FAQs will not be subject to a penalty that provides a reasonable cause standard for relief, including a negligence penalty or other accuracy-related penalty, to the extent that reliance results in an underpayment of tax. Tax Implications and Financial Business Guidance Regarding the Coronavirus. Orlando | For this example, the sales tax rate is 8.5 percent, the cannabis excise tax is 15 percent, and there is a 10 percent local business tax. If you are a manufacturer or importer, it is essential that your organization be prepared to report and remit the excise tax. (added June 24, 2022), Q13. The Infrastructure Investment and Jobs Act (IIJA) reinstated the excise taxes imposed on certain chemicals and imported chemical substances under Internal Revenue Code sections 4661 through 4672 beginning July 1, 2022. Legal Disclaimer|Privacy Policy | Copyright 2022 IGenFuels LLC. (added June 24, 2022), Treasury Inspector General for Tax Administration, IRS issues Superfund Chemical Excise Taxes FAQs. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. Ethylene and propylene may also be exempt, but only when used in the production of fuel (motor fuel, diesel fuel, aviation fuel, or jet fuel). It has been almost 30 years since the Superfund excise tax was in effect. For taxable substances, the importer of the taxable substance is responsible for reporting and paying the section 4671 tax to the IRS. Superfund Excise Tax - What You Need to Know, This analysis is intended for informational purposes only and is not tax advice. Taxable substances include substances where taxable chemicals constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce such substance (as determined based on the predominant method of production). NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. More information on the procedures for petitioning the Secretary to add or remove substances from the list of taxable substances will be released in advance of July 1, 2022. As a result, large and small companies alike who produce or import these chemicals or substances are about to be slammed with additional costs. During her free time Elizabeth enjoys going to concerts, traveling, hanging out with her pets, and caring for her succulent plants. What is a taxable substance? 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. Helping tax leaders embrace disruption, seize new opportunities and drive greater value. Sightline is a tax platform that makes the entire tax process more collaborative and insightful. 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. IRS publishes initial Superfund chemical list January 11, 2022 The IRS recently released guidance ( Notice 2021-66 ,) providing key information on the excise taxes imposed on certain chemicals and substances under Sections 4661 and 4671often referred to as Superfund excise taxes. Florida Woman Sentenced to Prison for False Statement to Investigator Idaho Man Indicted for Federal Hate Crime Against LGBTQ Residents of EPA Proposes Cleanup Plan for Sulphur Bank Mercury Mine Superfund B&C Biobased and Sustainable Chemicals Practice Group Bergeson & Campbell, P.C. A taxable chemical is a chemical that is (i) listed in section 4661(b), and (ii) manufactured or produced in the United States or entered into the United States for consumption, use, or warehousing. A substance is listed as a taxable substance if it is listed under section 4672(a)(3), or if the Secretary of the Treasury or her delegate (Secretary) has added it to the list of taxable substances pursuant to section 4672(a)(2) or (4). The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. The taxes had previously expired on Dec. 31, 1995, but were reinstated as part of the infrastructure legislation signed by President Biden in November 2021. Any taxable chemical or substance also qualifies for a Superfund Tax Credit. These credits are accrued when a taxable chemical or taxable substance is exported. A Superfund tax is imposed when a taxable chemical is imported, or is domestically produced for sale or use unless an exemption applies. 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. As is the case with many excise taxes, the cost to businesses is expected to be passed down the supply chain, and ultimately to the end consumer in the form of increased prices and fees. Kti Chemicals Inc is a superfund site located at 1170 Sonora Ct, Sunnyvale, CA 94086. Funds collected will be added to the Hazardous Substance Superfund Trust. Beginning Your Sustainability Journey? The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. Each chemical has a specified rate of tax, imposed on a per-ton basis, which has now been doubled. 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. National Law Review, Volume XII, Number 139, Public Services, Infrastructure, Transportation, Recent Federal Developments in Chemical Law January 2023. Class Action Year in Review: The Rise Of The Self-Tapping Website? State Green and Sustainability Claims: A Roundtable Discussion. Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. The tax This TaxWatch webcast discusses the superfund excise taxes being reinstated, effective July 1, 2022. The term Superfund refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. The infrastructure bill imposes taxes on certain chemicals and imported substances under Internal Revenue Code sections 4661 through 4672. Charter will compile all required documentation, submit summary details for credit to the appropriate entity, and maintain all the necessary documentation for credits, all while providing complete confidentiality in third-party situations. 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. The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. The section 4661 tax is imposed as a rate per ton of a taxable chemical. Manufacturers, producers or importers that sell or use any of these chemicals must pay a tax of $0.22 to $4.87 per ton, depending on the chemical. See the full disclaimer. These taxes expired more than 25 years ago. A1. 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 rate on chemicals and a Section 4661 imposes tax on the sale by the manufacturer, producer or importer of taxable chemicals. They were reinstated by section 80201(c)(3) of the Infrastructure Investment and Jobs Act (Public Law 117-58, 135 Stat. . Los Angeles | 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. Sitemap This approach includes: Let us help you address the compliance issues associated with reinstatement of Superfund chemical excise taxes. Texas Unclaimed Property, a Division of the Texas Comptroller of Public Accounts (Texas Comptroller), is increasing compliance efforts through outreach. WebWork with outside vendor on Superfund Excise tax compliance; Ascend Performance Materials is the premium provider of high quality chemicals, fibers and plastics. Requesting additions and/or deletions to the taxable substances list pursuant to updated IRS guidance and procedure. The tax law is included in the Infrastructure Investment and Jobs Act that was signed into law on November 15, 2021. Explore available tools within IT systems/databases to collect data needed to comply with reporting requirements. After a more than 26 year hiatus, on July 1, 2022, the Superfund chemical excise tax (the Superfund Chemical Tax) will again become effective. Nashville | All rights reserved. Are semimonthly deposits required? 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%. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten The list of 42 chemicals and their respective excise tax rates is found in Internal Revenue Code (IRC) 4661(b). Ascend Performance Materials is the premium provider of high quality chemicals, fibers and plastics. Initially, the Superfund program called for taxes by manufacturers of crude oil and certain chemicals to fund a trust to pay for environmental cleanup activities. For example, butane and methane are exempt if used in fuel but not if they are used for other purposes. Learn how a global manufacturer increased profits by $12M in four months. FS-2022-31, June 2022. Section 80201(c)(1) of the IIJA modified the method for determining whether a substance is a taxable substance by lowering the required percentage of taxable chemicals used to produce the substance from 50 percent to 20 percent of the weight (or the value) of the materials used to produce such substance. South Florida | 429. Download list of 42 taxable chemicals and 151 taxable substances. Applicants for registration may call 859-320-4091 and select menu option #1. Providence | In turn, the tax rate of imported substances was effectively doubled as well. See questions 4-5 for more information on taxable substances and questions 7-9 for more information on calculating the tax imposed by section 4671 (section 4671 tax). Manufacturers, producers, or importers that sell or use any of these chemicals must pay a tax of $0.22 to $4.87 per ton, depending on the chemical. System and Organization Control Reporting (SOC), GDPR General Data Protection Regulation. 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. on The Reinstated Superfund Excise Tax for Chemicals and Imported Substances, How Finance and Accounting Outsourcing Helps Companies Grow, How Sage Intacct Real Estate Simplifies Property Management and Reporting. See section 4672(a)(1). Boston | A11. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); This website uses cookies. 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. 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. Nearly three decades after expiring, the Superfund chemical excise tax is back. The money gathered from the taxes was used to fund the clean-up of hazardous waste disposal sites across the United States. Operating now under a new set of rules, organizations manufacturing or importing certain chemicals now face new tax challenges. Learn more about Superfund Excise Tax changes effective July 1, 2022, including key considerations for dealings with the reinstated Superfund Tax on chemicals and substances. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. Gas tax holiday: impact of changes in motor fuel tax rates, Tax automation: the ultimate guide to tax process efficiency, Reporting The entities falling under the Cherry Bekaert brand are independently owned and are not liable for the services provided by any other entity providing services under the Cherry Bekaert brand. The Superfund Tax that was established over two decades ago and taxed specific chemicals and hazardous substances has been restored after the passing of the Infrastructure Investment and Jobs Act last year. No such update has been issued to date, however. Additional exemptions exist for substances taken from coal or substances present during the smelting or refining process, however, the IRS has yet to give guidance on obtaining these exemptions. For tax advice, consult your tax adviser. The IRS has provided taxpayers temporary relief from penalties for failure to deposit superfund chemical taxes in the third and fourth calendar quarters of 2022 and the first quarter of 2023 through Notice 2022-15. A14. 2022-26 (Issued 6/28/2022), Exclusive Procedures to Request a Determination under IRC 4672 (a) (2) That a Substance Be Added To/Removed From the List of Taxable Substances under IRC 4672 (a) ( Link) Please Identify exempt chemicals and substances under export rules. 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. As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. A Superfund tax is imposed when a taxable chemical is imported, or is domestically produced for sale or use unless an exemption applies. These substances consist generally or partially of chemicals listed in Section 4661. Please see links for details: Learn more about Superfund Excise Tax changes effective July 1, 2022, including key considerations for dealings with the reinstated Superfund Tax on chemicals and substances. This Superfund Tax is assessed only on importers of taxable substances and is due upon the first sale or the first use after import into the United States. More substances are expected to be added in the future, but the list as it stands is available below. 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. The Inflation Reduction Act (IRA) enacted on August 16, 2022, created a new corporate alternative minimum tax (AMT) for taxable years beginning after December 31, 2022. 429 (2021)), effective July 1, 2022, with modifications to the applicable rates of tax and other provisions related to those taxes. Client Advisory Board, 1175 Lombardi Access Rd., Ste 500, Green Bay, WI 54304. WebEarlier Superfund excise taxes were 9.7 cents per barrel of crude oil or refined oil products, and a variety of excise taxes, ranging from $0.22 to $4.87 per ton on some 42 chemicals and metal compounds. Unless your company is a manufacturer or importer of chemicals and substances, there is no additional reporting required regarding the superfund excise tax. Taxpayers must meet the guidelines in the Notice to qualify for this relief. The frequent and sizeable requirements of the reinstated superfund excise tax reporting can be burdensomeespecially for resource-constrained tax departments or those unfamiliar with the requirements. Webrate and the $0.164 per barrel petroleum Superfund tax rate. Acetylene Benzene Butane Butylene Butadiene Part 40regarding filing, deposits, and related procedural issues apply to companies subject to the reinstated Superfund excise taxes. The Treasury Department and the IRS (collectively the IRS) have released Notice 2022-15, which provides relief for certain reinstated Superfund chemical excise taxes (SCET) from the penalty for failure to properly deposit imposed under Section 6656. According to the IRS, A taxable chemical is a chemical that is (i) listed in section 4661(b), and (ii) manufactured or produced in the United States or entered into the United States for consumption, use, or warehousing. Below is the current list of taxable chemicals. The Superfund taxes are expected to generate approximately $14.5 billion over a 10-year period. Part II of IRS Form 6627 has been updated to reflect these rates. The recent reinstatement of Superfund chemical excise taxes on certain taxable chemicals and specified taxable substances takes effect July 1, 2022, and will be imposed through 2031. The Anti-Money Laundering Act of 2020 Gets a Glow Up: Congress FINRA Files Amendments to Proposed Rule Change That Will Allow Remote Corporate Practice of Medicine Doctrine: Increased Enforcement on the Environmental Justice Update: EPA Announces $100 Million in EJ Grants Insurers Beware of Silent Crypto Exposure: PART III, Silent Crypto Court Rules that Brown Bread is Not Misleading, Whats Next in Washington? If the importer does not calculate the section 4671 tax for a taxable substance and the IRS has prescribed a tax rate for the taxable substance, the tax is calculated using the rate prescribed by the IRS. The first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). What happens if an importer does not calculate the section 4671 tax? 117-169), which was signed into law on August 16, 2022, reinstated the Petroleum Superfund Tax at a rate of 16.4 cents per barrel. Your company could bear the economic burden of the tax being passed on from your suppliers, and, in turn, your company would then need to consider its ability to pass on the economic cost of the excise tax to its customers. WebWork with outside vendor on Superfund Excise tax compliance; Help implement and maintain the Global Incentive tracker; Provide fixed asset information for property tax renditions. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. 4295) on December 22, 2022, that accomplishes three things: (1) eliminates the requirement to affirmatively elect New Jersey S corporation status, while including an opt-out provision; (2) adopts the federal centralized partnership audit regime, with certain modifications; and (3) ends certain COVID-related extensions. A12. The microbusiness also charges $5 for delivery. - 2023 PwC. These Superfund tax credits can be taken by either the importer, the manufacturer, or the exporter, depending on the commercial agreements that have been established among those parties. The Superfund Excise Tax on chemical sales is back! Charter is different from tax teams because we dont just focus on compliance we also find the credits your company qualifies to receive. It's important to note that the tax only applies to imported chemicals and hazardous substances. Exporters will not be taxed. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. Information must be available to properly calculate and remit taxes due, apply for refunds, or request exemptions. Download list of 42 taxable chemicals and 151 taxable substances. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. Take inventory of chemicals and determine effects on manufacturing processes and product pricing to ascertain business impact and identify tax exposure. The tax may be passed along to customers. 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). There are 42 chemicals listed in section 4661(b). The National Law Review is a free to use, no-log in database of legal and business articles. Final Regulations Governing Illinois Equal Pay Acts Certification Weekly Bankruptcy Alert: January 17, 2023 (For the week ending Bankruptcy Court Allows Service of a Subpoena Via Twitter. For purposes of this code section the term importer means the person for which the taxable chemical is brought to the U.S. for consumption, use or warehousing. This current iteration is set to expire on December 31, 2031. Yes. 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). For example, methane or butane used as a fuel, or nitric acid, sulfuric acid, ammonia, or methane used in production of fertilizer are exempt. Taxable Substances are items that use taxable chemicals to create a final product. The Inflation Reduction Act added excise tax on domestic crude oil and imported petroleum products starting on January 1,2023. 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. This excise tax, which is imposed on certain chemicals and imported chemical substances, was reinstated effective July 1, 2022, as part of the Infrastructure Investment and Jobs Act of November 2021. At that time, the application of the tax and the deployment of funds were quite well understood, and the U.S. Internal Revenue Service (IRS) developed a relatively robust series of guidance documents to explain how the tax operated and who was subject to the tax. Proc. 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. Section 40.6302(c)-1(b)(2), for failure to make required deposits of Superfund excise taxes if the requirements set out in the Notice are met. Go back five years for manufacturing drawback. The DOE Publishes Notice of Intent to Fund Clean Hydrogen Projects. The site is 15 miles east of Sacramento, California. The excise tax collection expired in 1995 but resumed on July 1, 2022. Any taxable chemical or substance also qualifies for a Superfund Tax Credit. Chemicals will be taxed based on how they're sold, used, or stored and can range from $0.44 to $9.74 and will be charged on a per-ton basis. Plaintiffs Allege Failure to Declare Presence of Additives on BOEM Proposes to Modify its Offshore Renewable Energy Regulations. Its been a while since manufacturers or other affected organizations had to consider this levy, so lets take a closer look at these excise taxes and how taxpayers can determine applicability and prepare for compliance. Aerojets previous disposal and operating practices led to soil and groundwater contamination. - January 2023 Edition. Cherry Bekaert Advisory LLC and its subsidiary entities are not licensed CPA firms. Home Guidance Article Superfund Excise Taxes on Chemicals and Substances: How to Prepare. 11 In addition to the reinstatement of the taxes, | All Locations, Cherry Bekaert is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC, independently owned entities, provide professional services in an alternative practice structure in accordance with applicable professional standards. 177-58) and was signed on November 15, 2021. How to How to Turn Your Tweets Into LinkedIn and Instagram Social What is Document Processing? No other Superfund tax refund service provider has the experience of Charter Brokerage. Companies must report the reinstated Superfund excise taxes onForm 6627, Environmental Taxes, attached toForm 720, Quarterly Federal Excise Tax Return. Initially, the Superfund program called for taxes by manufacturers of crude oil and certain chemicals to fund a trust to pay for environmental cleanup activities. These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. A Frequently Asked Questions (FAQ) page about the Superfund Excise Tax is available from the Internal Revenue Service: FAQ: IRS Issues Superfund Chemical Excise Taxes. As a background, when these taxes were reinstated through the Infrastructure Investment and However, the first Superfund is also imposed when a taxable substance is imported for consumption, use, or warehousing. The Superfund excise taxes are part of Subtitle D, Chapter 38 of the Tax Code. The applicable tax ranges from $.48 to $9.47 per ton. The rate of excise tax per ton is based on the amount of each chemical included in the substance. Even companies that have been on the market for decades may not have many employees who were around when the previous excise tax applied. Notice IR-2022-132 focused on issuing tax rates for 121 taxable substances. The term Superfund refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. Read about their experiences and a few lessons learned along the way. The original excise tax expired on December 31, 1995. This memorandum explains why. Are Your Companys Year-End Compensation Accruals Tax Deductible? Richmond | The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. under section 4672(a)(3), or if the Secretary of the Treasury or her delegate (Secretary) has added it to the list of taxable substances pursuant to section 4672(a)(2) or (4). Below is the current list of taxable substances. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Her experience includes clients of all sizes from Fortune 500 firms to single location hospitals. Relief provided for Superfund chemical excise tax semimonthly deposits April 2022 In brief The Treasury Department and the IRS (collectively the IRS) have released Notice 2022-15, which provides relief for certain reinstated Superfund chemical excise taxes (SCET) from the penalty for failure to properly deposit imposed under The IRS is working on calculating tax rates for taxable substances and will release them as they become available. Petitions to Add Polyoxymethylene and Polyphenylene Sulfide. This webcast discusses the three Superfund Excise Taxes that are now in place, recent trends, and hot topics to be aware of as organizations solidify processes and procedures to ensure compliance by October 31, 2022. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. 2017 WebEffective July 1, 2022, Congress has revived the Superfund Excise tax on Taxable Chemicals and Taxable Substances that previously existed from 1980 through 1995. The table below outlines products that are impacted by this excise tax. Taxable substances are defined inSection 4672as any substance that, at the time of sale or use by the importer, is listed as a taxable substance. Tampa | As we mentioned above, this tax is only for companies importing chemicals or hazardous substances on the list and filing an IRS Form 720. In 2022, IRS received petitions to add polyoxymethylene and polyphenylene sulfide to the list of For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. Permit & License. A semimonthly period is the first fifteen (15) days of a calendar month or the portion of a calendar month following the 15th day of the month. The section 4661 tax is imposed as a rate per ton of a taxable chemical. Tax on Imported Chemical Substances, IRS No. See also section 4661(b) for the tax rate for taxable chemicals. AllRightsReserved. This new tax does not need to add additional costs to your products. 11 In addition to the reinstatement of the taxes, the Infrastructure Bill doubled the prior rate of tax on the 42 listed chemicals. Companies opting for the latter run the risk, however, of incurring penalties, should the IRS adopt a different view. In Philadelphia, Economy Struggles to Keep Up with New Influx of Immigrants. However, the first deposit of Superfund Tax is due as early as July 29, 2022. Are you capturing all of them? Cherry Bekaert LLP and Cherry Bekaert Advisory LLC practice in an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations and professional standards. Accordingly, these FAQs may not address any particular taxpayer's specific facts and circumstances, and they may be updated or modified upon further review. Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. Part III. Certain non-fuel and agricultural uses of some of these chemicals were exempted from the excise tax. $150 plus $0.069 per each acre-foot greater than 10 acre-feet. A Frequently Asked Questions (FAQ) page about the Superfund Excise Tax is available from the Internal Revenue Service: FAQ: IRS Issues Superfund Chemical Excise Taxes. July 1, 2022. The full list of taxed chemicals and substances can be viewed here. The Time Is Now: Comment Period Open For The Federal Trade Commission Canadas Foreign Buyers Ban: What You Should Know About the Ban on CMS Proposed Rule for Refunding Overpayments Would Align With False EPAs Proposal to Tighten the Fine Particulate NAAQS: Whats Proposed Commonwealth Court Strikes Down 2021 Accessibility Regulations as Is Texas Getting Ready to Expand Its Compassionate Use Program? Duration: 00:12:55. Chemicals. Superfund Tax Chemicals List According to the IRS, A taxable chemical is a chemical that is (i) listed in section 4661 (b), and (ii) manufactured or produced in the United States or entered into the United States for consumption, use, or warehousing. Below is the current list of taxable chemicals. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form Specifically, sections 4661(a) and 4662(c)(1) impose an excise tax on the sale or use of a taxable chemical by the manufacturer, producer, or importer of the taxable chemical. 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. Please reach out to our team if you have any questions about the implications of the infrastructure bill. The microbusiness also charges $5 for delivery. You Meta Believe the GDPR Penalties Are No Joke! The hazardous substance tax will be imposed at a rate of 16.4 cents per barrel and will be adjusted for inflation on January 1 of each year until it expires on December 31, 2032. The Superfund chemical excise taxes previously expired on December 31, 1995. Aside from this quarterly filing, taxpayers A2. There are 42 listed taxable chemicals under IRC 4661, which imposes excise tax on the sale or use by a manufacturer, producer or importer of such chemicals. How does ESG fit into business strategy? Our use of the terms our Firm and we and us and terms of similar import, denote the alternative practice structure of Cherry Bekaert LLP and Cherry Bekaert Advisory LLC. Drive maximum value across your supply chain. The Superfund Chemicals Excise Tax Makes a Comeback. Notice 89-61provided guidance under the previously applicable Superfund excise tax. An importer of a taxable substance is subject to the section 4671 tax on the sale or use of the taxable substance on or after July 1, 2022. Section 4671(a) imposes an excise tax on the sale or use of a taxable substance by the importer of the taxable substance. Normally, if a taxpayer deposits less than 95% of its required deposit and is not following the prescribed safe-harbor method, Section 6656 imposes a penalty that reaches its maximum rate of 10% after only 15 days. If you are not responsible for paying and reporting the excise tax to the IRS but purchase any of the listed chemicals or substances from your suppliers, review the potential economic impact of the reinstated excise tax on your company. We recommend taking the following steps now to determine how this excise tax applies to your company and to help ensure compliance: In addition, it is important to identify your available resources for determining taxability, exemptions, making tax deposits, filing applicable IRS registrations (Form 637, Application for Registration For Certain Excise Tax Activities) and filing quarterly tax returns (Form 720, Quarterly Federal Excise Tax Return, and attachment Form 6627, Environmental Taxes). 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. More. As of July 1, 2022, The Infrastructure Investment and Jobs Act (IIJA) has reinstated excise taxes imposed on certain chemicals and imported chemical substances. Tax News & Views, our current events-focused tax podcast, can help provide clarity on the latest tax news and developments that could affect your business. Companies might receive a refund of the tax paid if they export products made with specific chemicals and substances if they paid before manufacturing. With over 10 years of experience, Sales Tax Manager Elizabeth Perez Gonzalez specializes in sales and use tax services. While the final taxable substance list and exact rates have yet to be finalized, costs will be calculated by weight or value of the contained taxable chemical. Taxpayers must make semimonthly deposits of the Superfund chemical excise taxes. Tech trends in The Treasury Department and the IRS (collectively the IRS) have released Notice 2022-15, which provides relief for certain reinstated Superfund chemical excise taxes (SCET) from the penalty for failure to properly deposit imposed under Section 6656. The Joint Committee on Taxation estimates these excise taxes combined would increase revenues by over $52 billion over a 10-year period. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. Otherwise, companies risk finding out about this tax when they are audited and risk becoming liable for penalties. Unless otherwise noted, attorneys are not certified by the Texas Board of Legal Specialization, nor can NLR attest to the accuracy of any notation of Legal Specialization or other Professional Credentials. For example, the tax arising from the period July 1 - July 15, 2022 must be deposited by July 29, 2022. 2022-19: Relief for S Corporation Owners, Financial Secrecy Under Attack in the United States: Final Regulations Issued for Beneficial Ownership Information Reporting, Cybersecurity Maturity Model Certification, Business Intelligence and Data Analytics Services, Digital Strategy & Transformation Services, Government Contractor Consulting Services, SBA 8(a) Business Development Program Consulting Services, Information Technology Audit & Consulting, Cybersecurity Maturity Model Certification (CMMC), Outsourced Sales Tax Compliance and Managed Services, IRS issues Superfund Chemical Excise Tax Rates, IRS issues Superfund Chemical Excise Taxes FAQs, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. Austin | A5. Among the requirements mentioned (briefly) in Notice 2021-66, SCET taxpayers with a net quarterly liability in excess of $2,500 must make deposits of tax for each semimonthly period in which the tax liability is incurred. As a result, Notice 2022-15 provides welcome relief and affords SCET taxpayers additional time to perfect their SCET deposit process. What are the Superfund chemical excise taxes? Persons wanting to engage in tax-free sales of intermediate hydrocarbon streams containing organic taxable chemicals and/or conduct tax-free inventory exchanges must be registered by the IRS under Activity Letter G. Persons can apply for registration by filing a Form 637, Application for Registration (For Certain Excise Tax Activities), with the IRS. Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. Nearly three decades after expiring, the Superfund chemical excise tax is back. If your company is a business that manufactures, produces or imports any of the listed chemicals or substances, determine your liability for the taxes. Cherry Bekaert is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC provide professional services. See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. Aside from this quarterly filing, taxpayers with a quarterly liability of greater than $2,500 will be required to make semi-monthly tax deposits of at least 95 percent of the net tax liability incurred during the tax period (unless a safe harbor Heres more on what is included in the Superfund Excise Tax and what to keep an eye out for. Semimonthly periods are the first through 15th of the month and 16th through the end of the month, with the deposit being due the 14th day following the end of the semimonthly period. On December 27, 2022, the Treasury Department and the Internal Revenue Service issued interim guidance in the form of Notice 2023-7, addressing how the new corporate AMT applies to partnership interests, consolidated return groups and other significant events that affect corporations, including merger and acquisition activities and excepted cancellation of debt income. Charter Brokerage can help you mitigate the Superfund taxes paid on these taxable chemicals. Since the Superfund excise tax expired almost three decades ago, the industrial chemical communitys familiarity with their application is attenuated at best. Atlanta | 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). 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. Will the IRS prescribe tax rates for taxable substances? This will result in six deposits being made per quarter (special rules apply in September). WebClaims for refund of excise taxes. It is unclear whether and how the statute means to differentiate a substance from an article, and if so, whether the IRS would apply the definition of article under the Toxic Substances Control Act (TSCA). 17. Originally, Superfund cleanups were funded through corporate and excise taxes, commonly referred to as Superfund taxes, focused on the petroleum and chemical industries. Charlotte | The per-ton rate of tax varies depending on the taxable chemical being sold or imported, so the amount of Superfund Tax will vary by product. The excise tax was not only brought back, but the IIJA doubled the prior tax rate on chemicals. All rights reserved. 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. A9. Implementing process improvements including potential technology solutions to efficiently monitor products subject to tax and possible exemptions. Section 704.3. This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. As reinstated, the excise tax rates are doubled from pre-1996 levels and range from $0.44 cents per ton to $9.74 per ton. The revived Accordingly, a manufacturer, producer, or importer of a taxable chemical is subject to the section 4661 tax on the sale or use of the taxable chemical on or after July 1, 2022. The reauthorization doubled the tax rates on taxable chemicals, vastly expanded listed taxable substances, and increased the cap size of the trust fund. That penalty can be avoided if the taxpayer demonstrates that the failure was due to reasonable cause and not due to wilful neglect. The Treasury Department and the IRS reportedly intend to update Notice 89-61 to reflect the changes made to Section 4672(a)(2) by the IIJA and to make other changes that may be necessary. Superfund Excise Tax on Chemicals Has Been Revived Effective July 1, 2022, Congress has revived the Superfund Excise tax on Taxable Chemicals and Taxable Substances that previously existed from 1980 through 1995. The original Superfund Chemical Excise Tax was enacted with the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) and expired on December 31, 1995. Aerojet and its subsidiaries have 117-169), which was signed into law on August 16, 2022, reinstated the Petroleum Superfund Tax at a rate of 16.4 cents per barrel. Sign up to receive the latest BDO news and insights. Fast forward to today. A4. The revenues are intended to help pay for the approximately $550 billion in new spending on infrastructure that is part of the 2021 Infrastructure Investment and Jobs Act. The new tax doubles the previous tax rate on Taxable Chemicals and Taxable Substances. 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. Permit & License. Corresponding with the IRS, including requests for determination and other guidance. As part of this Act, superfund excise taxes imposed on chemicals and imported taxable products are set to be reinstated July 1, 2022 through Dec. 31, 2031. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. Excise taxes are reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. By continuing to use this site, you are giving consent to cookies being used. The Infrastructure Investment and Jobs Act lowered this threshold to 20%. 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. Now and for the future. Identify and educate key stakeholders impacted by the excise tax within the organization (supply chain, tax, EPA regulatory, IT, finance), Identify taxable chemicals, hazardous substances, and crude oil/ imported petroleum products, Identify and document exceptions to the excise tax, Forecast excise tax liability based on applicable rates, Consider filing petition with IRS to request modifications to the list of taxable substances and rate of tax on taxable substances, Assess supplier and consumer invoicing issues, Assess internal and external communications regarding excise tax information, Identify data sources required to track the lifecycle of affected chemicals and products, assess potential issues, and evaluate process and configuration changes to resolve issues, Prepare for all aspects of compliance, including filing registrations on Form 637 and filing returns on Form 720 and Form 6627. For more information on cookies and how we use them, view our Cookie Policy. Cherry Bekaert: Tax, Audit and Advisory Services, Superfund Excise Taxes on Chemicals and Substances: How to Prepare, Starting a New Business & Launching Successfully: Tax and Business Planning Tips, IRS Rev. The calculation of the superfund excise taxes is complex, and accurate reporting data can help companies reduce their tax burden. On November 15, 2021, President Biden signed into law theInfrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. 429, Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). Please see www.pwc.com/structure for further details. The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. Copyright 2023 BDO USA LLP. If the importer does not calculate the section 4671 tax for a taxable substance and the IRS has prescribed a tax rate for the taxable substance, the tax is calculated using the rate prescribed by the IRS. These FAQs detail what the Superfund chemical excise tax is, how the tax is computed, and who may be liable for the tax. Additionally, Notice 2022-15 provides that the IRS will not exercise its authority to revoke the right to use the safe-harbor deposit method during the first three quarters of 2023, provided the requirements of Notice 2022-15 are met. The Aerojet General Corp. Superfund site covers about 5,900 acres near Rancho Cordova. Additional substances may be added if the weight or value of the substances is greater than 20% of the contained taxable chemical. Retailer's Wholesale Cost ($1,000 + $200) $1,200.00. Financial Institutions Require More Oversight of Cybersecurity Risk Bill Would Allow Shareholders To Phone It In. Form 6627 must be led alongside Form 720 on a quarterly basis. The content and links on www.NatLawReview.comare intended for general information purposes only. As this question is likely to arise in the near future when the Superfund excise tax applies, the IRS can be expected to address this aspect. Review your business processes, entities and products to determine the effect on contracts, invoicing, cost recovery, technology and potential future audits. Specifically, the due date for the deposit accelerates to the immediately preceding date that is not a Saturday, Sunday, or legal holiday. The IRS determined this threshold in consultation with the Environmental Protection Agency and U.S. Customs and Border Protection. These credits are accrued when a taxable chemical or taxable substance is exported. This law levies taxes on the manufacture, production, or importation of 42 specific chemicals and another 121 chemical (added June 24, 2022), Q5. The excise tax collection expired in 1995 but resumed on July 1, 2022. 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). Houston | Superfund excise taxes are reported on Form 6627, Environmental Taxes, which must be attached to Form 720 Quarterly Federal Excise Tax Return. As noted above, importers are not required to use the IRS-prescribed tax rates for the section 4671 tax and may calculate their own rates. Statement By Secretary Walsh On the Telecommunications Workforce EPA Announces Appointments to Local Government Advisory Committee. The new tax doubles the previous tax rate on Taxable Chemicals and Taxable Substances. However, given the related compliance processes that need to be established (e.g., automating data capture, gathering exemption documentation, and return preparation and filing) and matters that need to be addressed (e.g, Form 637 registration and taxable substance listing), taxpayers should consider taking this opportunity to evaluate whether their overall SCET program is sufficiently robust and meets the greater needs of their organization for example, by reprioritizing activities within their project plans. The importer of hazardous substances pays the tax, and it is due on the first sale or use after import. Washington DC |, Copyright 2023 Cherry Bekaert. Contributed by Stephanie C. Cason, CPA, MAcc, Manager in RKLs Tax Services Group. $225 plus $0.073 per each acre-foot greater than 10 acre-feet. (Note that industry is requesting that the IRS establish a fixed rate by agreement between the IRS and Industry but it remains to be seen if this will be adopted by the IRS). Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. Its tax re-imagined. There are two ways a substance can be added to or removed from the list of taxable substances pursuant to section 4672(a)(2) and (4). July 1 is fast approaching and the window to prepare for compliance with the reinstated Superfund Tax is brief. The recent reinstatement of Superfund chemical excise taxes on certain taxable chemicals and specified taxable substances takes effect July 1, 2022, and will be imposed See section 4671(b)(3). This potential change in Brazilian transfer pricing policies could have significant consequences from a U.S. transfer pricing and international tax perspective. A6. 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. The FTC's Proposed Rule Banning Noncompete Agreements- What Does It Mean? Read more about the three reinstated excise taxes. The Environmental Protection Agency (EPA) identifies sites such as Kti Chemicals Inc because 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 Infrastructure Investment and Jobs Act (IIJA) reinstated the excise taxes imposed on certain chemicals and imported chemical substances under Internal Revenue Code sections 4661 through 4672 beginning July 1, 2022. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. Many entities are struggling with its application. If your company is liable, this will require compliance with semi-monthly tax deposit rules and quarterly tax return reporting requirements along with IRS registrations for certain exemptions. Partner, Tax Controversy and Regulatory Services, PwC US. The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. Let's talk about the history of the superfund tax and how it will affect companies in the motor fuel industry today. Section 4661(b) lists the almost three and a half dozen chemicals that this SECURE 2.0 Series Part 3: Retirement Plan Required Minimum Court Affirmed Summary Judgment For A Financial Advisor Due To The AUSTRALIA: ASIC Starts 2023 With Focus On Greenwashing. The Inflation Reduction Act (Pub.L. The Superfund law (P.L. First, a substance can be added to the list of taxable substances by the Secretary, in consultation with the Administrator of the Environmental Protection Agency and the Commissioner of U.S. Customs and Border Protection, if the Secretary determines that taxable chemicals constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce the substance (determined on the basis of the predominant method of production). Aside from this quarterly filing, taxpayers with a quarterly liability of greater than $2,500 will be required to make semi-monthly tax deposits of at least 95 percent of the net tax liability incurred during the tax period (unless a safe harbor applies). The first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). Built by tax professionals for tax professionals. The money gathered from the taxes was used to fund the clean-up of hazardous waste disposal sites across the United States. Calculating 3/17/2022. A13. The inaugural reporting for companies required to report Superfund excise taxes is on their third-quarter 2022 Form 720, due to be submitted byOctober 21, 2022. 117-169), which was signed into law on August 16, 2022, reinstated the Petroleum Superfund Tax at a rate of 16.4 cents per barrel.
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