Since the Superfund excise tax expired almost three decades ago, the industrial chemical communitys familiarity with their application is attenuated at best. 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. Any taxable chemical or substance also qualifies for a Superfund Tax Credit. I am an importer of taxable substances. (added June 24, 2022), Q14. 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. In the meantime, reach out to your RKL advisor with questions or to discuss your companys specific circumstances. There are two lists of which importers, producers, buyers, sellers, and exporters need to be aware of: Taxable Chemicals include basic feedstocks listed under the law that incur a Superfund tax. This ABA Tax Times article provides an illustration of the challenges faced by the oil and gas industry in applying one of these special rules related to two products derived from natural gas: methane and butane. Companies are likely to be caught off guard by this reinstated tax. Unlike many filings, due dates for deposits are accelerated if the typical due date falls on a Saturday, Sunday, or a legal holiday in the District of Columbia. 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). 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. 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. Policy on Demand is a news platform that provides in-depth insights and analysis on policy developments that impact your business. 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. 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. Some exported chemicals and hazardous substances used in different types of fertilizer, animal feed, and fuel are exempt from the superfund tax. See section 4671(b)(1). Various exemptions exist for taxable chemicals. 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. 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. Sitemap Orlando | See section 4672(a)(1). Duration: 00:12:55. The Superfund Excise Tax: Back in action. . The Reinstated Superfund Excise Taxes. Cherry Bekaert is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC provide professional services. Additionally the new legislation also decreased the threshold amount from 50% to 20% of 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. FS-2022-31 (Issued 6/24/2022), IRS issues Superfund Chemical Excise Taxes FAQs ( Link) Rev. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. Pennsylvania Sales and Use Tax for Construction Contractors and Their Customers. 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. A11. Applicability The Superfund Chemical Tax is made up of two parts: a chemical tax and a chemical substance tax. Superfund is also imposed when a taxable substance is imported for consumption, use, or warehousing. 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. Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. The tax on substances depends on their chemical composition and if it has 20% or more of a chemical on the taxable list. Tax Implications and Financial Business Guidance Regarding the Coronavirus. 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. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); This website uses cookies. This new tax does not need to add additional costs to your products. For taxable substances, the importer of the taxable substance is responsible for reporting and paying the section 4671 tax to the IRS. 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. More information about reliance is available. These FAQs were announced in IR-2022-131. As a result, large and small companies alike who produce or import these chemicals or substances are about to be slammed with additional costs. It started with the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 19801986. The infrastructure bill imposes taxes on certain chemicals and imported substances under Internal Revenue Code sections 4661 through 4672. Stephanie provides tax planning and compliance services to corporations, pass-through entities and individuals. This legislation provided a federal Superfund to clean up hazardous-waste sites and accidents, spills, or other emergency releases of pollutants and contaminants into the environment. 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. Until then, companies may take the IRS previous position as an indication of how it is likely to view articles and fabricated products under the current Superfund excise tax. The IRS previously released Notice 2021-66, providing guidance on the reinstatement of the SCET under the Infrastructure Investment and Jobs Act (sometimes referred to as the bipartisan infrastructure bill) enacted on November 15, 2021. Read more about the three reinstated excise taxes. 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. Connecting with our core purpose through a renewed lens. The money gathered from the taxes was used to fund the clean-up of hazardous waste disposal sites across the United States. Please reach out to our team if you have any questions about the implications of the infrastructure bill. 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 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. 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? Texas Unclaimed Property, a Division of the Texas Comptroller of Public Accounts (Texas Comptroller), is increasing compliance efforts through outreach. Does Your Cyber Insurance Policy Cover a Ransomware Attack? According to the IRS, 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. South Florida | Download list of 42 taxable chemicals and 151 taxable substances. As reinstated, the tax The IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. Biobased chemicals and biofuels have taken root thanks to both popular appeal and political support. 429. 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. Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. (added June 24, 2022), Q12. Are semimonthly deposits required? When is the first return due? (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). For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. 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). The first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). (added June 24, 2022), Q2. 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). Houston | A5. BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. Applicants for registration may call 859-320-4091 and select menu option #1. Cherry Bekaert LLP is a licensed independent CPA firm that provides attest services to its clients, and Cherry Bekaert Advisory LLC and its subsidiary entities provide tax and business advisory services to their clients. Are Your Companys Year-End Compensation Accruals Tax Deductible? Funds collected will be added to the Hazardous Substance Superfund Trust. 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. 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 Superfund chemical taxes should be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. A15. 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. 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. 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. - 2023 PwC. | Privacy Policy The term Superfund refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. The Aerojet General Corp. Superfund site covers about 5,900 acres near Rancho Cordova. 429, Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. That authority This memorandum explains why. The Infrastructure Bill reinstated the Superfund Excise Taxes on chemicals and taxable substances, effective July 1, 2022. This field is for validation purposes and should be left unchanged. Acetylene Benzene Butane Butylene Butadiene You Meta Believe the GDPR Penalties Are No Joke! An official website of the United States Government. 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. Semi-monthly deposits are required, however. The Treasury Department and the IRS (collectively the IRS) have released Notice 2022-15, which provides relief for certain reinstated Superfund chemical excise taxes 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 The Environmental Protection Agency (EPA) identifies sites such as Kti Chemicals Inc because If you would ike to contact us via email please click here. The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. The Infrastructure Investment and Jobs Act included the reauthorization of the Superfund law (P.L. The National Law Review - National Law Forum LLC 3 Grant Square #141 Hinsdale, IL 60521 Telephone (708) 357-3317 ortollfree(877)357-3317. Taxpayers must make semimonthly deposits of the Superfund chemical excise taxes. The money gathered from the taxes 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. Operating now under a new set of rules, organizations manufacturing or importing certain chemicals now face new tax challenges. 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. 1043, provides transitional relief for the third and fourth calendar quarters of 2022, and the first calendar quarter of 2023, regarding the failure to deposit penalties imposed by section 6656 for failures to deposit Superfund chemical excise taxes through March 31, 2023. Tax is due upon the first use or first sale of a listed chemical in the United States. 2017 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. A10. 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. 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. (added June 24, 2022), Q13. In these cases, the other person would be liable for paying the excise tax, not the initial importer. Additional substances may be added if the weight or value of the substances is greater than 20% of the contained taxable chemical. Proc. Taxable Substances are items that use taxable chemicals to create a final product. July 1, 2021 thru June 30, 2022. A14. Any later updates or modifications to these FAQs will be dated to enable taxpayers to confirm the date on which any changes to the FAQs were made. 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. Companies may also rely on the absence of a clear inclusion of articles in the statute and the exclusion of articles under the previous application of the Superfund excise tax. Companies might receive a refund of the tax paid if they export products made with specific chemicals and substances if they paid before manufacturing. (added June 24, 2022), Q9. 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. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. 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. 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. 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 Infrastructure Investment and Jobs Act lowered this threshold to 20%. The relief applies to the first three quarters of the SCET, i.e., the third and fourth quarters of 2022 and the first quarter of 2023. Excise taxes are reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. A Frequently Asked Questions (FAQ) page about the Superfund Excise Tax is available from the Internal Revenue Service: FAQ: IRS Issues Superfund Chemical Excise As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. 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. 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 tax may be passed along to customers. 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. The excise tax applies to companies that manufacture, produce, or import any of the 42 specific chemicals listed inSection 4661of the Tax Code, most of them common in consumer products, including ammonia, butane, benzene, and mercury. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. The Environmental Protection Agency (EPA) identifies sites such as Kti Chemicals Inc because they pose or had once posed a potential risk to human health and/or the environment due to contamination by one or more hazardous wastes. 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. Tax on Imported Chemical Substances, IRS No. Los Angeles | 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. 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. (added June 24, 2022), Q15. Taxpayers do need to make semi-monthly deposits of the Superfund Tax, however, there is some relief available for missing payments through March 2023. 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. IRC section 4661(b) lists 42 chemicals that are once again subject to the Superfund Excise Tax effective July 1, 2022. That penalty can be avoided if the taxpayer demonstrates that the failure was due to reasonable cause and not due to wilful neglect. 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. 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. Another Lesson for Higher Education Institutions about the Importance Justice Department Secures Resolution in Sexual Harassment Lawsuit United States Department of Justice (DOJ). See the full preliminary list in Internal Revenue Code 4661, 4671, 4672; Notice 2021-66. What happens if an importer does not calculate the section 4671 tax? The original excise tax expired on December 31, 1995. The Superfund Chemicals Excise Tax Makes a Comeback. 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. Reconciling (added June 24, 2022), Q7. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Mississippi Gaming Commission Agenda: January 19 Meeting. 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. 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 The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. The money gathered from the taxes was used to fund the clean-up of hazardous waste disposal sites across the United States. 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