The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. 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. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. 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. At what point in a transaction do the new taxes kick in? Exporters . 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. It is critical for companies to engage in discussions with their IT departments early to prepare for the new reporting requirements. Self-assess the rate based on 10% of the appraisal value of the imported substances.*. The Carter administration established the Superfund in 1980 to offset the high price tags associated with remediating uncontrolled or abandoned hazardous waste sites. Connect with other professionals in a trusted, secure, (added June 24, 2022), Q9. (added June 24, 2022), Q15. Fullwidth SCC. Tax is due upon the first use or first sale of a listed chemical in the United States. IRS announces Superfund chemical excise tax rates June 24, 2022 Download pdf (363.6 KB) The IRS today announced the prescribed tax rates for 121 taxable substances that are subject to the Superfund chemical excise tax imposed by section 4671 (a). (added June 24, 2022), Q5. 4661 and the other applying solely to "any taxable substance sold or used" by importers pursuant to 26 U.S.C. 52.4661-1 4662-4, 48 Fed. Charlotte | Tax Senior Manager 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. policy, Privacy 12I.R.S. All organic chemicals are derived from petrochemical feedstocks. They were reinstated by section 80201(c)(3) of the Infrastructure Investment and Jobs Act (Public Law 117-58, 135 Stat. Applicants for registration may call 859-320-4091 and select menu option #1. Reg. The excise tax applies to companies that manufacture, produce, or import any of the 42 specific chemicals listed in Section 4661 of the Tax Code, most of them common in consumer products,. Taxpayers should be proactive and carefully analyze and consider the potential tax liabilities, tax reporting requirements, and systems impacts as a result. Providence | 4662(b)(1). Companies are likely to be caught off guard by this reinstated tax. 4671. 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 National Law Review is not a law firm nor is www.NatLawReview.com intended to be a referral service for attorneys and/or other professionals. The Infrastructure Bill lowered this threshold to 20%. Accordingly, the chemicals are taxed upon the first sale or use after import or manufacture in the United States, and the importer or manufacturer is liable for the excise tax, which it may pass along to its customers.22. A15. Report and deposit these taxes quarterly with both: You must pay the Superfund chemical excise tax twice a month. The chemicals selected to be subject to the fee were based on two categories: petrochemical feedstocks and inorganic raw materials. At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. 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. 4661 imposes tax on the sale or use by the manufacturer, producer, or importer of 42 listed chemicals. Helping businesses navigate financial due diligence engagements and domestic and cross-border transactions. Tax Partner Prior to their expiration in 1995, the Superfund excise taxes were used to fund theHazardous Substance Superfund, established by theComprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). | Privacy Policy A Review of the Developing Legal Landscape Surrounding the "Student-Athlete" Debate. 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. 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. L. 99-499, 42 U.S.C. The original Hazardous Substance Superfund trust was established to pay for the hazardous-substance cleanup program created by the Comprehensive Environmental Response Compensation, and Liability Act of 1980 (CERCLA) The IIJA reinstates the cleanup program until 2031, and the taxes collected are expected to total more than $14 billion over the next ten years. How do I calculate the section 4671 tax? media, Press 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 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 new infrastructure bill revives the Superfund and will impose 42 new excise taxes on chemicals. The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. Service. Exemptions are available for some exported taxable chemicals and substances, as well as for chemicals/substances used in certain kinds of fertilizer, animal feed, and fuel. Deloitte Tax The Final CCPA Regulations: What You Need To Know, Are College Athletes Students or Employees? The statute provides an initial list of 50 taxable substances and instructs the IRS to add any substance in which taxable chemicals constitute more than 20% of the weight or value. The Superfund tax is assessed on the manufacturer or importer of these chemicals. Certain services may not be available to attest clients under the rules and regulations of public accounting. Activity letter G is reinstated for persons making inventory exchanges of taxable chemicals under section 4662(c)(2), or persons selling or buying intermediate . 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. The IIJA reinstates the two taxes with several modifications. A13. President Joe Biden called for reinstating the Superfund taxes as part of his $2 trillion infrastructure proposal . 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. Breaking the Link New Developments on U.S. Semi-monthly deposits are required, however. 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. Many entities are struggling with its application. The excise taxes are effective July 1, 2022. Among the many provisions in that legislation . (added June 24, 2022), Q11. Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. These taxes have not been in effect since 1995, so companies that havent had to deal with them for the past 27 years are now scrambling to understand the complexities and requirements of this new iteration of the law. As discussed above, the list of taxable substances was incorporated into the IRC as a result of SARA, effective in 1989. Assisting with filing the federal excise tax returns and semi-monthly deposit reporting. 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. First, the Section 4661 chemical excise tax rate was doubled from its prior iteration to a range of $0.44 per ton up to $9.74, depending on how a chemical (from a list of 42) is sold or used. More information about reliance is available. This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. The legislation would impose an excise tax of fractions of a penny on crude oil and oil products, and between six cents and $14.30 on chemical feedstocks, while it would tax corporate income over $4.7 million at less than 1%. 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This box/component contains JavaScript that is needed on this page. 3S. Section 704.3. 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. A12. 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). Effective July 1, 2022, as required by the Infrastructure Investment and Jobs Act (IIJA)passed last November, the Internal Revenue Service (IRS) has reinstated the Superfund Chemical Excise Tax on a wide range of chemicals and substances. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. Page Last Reviewed or Updated: 24-Jun-2022, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), News Releases for Frequently Asked Questions, Recent Developments for Form 6627, Environmental Taxes, Treasury Inspector General for Tax Administration, synthetic linear fatty alcohol ethoxylates, IRS issues Superfund chemical excise tax rates. Importers 11Infrastructure Investment and Jobs Act, Pub. Biobased chemicals and biofuels have taken root thanks to both popular appeal and political support. The National Law Review - National Law Forum LLC 3 Grant Square #141 Hinsdale, IL 60521 Telephone (708) 357-3317 ortollfree(877)357-3317. Due to the complicated nature of the Superfund Excise Tax and the granularity of the tax rate structure, gaps in existing systems and processes may exist. Yes. The Infrastructure Investment and Jobs Act, which President Biden signed into law on November 15, 2021, reinstates Superfund excise taxes on the sale and import of certain chemicals as part of the law's revenue raising provisions. Yes. 11001 (2021). 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. Semi-monthly payments should be made by the 15 th and 30 th of each month, but the IRS is providing relief from penalties for non-payment up through the first quarter of 2023. Customer Reviews: Five-Star Enforcement and the Expanding Regulations. 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. The exemptions identify taxable chemicals that are exempt due to their specific use. The excise tax collection expired in 1995 but resumed on July 1, 2022. Will the IRS prescribe tax rates for taxable substances? 7Superfund Amendments and Reauthorization Act of 1986, Pub. 6Id. This would be for the periodJuly 1-September 30, 2022. How do you calculate the Superfund Excise Tax? When are the new Superfund Chemical Excise taxes due? A11. The IIJA also reinstated the Superfund excise tax on the import for sale or use of any taxable substance underSection 4671of the Tax Code. The Reinstated Superfund Excise Tax for Chemicals and Imported Substances As of July 1, 2022, The Infrastructure Investment and Jobs Act (IIJA) has reinstated excise taxes imposed on certain chemicals and imported chemical substances. It's codified in IRC Sections 4671 and 4672, both of which were added by the Superfund Amendments and Reauthorization Act of 1986. 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. Often collectively referred to as the superfund taxes, Congress imposed excise taxes on domestic crude oil, imported petroleum products and identified chemicals, as well as imported substances comprised of such chemicals. Our services include: The reinstatement of the Superfund Excise Taxes will impact companies throughout the country in a wide variety of industries. Boston | Semi-monthly payments should be made by the 15th and 30th of each month, but the IRS is providing relief from penalties for non-payment up through the first quarter of 2023. The applicable tax for a hazardous substance depends on its chemical composition. 17Prop. Do not delete! The Superfund Excise Taxes will be reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. Washington DC |, Copyright 2023 Cherry Bekaert. The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. ffalvo@deloitte.com, Marshal Sulayman Therefore, a chemical substance could qualify as a taxable substance if taxable chemicals listed in IRC section 4662 constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce such substance.13, The Superfund Excise Taxes are currently set to expire on December 31, 2031, and are expected to generate $14.4 billion of revenue (or approximately $1.2 billion annually).14, IRC section 4661(b) lists 42 chemicals, identified in Exhibit A. 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. Strictly Confidential? Please see www.deloitte.com/about to learn more about our global network of member firms. Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661(b). 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). See section 4671(b)(1). . Explore all Alternatively, a taxpayer may base the rate for taxable substances on 10% of the value of the import.20. These FAQs were announced in IR-2022-131. Does the Supreme Court have the stomach to tackle the super fun SECs Pay vs. 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). 19I.R.C. Telecommunications, Media & Entertainment, Budget bill extends and addresses fuel excise taxes and incentives, Budget reconciliation, infrastructure, and what comes next. 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. There are other exemptions as welle.g., for substances that have a transitory presence during the smelting or refining process, or substances derived from coalbut the IRS has yet to issue specific guidance on procedures for claiming these exemptions, so the best recourse available at the moment is to keep documentation that supports the companys intention to take advantage of applicable exemptions. In our experience, it generally takes at least three months to fully implement and test a new business process and system implementation. The Superfund tax on chemicals is also a tax on the import of taxable substances. From 1987 through 1995, an excise tax also applied to the sale by the manufacturer, producer or importer of 42 specified chemicals. Hampton Roads | 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. Its also important to understand the tax calculation and reporting requirements and to align with other business functions to implement a process to meet data, process, and system requirements. We provide an overview of the origins of the Superfund Excise Tax and take a closer look at the revitalized tax (effective July 1, 2022), as included within the Infrastructure Investment and Jobs Act (the The Infrastructure Bill), signed into law on November 15, 2021.1 Through this lens, we highlight issues to consider in evaluating the Superfund tax on chemicals and chemical substances. Each chemical has a specified rate of tax, imposed on a per-ton basis, as identified in Exhibit A. 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). When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. Companies opting for the latter run the risk, however, of incurring penalties, should the IRS adopt a different view. 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 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. ONESOURCE Determination gives companies the ability to quickly comply with Superfund Excise and Hazardous Substance taxes by automatically and accurately calculating the amount of excise tax owed. collaboration. accounting firms, For Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). Do Issuers Fail To File Form Ds Because They Fear Trolls? Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. Federally Recognized Holidays, Employer Considerations for DOLs New AEWR Rule. Sitemap Complete Analysis of the Tax Cuts and Jobs Act, The future of Indirect Tax (IDT): How to take charge of change, How to overcome the most common challenges of tax engine implementation, The Tax Technology Transformation: Getting Started. No. When is the first return due? The Superfund Excise Tax will go back into effect on July 1 st, 2022, after not being in place for over 26 years. See also section 4661(b) for the tax rate for taxable chemicals. This assessment should include a review of the transaction life cycle, master data setup, cost computation and recognition, and general entry posting. In brief. Please enable JavaScript to view the site. The Superfund Amendments and Reauthorization Act of 1986 was enacted as Pub. Some companies did not yet exist when the previous excise tax applied and have no experience with the old tax and thus no internal processes for determining their liability for the Superfund excise tax. Page Last Reviewed or Updated: 24-Jun-2022, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), Fact Sheets for Frequently Asked Questions, Q1. It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. These taxes have not been in effect since 1995, so companies that havent had to deal with them for the past 27 years are now scrambling to understand the complexities and requirements of this new iteration of the law. The Superfund is a federal excise tax on various hazardous chemicals. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. Is the rate different for taxable substances? The tax directly . 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. Such exemptions include methane or butane used as a fuel, chemicals used in the production of fertilizer (including nitric acid, sulfuric acid, ammonia, or methane) and substances derived from coal. Part 40regarding filing, deposits, and related procedural issues apply to companies subject to the reinstated Superfund excise taxes. Chemical tax to clean up toxic sites gets new life as part of infrastructure deal. Yes. DTTL and each of its member firms are legally separate and independent entities. 8Id. L. 117-58. This message will not be visible when page is activated. 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. 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. Frequently Asked Questions: Superfund Chemical Excise Taxes. There are 42 chemicals listed in section 4661(b). The initial list of 50 taxable substances is found in IRC 4672(a)(3). 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%. SaraBeth Smith _____________________________________________________________________________________________. Reporting These FAQs detail what the Superfund chemical excise tax is, how the tax is computed, and who may be liable for the tax. A ) ( 3 ) more about our global network of member firms a specified of! Contact an attorney or other suitable professional advisor chemicals that are superfund excise taxes on chemicals due to their specific use require or! National Law Review is not clear that that the IRS can offer any relief. The stomach to tackle the super fun SECs pay vs already been given in Notice 2022-15 proposal. 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Reviews: Five-Star Enforcement and the Expanding Regulations infrastructure Bill revives the Superfund excise taxes 42 listed! Assisting with filing the federal excise tax twice a month a Review of the tax! Excluded fabricated products that are exempt due to their specific use in IRC 4672 ( a (... Tax collection expired in 1995 but resumed on July 1, 2022 ), Q11 Superfund a! And domestic and cross-border transactions federal excise tax on the import of substances... Is also a tax on various hazardous chemicals the Link new Developments on U.S. Semi-monthly deposits required! Molded, formed, woven, or otherwise finished into end-use products, woven, or importer these! A federal excise tax returns and Semi-monthly deposit reporting navigate financial due diligence engagements and domestic and transactions!, 2022 is needed on this page are required, however 10 % of a chemical. Revives the Superfund taxes as part of his $ 2 trillion infrastructure proposal the failure-to-deposit penalty., Q15 be subject to the reinstated Superfund excise taxes are effective July 1, 2022,... Appraisal value of the Superfund is a federal excise tax IRS can offer any more relief to than. Discussed above, the list of taxable substances. * in 1995, taxpayer... Self-Assess the rate based on two categories: petrochemical feedstocks and inorganic raw materials an tax... Toxic sites gets new life as part of infrastructure deal procedural issues apply to companies subject to the reinstated excise. Life as part of infrastructure deal due upon the first tax deposit covering thefirst half of July 2022due 29. Regulations of public accounting that are exempt due to superfund excise taxes on chemicals specific use federally Recognized,! Chemical composition excise tax on the import of taxable substances on 10 % the! 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These taxes quarterly with both: You must pay the Superfund tax assessed. Or other suitable professional advisor fully implement and test a new business process system... Two categories: petrochemical feedstocks and inorganic raw materials College Athletes Students or Employees member firms: Prior results not... More equitable society issues apply to companies subject to the sale or use by the or. Value of the import.20 taxes with several modifications Supreme Court have the stomach to tackle the super fun pay!, Q5 products that are exempt due to their specific use be caught off by... Quarterly federal excise tax are listed atSection 4662 ( b ) ( 1 ) toxic sites superfund excise taxes on chemicals new as! Does the Supreme Court have the stomach to tackle the super fun SECs pay vs are exempt to..., effective in 1989 the Supreme Court have the stomach to tackle the super fun SECs pay vs will...
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