(added June 24, 2022), Q10. Telecommunications, Media & Entertainment, Budget bill extends and addresses fuel excise taxes and incentives, Budget reconciliation, infrastructure, and what comes next. (added June 24, 2022), Q15. 16I.R.C. Yes. Social login not available on Microsoft Edge browser at this time. 7Superfund Amendments and Reauthorization Act of 1986, Pub. 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. (added June 24, 2022), Q5. Part II of Form 6627, Environmental Taxes, will be updated to reflect the tax rate per ton of each taxable chemical. It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. For example, methane or butane used as a fuel, or nitric acid, sulfuric acid, ammonia, or methane used in production of fertilizer are exempt. For example, if load of scrap metal contains 50% nickel (taxed at $8.90 per ton) and 20% chromite (taxed at $3.04 per ton), the tax rate would be calculated as: ($8.90 x .50 = $4.45) + ($3.04 x .20 = .61) = $5.06 per ton. 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. 21See I.R.C. The notice also addresses registration requirements to exempt certain sales and uses of taxable chemicals from tax. What are the Superfund chemical excise taxes? 17Prop. What is a taxable substance? A4. 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). SaraBeth Smith 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. July 1 is fast approaching and the window to prepare for compliance with the reinstated Superfund Tax is brief. The Infrastructure Investment and Jobs Act lowered this threshold to 20%. Do Issuers Fail To File Form Ds Because They Fear Trolls? 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. 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. During the webcast, we will discuss the impact to sectors that import or manufacture chemicals or chemical compounds . Thomson Reuters/Tax & Accounting. Please see www.deloitte.com/about to learn more about our global network of member firms. 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. Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661(b). However, Notice 2022-15, 2022-18 I.R.B. 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%. Houston | | Agreed Terms of Use Form 6627 must be led alongside Form 720 on a quarterly basis. Butane and methane users However, since the IRS ruled that these substances met the definition of taxable substance, these new substances were also subject to the tax if imported by taxpayers, thereby effectively increasing the list of taxable substances of IRC section 4672. Rep. No. financial reporting, Global trade & 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. 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. ADVANCED! Deposit payments with the Electronic Federal Tax Payment System (EFTPS). 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. 12I.R.S. However, the IRS released a number of IRS Notices between 1990 and 1995 concerning taxpayer requests for a determination as to whether a listed chemical substance met the definition of taxable substance. This increased the taxable substances list to more than 100 individual chemical substances. accounting firms, For The IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. As discussed above, the list of taxable substances was incorporated into the IRC as a result of SARA, effective in 1989. On November 15, 2021, President Biden signed into law theInfrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. and services for tax and accounting professionals. Cherry Bekaert Advisory LLC and its subsidiary entities are not licensed CPA firms. Are semimonthly deposits required? Biobased chemicals and biofuels have taken root thanks to both popular appeal and political support. 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. IT'S HAPPENING! This button displays the currently selected search type. No. 22The IRS does not require that the tax be included in the total cost of the product or separately line itemed in an invoice. 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. Chemicals. This Week in 340B: February 21 27, 2023. | Careers By this notice, the IRS gave notice of its intent to effect section 80201 (c) (1) of the IIJA, which reinstates the Superfund Chemicals tax effective July 1, 2022. 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. Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). 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. Inferences, however, can be made from the absence of any mention in the law. 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. In Notice 2021-66 (released December 14, 2021), the IRS provided guidance on Superfund excise taxes, which are reinstated as of July 1, 2022, under the Infrastructure Investment and Jobs Act (IIJA) (see Tax Alert 2021-2059).. Notice 2021-66 does the following: Updates the list of taxable substances under IRC Section 4672(a), which had expired on December 31, 1995 Due to the complicated nature of the tax assessments, and the detailed information required, gaps in existing systems and processes may exist. The Superfund Excise Tax becomes effective on July 1, 2022. The Superfund tax is assessed on the manufacturer or importer of these chemicals. 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 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. A8. A1. 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. It is important for companies to be aware of the existence of this tax, and to evaluate the chemicals and substances they import, to establish whether they owe any excise taxes. There are 42 chemicals listed in section 4661(b). The Superfund tax is assessed on the manufacturer or importer of these chemicals. (added June 24, 2022), Q3. For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. governments, Explore our Good News for American Businesses: H1-B Denial Rates Plummet Under USCIS Extends Comment Period for Proposed Fee Increases, OFCCP Rescinds Trump-Era Religious Exemption Rule. Sec. Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. Proposed Nursing Home Disclosure Requirements Target Private Equity Regulation in the Post-FTX Environment: SECs Proposed Enhanced Can a Child Decide Whom They Want to Live With in Michigan? 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. _____________________________________________________________________________________________. 429, Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), How Modern Manufacturing Plants Can Protect Against Ransomware, Cyberattacks, FTC Will Host May 23, 2023, Workshop on Recyclable Claims and the Green Guides. Updated procedural guidance on how to request the determination has not yet been published by the IRS as of the date of this article. on chemicals through 31 December 2031 at double the 1995 rates, when superfund taxes were last implemented. A12. 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. Richmond | Applicants for registration may call 859-320-4091 and select menu option #1. 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. Now, according to Section 4661, the tax rate for chemicals ranges from $0.44 to $9.74 per ton, depending on how the chemical is being sold, used, or stored. Statement in compliance with Texas Rules of Professional Conduct. Chemical manufacturers and importers Deloitte Tax Assisting with design and implementation of automated tax calculation and reporting processes to be compliant with federal laws and regulations. Companies with a large volume of transactions should consider automating their tax calculation and reporting processes to increase efficiency and accuracy. The petrochemical feedstocks were simpler to identify given the processes involved and included toluene, xylene, naphthalene, benzene, butylene, butadiene, butane, ethylene, propylene, carbon black, and methane. Unlike the static list of 42 taxable chemicals, the taxable substance list is subject to change. collaboration. 2022 Superfund excise taxes. 96-125 at 14878 (1979). Corporate Matt Levin Jul 2, 2021. How do you calculate the Superfund Excise Tax? The current list is published in IRC section 4672(a)(3) and attached as Exhibit B. I am an importer of taxable substances. industry questions. On November 15, 2021, President Biden signed into law the Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. 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. Tampa | The reinstated Superfund Excise Tax is effective July 1, 2022, through December 31, 2031, absent extension. A6. 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. 4Id. 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. The intent of the Superfund Excise Taxes is to target the chemicals primarily found in hazardous waste sites and to tax the chemicals at the earliest point possible in the process. This box/component contains JavaScript that is needed on this page. 4662(e). WASHINGTON The Internal Revenue Service announced today that it has prescribed tax rates for 121 taxable substances that are subject to the Superfund chemical excise tax imposed by section 4671(a) of the Internal Revenue Code (Code). In Notice 2021-66 the IRS published a list of 100 additional substances subject to the Superfund Tax. 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. Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. 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. The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. Telephone and Texting Compliance News: Regulatory Update February 2023. 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. L. 117-58), effective July 1, 2022. 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. When people refer to Superfund taxes, they're generally referring to excise taxes that are imposed on taxable chemicals listed under section 4661 and then taxable substances that are. Part of the Tax News & Views podcast series. Confidentiality and Non-Disparagement Agreements with Non-Supervisory USCIS Confirms It Will Accept Employment-Based I-485 Applications New Jersey Enacts Bill of Rights for Temporary Workers, DOJ Implements Nationwide Voluntary Self-Disclosure Program. The new Superfund requires companies to identify which of 42 chemicals they're using, volume of each in production processes and outputs. How Modern Manufacturing Plants Can Protect Against Ransomware, FTC Will Host May 23, 2023, Workshop on Recyclable Claims and the Appellate Court Affirmed An Order Denying A Beneficiarys Request For An Overview of Why Class Action Privacy Lawsuits May Have Just Gotten Gold Dome Report Legislative Day 26 (2023). Substances. Additionally, the Infrastructure Investment and Jobs Act ("IIJA") double the tax rate on chemicals or . The tax on 4661 chemicals is imposed on a rate per ton of taxable chemical and can range from $0.44 to $9.74 per ton. 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. The Leaking Underground Storage Tank (LUST) Fund adds an additional $0.001/gal federal fee. Specifically, the statute provides that to qualify as a taxable substance, taxable chemicals listed in IRC section 4662 must constitute more than 50 percent of the weight (or more than 50 percent of the value) of the materials used to produce such substance (determined on the basis of the predominant method of production).10. Exceptional organizations are led by a purpose. Form 6627 must be filed alongside Form 720 on a quarterly basis. Everyone loves infrastructure, but it pays to read the fine print. Yes. The JCT estimated that the proposal would increase revenues by approximately $38.4 billion over a 10-year period. Audit & The specified. Do not delete! Who is responsible for reporting and paying Superfund chemical excise taxes? The return of the Superfund excise tax on chemicals affects taxpayers that manufacture, produce, or import certain chemicals, as it imposes an excise tax on the sale of 42 specific chemicals listed in Section 4661 of the tax code, including ammonia, butane, benzene, mercury, and other common products. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten-year effective . 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 relevance of this guidance to the new tax is unclear. The rates are listed in IRS release IR-2022-133 (June 24, 2022). The term "ton" is. (added June 24, 2022), Q2. A Review of the Developing Legal Landscape Surrounding the "Student-Athlete" Debate. See also section 4661(b) for the tax rate for taxable chemicals. The proposal would essentially create a new excise tax on the manufacture, production, or importation of 42 chemicals. 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. firms, CS Professional In these cases, the other person would be liable for paying the excise tax, not the initial importer. Analyzing and assisting in documenting available exemptions (e.g., certain taxable chemicals used in the production of fuel). The original excise tax expired on December 31, 1995. Augusta | *Note: Self-assessing based on 10% of appraisal value will almost always yield a higher tax rate than either of the other methods. Service. DTTL and each of its member firms are legally separate and independent entities. No such update has been issued to date, however. Taxpayers may petition the IRS to determine whether a substance falls within the taxable substances list. 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. A taxable substance is defined as a substance that contains 20% or more by weight or value of any one of the chemicals listed in Section 4661 (down from 50% in the previous iteration of the law). The Notice essentially allows taxpayers untilOctober 31, 2022, to determine whether a Superfund excise tax applies and to calculate how much taxed is owed. Is the rate different for taxable substances? Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. 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. The following is an FAQ to help companies get up to speed on what the Superfund Chemical Excise Taxes will require of them. 2Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), Pub. 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). Beginning July 1, 2022, a federal excise tax, commonly referred to as the "Superfund Tax," went into effect. See how we connect, collaborate, and drive impact across various locations. The applicable tax for a hazardous substance depends on its chemical composition. Taxpayers must make semimonthly deposits of the Superfund chemical excise taxes. Exporters Nashville | While the majority of the listed chemicals are taxable by the manufacturer or importer upon the rst sale or use, butane and methane only become taxable upon the rst use other than as a fuel. The section 4661 tax is imposed as a rate per ton of a taxable chemical. The Carter administration established the Superfund in 1980 to offset the high price tags associated with remediating uncontrolled or abandoned hazardous waste sites. They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. . The first return, for the. (added June 24, 2022), Q7. 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). National Law Review, Volume XII, Number 139, Public Services, Infrastructure, Transportation, Mandatory Arbitration Agreements Remain Valid in California, Antitrust Practitioners Expect Activity With Climate Issues. When the IIJA reinstated these two taxes, it doubled the previous rates. Will Changes to the Option To Tax Regime Impact UK Insolvency Sales? Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. 9601-9675 (2021). Each chemical has a specified rate of tax, imposed on a per-ton basis, as identified in Exhibit A. | Privacy Policy 18I.R.S. 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. Under the new law, the excise tax applies to the use, sale, or import of 42 taxable chemicals and 151 hazardous substances. The IRS has issued lists for both the chemicals and substances included (under Section 4661 and 4671 of the Internal Revenue Code, respectively), but has cautioned importers that items on the list could change as chemicals or substances are either added or removed from the list over time. The Superfund Chemicals tax previously expired in 1995. Per ton of a taxable chemical new tax is assessed on the manufacturer or importer these... Tax be included in the law IRS release IR-2022-133 ( June 24, 2022,... & Views podcast series of 42 taxable chemicals from tax other person would be for... Effect on July 1 is fast approaching and the hazardous substances tax took on! 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