ADVANCED! Earlier 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. IRC section 4662(e) provides for a refund of the Superfund Excise Tax for the exporter of both taxable chemicals and taxable substances. 4672(a)(2)(B)(1995). In fact, companies that export products comprised of taxable chemicals or substances are entitled to a refund if they paid prior to manufacturing. on a wide range of chemicals and substances. Are there any available exemptions for the Superfund Chemical Excise Taxes? Taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the tax. Background This box/component contains JavaScript that is needed on this page. 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. IRC section 4662 directs the IRS to release guidance as to the appropriate manner of reporting exempt sales or claiming refunds. For taxable chemicals, the manufacturer, producer, or importer of the taxable chemical is responsible for reporting and paying the section 4661 tax to the IRS. 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). Section 704.3. When do the Superfund chemical excise taxes go into effect? No. 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). 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 taxes are effective July 1, 2022. As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. Assisting with design and implementation of automated tax calculation and reporting processes to be compliant with federal laws and regulations. That number will likely change as substances are added to or removed from the list of taxable substances pursuant to section 4672(a)(2) or (4). Under Section 4661, an excise tax is imposed on the sale by manufacturers, producers, and importers of 42 taxable chemicals (see table below for a list of those chemicals). Section 4661 imposes a per-ton tax, ranging from $0.44 to $9.74 per ton on the following 42 chemicals: 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. Please enable JavaScript to view the site. Form 6627 must be led alongside Form 720 on a quarterly basis. 4672(b)(1). Reporting 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 taxes, which should go in effect on 1 July 2022, are estimated to raise approximately $14.45bn over a 10-year period accounts, Payment, South Florida | corporations, For The Infrastructure Investment and Jobs Act, signed at the end of 2021, reinstates the Superfund chemical excise taxes under Sections 4661 and 4671 of the Internal Revenue Code. Frequently Asked Questions: Superfund Chemical Excise Taxes. services, Comprehensive Environmental Response Compensation, and Liability Act of 1980 (CERCLA). The taxes apply only to imported chemicals or substances, not those for export. 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? Calculating the federal excise tax liability, including taking into account available exemptions. Implications of the revitalized Superfund tax for chemicals has been saved, Implications of the revitalized Superfund tax for chemicals has been removed, An Article Titled Implications of the revitalized Superfund tax for chemicals already exists in Saved items. Audit & Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. The original excise tax expired on December 31, 1995. There are three ways to arrive at a tax determination for the Superfund Tax: 2. Analyzing transactional and master data gaps given existing company system capability and data quality. Semi-monthly deposits are required, however. The Revenue Reconciliation Act of 1990 further extended the Superfund Excise Taxes through December 31, 1995, after which point the Superfund Excise Taxes expired. EPA Announces Availability Of Environmental Justice Thriving Energy & Sustainability M&A Activity February 2023, OSHA Implements Pilot Program to Streamline Complaint Intake Process. 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. media, Press An official website of the United States Government. Atlanta | The IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. Notice 2021-66. Your comprehensive guide to the Act's many changes to the Internal Revenue Code, and their implications for businesses and individuals. Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. Is there a way to check the status of an application for Activity Letter G registration? IRS issues Superfund chemical excise tax rates IR-2022-132, June 24, 2022 WASHINGTON The Internal Revenue Service announced today that it has prescribed tax rates for 121 taxable substances that are subject to the Superfund chemical excise tax imposed by section 4671 (a) of the Internal Revenue Code (Code). 96-125 at 14878 (1979). 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. The content and links on www.NatLawReview.comare intended for general information purposes only. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. The first return, for the. Integrated software technology solutions for global tax compliance and decision Each chemical has a specified rate of tax, imposed on a per-ton basis, as identified in Exhibit A. The return of the chemical excise tax affects taxpayers that manufacture, produce, or import certain chemicals, as Superfund Chemical Taxes are imposed on the sale of 42 specific chemicals (Taxable Chemicals) listed in 4661 (Chemical Sales Excise Tax), including ammonia, butane, benzene, mercury, and other common chemicals. 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. 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. financial reporting, Global trade & Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. The excise taxes are effective July 1, 2022. 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 Notice essentially allows taxpayers untilOctober 31, 2022, to determine whether a Superfund excise tax applies and to calculate how much taxed is owed. and services for tax and accounting professionals. See also section 4661(b) for the tax rate for taxable chemicals. msulayman@deloitte.com, Stephane Lunan Taxpayers must meet the guidelines in the Notice to qualify for this relief. When the owner or operator was not identified, or the site cleanups needed to be expedited, financing for the cleanup was to be provided by the Superfund. brands, Corporate income The Leaking Underground Storage Tank (LUST) Fund adds an additional $0.001/gal federal fee. 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. Federally Recognized Holidays, Employer Considerations for DOLs New AEWR Rule. 429. 6Id. Will the IRS prescribe tax rates for taxable substances? While the majority of the 42 listed chemicals are taxable by the manufacturer or importer upon the first sale or use, butane and methane only become taxable upon the first use other than as a fuel.23 This creates a potential liability for downstream product sales such that the first company that uses the methane or butane in a manner other than as a fuel will have to report and remit the Superfund Excise Tax. L. 99-499, 42 U.S.C. environment open to Thomson Reuters customers only. 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. 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 Products & 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. 9See I.R.C. The Superfund Chemicals tax previously expired in 1995. Strategies for Protecting Standard Essential Department Of Justice Introduces Voluntary Self-Disclosure Policy For Minnesota Supreme Court Clarifies State Law Standards for Severe or Gold Dome Report Legislative Day 25 (2023). Part of the Tax News & Views podcast series. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten-year effective . What happens if an importer does not calculate the section 4671 tax? Tampa | Notice 2021-66 suspended the procedure in Notice 89-61 because the IRS plans to issue a more current guidance on this matter. 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. 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. Treas. See Terms of Use for more information. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. ffalvo@deloitte.com, Marshal Sulayman (added June 24, 2022), Q5. The Infrastructure Bill lowered this threshold to 20%. Is the rate different for taxable substances? The tax would apply after December 31, 2021, until January 1, 2032. The rates will be included in the instructions to Form 6627, Environmental Taxes, and under Recent Developments for Form 6627, Environmental Taxes. On November 15, 2021, President Biden signed into law theInfrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. Cultivating a sustainable and prosperous future, Real-world client stories of purpose and impact, Key opportunities, trends, and challenges, Go straight to smart with daily updates on your mobile device, See what's happening this week and the impact on your business. It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. (added June 24, 2022), Q11. Notice 2021-66 does not specify the tax rate for each taxable substance. Friday Development: New Sanctions and Export Controls to Address Weekly IRS Roundup February 20 February 24, 2023, Everything to Know About Unbundled Legal Services. Substances. 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. The rate of excise tax per ton is based on the amount of each chemical included in the substance. 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). Heres how to analyze the implications and plan now for the revitalized Superfund Excise Tax. Hampton Roads | The Petroleum Superfund Tax is proposed to be indexed for inflation beginning in calendar year 2023. Section 4671(a) imposes an excise tax on the sale or use of a taxable substance by the importer of the taxable substance. 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. Assisting with filing refund claims and reporting requirements around exemption certificates. 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 first quarterly reporting for the Superfund Tax on Form 720 is due Oct. 31, 2022. Please join our EY cross-functional panel of professionals for a webcast focused on the recently enacted Infrastructure Investment and Jobs Act, specifically the reinstatement and expansion of the Superfund chemicals excise tax. Rep. No. These taxes were in place until 1995 to fund the Federal Hazardous Substance Superfund, but expired in 1995. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. 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. Chicago | shipping, and returns, Cookie A13. The IIJA reinstates the two taxes with several modifications. 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. At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. 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). These substances consist generally or partially of chemicals listed in Section 4661. Do not delete! Certain non-fuel and agricultural uses of some of these chemicals were exempted from the excise tax. Chemical manufacturers and importers It is important for companies to engage in early conversations with procurement, contracting, IT, and other internal departments to identify and assess their exposure and potential gaps in data gathering. 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. EEOC Reminds Employers How to Handle Applicants and Employees With UK's PRA Sets Regulatory Priorities for International Banks, FDA Asked to Allow Healthy Claims on Coffee. There are 42 chemicals listed in section 4661(b). Home Guidance Superfund Excise Taxes on Chemicals and Substances: How to Prepare. 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. The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. Explore all When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. When enacted, the Superfund was financed by environmental excise taxes on certain commonly used chemicals often found at Superfund sites. The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. 3. Superfund tax on chemicals. 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. These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. Form 6627, Environmental Taxes, previously used to report the Superfund Tax, will likely be used again to report the tax owed. 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. L. No. Accordingly, the procedural rules in26 C.F.R. firms, CS Professional The Superfund is a federal excise tax on various hazardous chemicals. *Note: Self-assessing based on 10% of appraisal value will almost always yield a higher tax rate than either of the other methods. Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. Richmond | They were reinstated by section 80201(c)(3) of the Infrastructure Investment and Jobs Act (Public Law 117-58, 135 Stat. For example, methane or butane used as a fuel, or nitric acid, sulfuric acid, ammonia, or methane used in production of fertilizer are exempt. Deposit payments with the Electronic Federal Tax Payment System (EFTPS). 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