Accordingly, these FAQs may not address any particular taxpayer's specific facts and circumstances, and they may be updated or modified upon further review. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten-year effective . The National Law Review is a free to use, no-log in database of legal and business articles. See how we connect, collaborate, and drive impact across various locations. 8Id. At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. How do I calculate the section 4671 tax? Companies with a large volume of transactions should consider automating their tax calculation and reporting processes to increase efficiency and accuracy. Many entities are struggling with its application. The rates will be included in the instructions to Form 6627, Environmental Taxes, and under Recent Developments for Form 6627, Environmental Taxes. 429. An official website of the United States Government. The Superfund Amendments and Reauthorization Act of 1986 was enacted as Pub. The original excise tax expired on December 31, 1995. Find the tax rates for 121 taxable substances. Self-assess the rate based on 10% of the appraisal value of the imported substances.*. Form 6627 must be filed alongside Form 720 on a quarterly basis. Since its reinstatement, the excise tax has raised many questions and caused significant industry consternation. The Treasury Department and the IRS (collectively the IRS) have released Notice 2021-66, providing guidance on the reinstatement of the Superfund chemical excise taxes (SCET) under the Infrastructure Investment and Jobs Act (sometimes referred to as the Bipartisan Infrastructure Bill, or IIJA) enacted on November 15. Does the Supreme Court have the stomach to tackle the super fun SECs Pay vs. Performance Rule Requires Disclosure of Relationship Tech Takeaways: SCOTUS Weighs in on Pivotal Tech Cases. See Notice 2021-66, 2021-52 I.R.B. Austin | The specified. The IRS published IRS Notice 2021-66 on December 13, 2021, which included the list of approximately 100 taxable substances previously considered by the IRS in the early 1990s via individual IRS Notices, which will now be subject to the Superfund Excise Taxes (see Exhibit C).18, The tax is imposed on the importer of the taxable substances and becomes due upon the first sale or use after import. 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. 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. This current iteration is set to expire on December 31, 2031. Section 4661 imposes a per-ton tax, ranging from $0.44 to $9.74 per ton on the following 42 chemicals: It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. 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. . Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. 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 Superfund tax on chemicals is also a tax on the import of taxable substances. Everyone loves infrastructure, but it pays to read the fine print. As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. services, Comprehensive Environmental Response Compensation, and Liability Act of 1980 (CERCLA). A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. 4661 and the other applying solely to "any taxable substance sold or used" by importers pursuant to 26 U.S.C. A7. Substances may be added or removed from the list of taxable substances at a later date. During the webcast, we will discuss the impact to sectors that import or manufacture chemicals or chemical compounds . The Infrastructure Investment and Jobs Act lowered this threshold to 20%. The information here is by no means comprehensive, but it does provide a basic understanding of the law and its implications for affected companies. Is the rate different for taxable substances? See section 4671(b)(1). shipping, and returns, Cookie Heavy metals, halogens, acids, and bases are significant raw materials for many toxic inorganics.) Taxable substances are those substances listed in either section 4672(a)(3) of the Code or Notice 2021-66. To accomplish this, the current system capability should be assessed. 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. Augusta | A12. Reinstatement of Superfund excise taxes. The Infrastructure Bill lowered this threshold to 20%. on a wide range of chemicals and substances. The rates are listed in IRS release IR-2022-133 (June 24, 2022). 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. 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. When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. How does a company report the Superfund Chemical Excise Tax? L. 117-58), effective July 1, 2022. Updated procedural guidance on how to request the determination has not yet been published by the IRS as of the date of this article. L. 99-499, 42 U.S.C. The Superfund is a federal excise tax on various hazardous chemicals. Some highlights on the petroleum products tax are as follows: Imposition of the Tax Your comprehensive guide to the Act's many changes to the Internal Revenue Code, and their implications for businesses and individuals. 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. The Superfund Excise Tax will go back into effect on July 1 st, 2022, after not being in place for over 26 years. California Assembly Bill Pushes for Womens Designated Restrooms on Mississippi Legislature Takes Up Pass-Through Entity Election FTC Signals Increased Scrutiny of Technology Sector Through Understanding the Corporate Transparency Act and Ensuring Compliance. The Superfund tax is assessed on the manufacturer or importer of these chemicals. To stay logged in, change your functional cookie settings. All organic chemicals are derived from petrochemical feedstocks. 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. IT'S HAPPENING! Unlike the static list of 42 taxable chemicals, the taxable substance list is subject to change. 4Id. Importers More for It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. (added June 24, 2022), Q7. 429.Section 80201 of the IIJA reinstates the Superfund excise tax on certain chemical substances under Sections 4661 and 4671 of the Internal Revenue Code (Tax Code), effective July 1, 2022.Section 80201(c)(1) of the IIJA modified the method for determining . See also section 4661(b) for the tax rate for taxable chemicals. discount pricing. 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. 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. The first return, for the. 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. 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. Procedures to request an IRS determination to add or remove a substance from the list of taxable substances under Internal Revenue Code Section 4672(a) are in Revenue Procedure 2022-26PDF. 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). The Basics of Californias Outside Salesperson Exemption. 11Infrastructure Investment and Jobs Act, Pub. 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. As explained in today's IRS release: What is a taxable chemical? Part of the Tax News & Views podcast series. 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 The chemicals Superfund tax was initially enacted in 1980 as a response to high-profile environmental disasters relating to hazardous waste. This law levies taxes on the manufacture, production, or importation of 42 specific chemicals and another 121 chemical substances. Criminal Referrals and OSHA Violations, Part III: Industry Standards Oregon House Revenue Committee Set to Hear More About Pro-Taxpayer Buying or Selling a Small Business Government Contractor? The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. The taxes apply only to imported chemicals or substances, not those for export. See Section 4671(b)(2). An importer of a taxable substance is subject to the section 4671 tax on the sale or use of the taxable substance on or after July 1, 2022. msulayman@deloitte.com, Stephane Lunan 12I.R.S. Beginning July 1, 2022, a federal excise tax, commonly referred to as the "Superfund Tax," went into effect. 2022 Superfund excise taxes. 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). 96-125 at 14878 (1979). 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. EC Appeals European General Court Decision Annulling the Harmonized Weekly Bankruptcy Alert February 28, 2023. ADVANCED! Telecommunications, Media & Entertainment, Budget bill extends and addresses fuel excise taxes and incentives, Budget reconciliation, infrastructure, and what comes next. The latest reiteration of the excise tax will be comprised of two separate taxes on (1) chemical sales and (2) chemical importers. See also I.R.C. In fact, companies that export products comprised of taxable chemicals or substances are entitled to a refund if they paid prior to manufacturing. The IIJA reinstates the two taxes with several modifications. 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. _____________________________________________________________________________________________. (added June 24, 2022), Q12. This effectively doubled the tax rate of the imported taxable substances as well, and the Infrastructure Bill further increased the alternative method of calculation of the taxable substances to 10% the value of import. Reminder: High-Earning Exempt Professionals Must Be Paid a "True Gold Dome Report Legislative Day 24 (2023). Will Changes to the Option To Tax Regime Impact UK Insolvency Sales? Taxpayers may petition the IRS to determine whether a substance falls within the taxable substances list. The IIJA also reinstated the Superfund excise tax on the import for sale or use of any taxable substance underSection 4671of the Tax Code. 9601-9675 (2021). The Superfund excise taxes are set to expire at the end of 2031. Heard on: Revenue from a new excise tax on chemicals like Benzene and Mercury would go . 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. Analyzing and assisting in documenting available exemptions (e.g., certain taxable chemicals used in the production of fuel). Biobased chemicals and biofuels have taken root thanks to both popular appeal and political support. Technology/systems impacts Multiple Concussions Result in Greater Cognitive Deficits, DOL Issues Internal Guidance on Telework Under the FLSA & FMLA, USPTO Launches Cancer Moonshot Expedited Examination Pilot Program. Matt Levin Jul 2, 2021. 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. The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. (added June 24, 2022), Q8. Cherry Bekaert: Tax, Audit and Advisory Services, Superfund Excise Taxes on Chemicals and Substances: How to Prepare, Maximize the Supply Chain Revolution Panel Discussion, 2023 Legislative Landscape: Expanding Opportunities for Manufacturers, The U.S. and Global Economic Manufacturing Outlook for 2023, Private Equity Industry Report: 2022 Trends and 2023 Outlook, Cybersecurity Maturity Model Certification, Business Intelligence and Data Analytics Services, Digital Strategy & Transformation Services, Government Contractor Consulting Services, SBA 8(a) Business Development Program Consulting Services, Information Technology Audit & Consulting, Cybersecurity Maturity Model Certification (CMMC), Outsourced Sales Tax Compliance and Managed Services, IRS issues Superfund Chemical Excise Tax Rates, IRS issues Superfund Chemical Excise Taxes FAQs, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. Chicago | Deloitte Tax What happens if an importer does not calculate the section 4671 tax? Butane and methane users 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. Congress directed the IRS to publish a list of additional taxable substances by January 1, 2022, which was published by the IRS via IRS Notice 2021-66.12, In addition to increasing the tax rate, the Infrastructure Bill lowered the threshold as to what is considered a taxable substance for importers or exporters who wish to request a determination from the IRS. 3. How do you calculate the Superfund Excise Tax? The 2022 law revived a tax that previously expired in 1995, the Hazardous Substance Superfund tax rate. For purposes of claiming refunds under section 4662(e) for section 4661 tax paid on chemicals used in the production of an exported substance, in the case of a petition of an importer or exporter (i) that is filed and accepted by the Secretary before January 1, 2023, (ii) that seeks to add the substance to the list of taxable substances, and (iii) based on which the Secretary adds the substance to the list of taxable substances, both the filing date of the petition and the date the substance is added to the list of taxable substances will be deemed to be July 1, 2022. Prior to the expiration of the Superfund Excise Taxes, a chemical substance that was composed of at least 50% of chemicals listed in IRC section 4662 could be found to be a taxable substance. Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. Additionally, the Infrastructure Investment and Jobs Act ("IIJA") double the tax rate on chemicals or . Excise Tax on Select Chemicals. 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. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. The law imposes a tax on any taxable chemical sold by the manufacturer, producer, or importer. IT and tax departments in particular will need to collect transactional data all along the supply chain, as well any applicable master data. (added June 24, 2022), Q11. Instead, Section 4671(b) provides that the amount of tax imposed with respect to any taxable substance is equal to the amount of tax that would have been imposed by Section 4661 on the taxable chemicals used as materials in the manufacture of the taxable substance, if such taxable chemicals had been sold in the United States for use in the manufacture or production of the taxable substance. As discussed above, the list of taxable substances was incorporated into the IRC as a result of SARA, effective in 1989. 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. See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. Consider the action items above, particularly the last one, making sure the information systems are in place to capture the data needed to comply with this tax. Among the many provisions in that legislation . Under what circumstances is registration required? 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. sarsmith@deloitte.com, Frank Falvo Section 80201 of the bill would revive long-expired Superfund excise taxes at twice their previous level. | Agreed Terms of Use A8. 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. What is the purpose of the Superfund Chemical Excise Taxes? slunan@deloitte.com, Christina Gong The Superfund was to be financed through environmental excise taxes, including: (1) excise tax imposed on domestic crude oil; (2) excise tax imposed on imported crude oil and petroleum products; and (3) domestically produced and imported petrochemicals and inorganic chemicals. Licenses for Exports to Are You Ready for the UPC? The amount of the section 4671 tax with respect to any taxable substance is generally the amount of section 4661 tax that would have been imposed on the taxable chemicals used in the manufacture or production of the taxable substance if the taxable chemicals had been sold in the United States for use in the manufacture or production of the taxable substance. Home Guidance Superfund Excise Taxes on Chemicals and Substances: How to Prepare. In response to pointed public comment, on April 15, 2022, the IRS released an advance version ofNotice 2022-15, providing relief for thethirdandfourth calendar quarters of 2022, and the first calendar quarter of2023, regarding the failure to deposit penalties imposed bySection 6656of the Tax Code, as those penalties relate to the Superfund excise taxes. 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. Deposit payments with the Electronic Federal Tax Payment System (EFTPS). Yes. 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? Frequently Asked Questions: Superfund Chemical Excise Taxes. governments, Explore our 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. Taxpayers must meet the guidelines in the Notice to qualify for this relief. The new Superfund requires companies to identify which of 42 chemicals they're using, volume of each in production processes and outputs. 17Prop. 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. NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. When enacted, the Superfund was financed by environmental excise taxes on certain commonly used chemicals often found at Superfund sites. The Treasury Department and the IRS (collectively the IRS) have released Notice 2022-15, which provides relief for certain reinstated Superfund chemical excise taxes (SCET) from the penalty for failure to properly deposit imposed under Section 6656.The 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. management, Document The IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. 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. Treas. Read our analysis and reports on the landmark Supreme Court sales tax case, and learn how it impacts your clients and/or business. The tax rate for taxable substances is dependent on the individual chemical composition of the substance.19 For example, if polypropylene is composed of 50% propylene (a listed taxable chemical), then the rate for polypropylene would be $9.74 x 50%, or $4.87. 117-58 (2021). View Full Firm Disclosure. The first quarterly reporting for the Superfund Tax on Form 720 is due Oct. 31, 2022. media, Press | Privacy Policy DTTL (also referred to as "Deloitte Global") does not provide services to clients. The Superfund chemical excise taxes previously expired on December 31, 1995. 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. As soon as possible, companies that import any of the taxable chemicals or substances on the IRSs list need to conduct a thorough assessment of their manufacturing processes to find out when, where, and how the Superfund Chemical Excise Tax might apply. 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 Applicants for registration may call 859-320-4091 and select menu option #1. Corporate The excise taxes are effective July 1, 2022. US Executive Branch Update February 28, 2023. Yes. Taxpayers should be proactive and carefully analyze and consider the potential tax liabilities, tax reporting requirements, and systems impacts as a result. Richmond | Inferences, however, can be made from the absence of any mention in the law. *Note: Self-assessing based on 10% of appraisal value will almost always yield a higher tax rate than either of the other methods. Please enable JavaScript to view the site. 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. Additionally, prior versions of these FAQs will be maintained on IRS.gov to ensure that taxpayers, who may have relied on a prior version, can locate that version if they later need to do so. The $1.2 trillion infrastructure bill making its way through the Senate contains a $14.55 billion tax hike on American chemical and mineral producers. Audit & There are 42 chemicals listed in section 4661(b). Do Issuers Fail To File Form Ds Because They Fear Trolls? As reinstated, the Superfund excise tax will apply to a list of taxable chemicals and taxable substances, as ofJuly 1, 2022,throughDecember 31, 2031, if not extended. collaboration. Each chemical has a specified rate of tax, imposed on a per-ton basis, as identified in Exhibit A. The applicable tax for a hazardous substance depends on its chemical composition. At Deloitte, our purpose is to make an impact that matters by trust! 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