This tax provided a federal fund to remediate toxic spill sites when a responsible party could not be identified. Inferences, however, can be made from the absence of any mention in the law. When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. The Infrastructure Bill lowers the thresholdfor a chemical substance to meet the definition of taxable substance, thus more imports may be subject to this tax. 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 section 4661 tax is imposed as a rate per ton of a taxable chemical. As part of the Infrastructure Investment and Jobs Act signed into law November 15, 2021, the Superfund Excise Taxes go into effect July 1, 2022. 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). 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. Substances may be added or removed from the list of taxable substances at a later date. See section 4672(a)(1). 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. 4662(b)(1). For chemicals, the taxable event is the sale or use by the manufacturer, producer, or importer of the chemical, and the tax is due in the U.S. upon the first use or sale. 1Investment and Jobs Act, Pub. (added June 24, 2022), Q8. 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. What is a taxable chemical? Analyzing and assisting in documenting available exemptions (e.g., certain taxable chemicals used in the production of fuel). 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. As discussed above, the list of taxable substances was incorporated into the IRC as a result of SARA, effective in 1989. 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. How does a company report the Superfund Chemical Excise Tax? The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. 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. This message will not be visible when page is activated. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. Accordingly, a manufacturer, producer, or importer of a taxable chemical is subject to the section 4661 tax on the sale or use of the taxable chemical on or after July 1, 2022. policy, Privacy Will the IRS prescribe tax rates for taxable substances? 9See I.R.C. For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. Along with the quarterly reporting requirements, taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the Superfund Excise Taxes. Technology/systems impacts Cherry Bekaert Advisory LLC and its subsidiary entities are not licensed CPA firms. Federally Recognized Holidays, Employer Considerations for DOLs New AEWR Rule. Taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the tax. The Final CCPA Regulations: What You Need To Know, Are College Athletes Students or Employees? Hampton Roads | Tax Managing Director | Privacy Policy Taxpayers must meet the guidelines in the Notice to qualify for this relief. Unlike the static list of 42 taxable chemicals, the taxable substance list is subject to change. Boston | 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. Los Angeles | For taxable substances, the importer of the taxable substance is responsible for reporting and paying the section 4671 tax to the IRS. on a wide range of chemicals and substances. services, Comprehensive Environmental Response Compensation, and Liability Act of 1980 (CERCLA). | Agreed Terms of Use The Superfund tax is assessed on the manufacturer or importer of these chemicals. 2022 Superfund excise taxes. The following is an FAQ to help companies get up to speed on what the Superfund Chemical Excise Taxes will require of them. Friday Development: New Sanctions and Export Controls to Address Weekly IRS Roundup February 20 February 24, 2023, Everything to Know About Unbundled Legal Services. 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. 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). IRC section 4662 directs the IRS to release guidance as to the appropriate manner of reporting exempt sales or claiming refunds. Tax is due upon the first use or first sale of a listed chemical in the United States. The Superfund is a federal excise tax on various hazardous chemicals. First Offshore Wind Energy Lease Sales in the Gulf of Mexico, Telephone and Texting Compliance News: Litigation Update February 2023. 117-58 (2021). Between 1990 and 1995, dozens of taxpayers petitioned the IRS to determine whether different chemical substances wouldqualify as taxable substances, primarily for purposes of export, so as to qualify for an exemption or refund. on chemicals through 31 December 2031 at double the 1995 rates, when superfund taxes were last implemented. 429 (2021)), effective July 1, 2022, with modifications to the applicable rates of tax and other provisions related to those taxes. Telephone and Texting Compliance News: Regulatory Update February 2023. 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. The taxes apply only to imported chemicals or substances, not those for export. 52.4661-1 4662-4, 48 Fed. The Superfund tax rate will now be adjusted annually to . When the IIJA reinstated these two taxes, it doubled the previous rates. What are the Superfund chemical excise taxes? The consumer and political goals of reducing Americas dependence on foreign oil, enhancing national security, and greening the economy converge in biobased chemicals and advanced biofuels, the promising technology of producing commercial chemicals and fuels from renewable resources. Some highlights on the petroleum products tax are as follows: Imposition of the Tax The chemicals Superfund tax was initially enacted in 1980 as a response to high-profile environmental disasters relating to hazardous waste. Reinstatement of Superfund excise taxes. If you would ike to contact us via email please click here. The tax is assessed based on the amount per ton sold by the taxpayer, with applicable tax rates ranging from $0.44 per ton to $9.74 per ton. 6Id. 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. Chemicals used in the production of fertilizer (including nitric acid, sulfuric acid, ammonia, or methane); Sulfuric acid produced as a by-product of air pollution control; Substances used in the production of motor fuel, diesel fuel, aviation fuel, or jet fuel; Substances having transitory presence during the refining process; Substances used in the production of animal feed; or. In our experience, it generally takes at least three months to fully implement and test a new business process and system implementation. 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. Taxable substances are defined inSection 4672as any substance that, at the time of sale or use by the importer, is listed as a taxable substance. They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. Everyone loves infrastructure, but it pays to read the fine print. When do the Superfund chemical excise taxes go into effect? When is the first return due? See also section 4661(b) for the tax rate for taxable chemicals. Tampa | The Superfund chemical excise taxes previously expired on December 31, 1995. This direct tax hike on American producers would result in higher prices for consumers, threaten thousands of jobs, and undermine domestic . Form 6627 must be filed alongside Form 720 on a quarterly basis. 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. Find the tax rates for 121 taxable substances. Breaking the Link New Developments on U.S. The Superfund tax on chemicals is also a tax on the import of taxable substances. 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. (added June 24, 2022), Q4. In addition, exporters of chemicals and substances which were subject to the Superfund Tax can request a refund of the tax previously paid. In addition to the reinstatement of the federal superfund excise tax on chemicals and substances that went into effect on July 1, 2022, the Hazardous Substance Superfund excise tax went into effect on January 1, 2023 as part of the Inflation Reduction Act of 2022. customs, Benefits & The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. 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. 3S. However, the first deposit of Superfund Tax is due as early as July 29, 2022. 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. 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. 96-125 at 14878 (1979). Substances. 4661 imposes tax on the sale or use by the manufacturer, producer, or importer of 42 listed chemicals. 4671. 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). 429. 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. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. These taxes were in place until 1995 to fund the Federal Hazardous Substance Superfund, but expired in 1995. Even companies that have been on the market for decades may not have many employees who were around when the previous excise tax applied. 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. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. The latest reiteration of the excise tax will be comprised of two separate taxes on (1) chemical sales and (2) chemical importers. Under certain state laws the following statements may be required on this website and we have included them in order to be in full compliance with these rules. Among the many provisions in that legislation . Hydrocarbon streams containing mixtures of organic taxable chemicals. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. Tax Senior Manager When expanded it provides a list of search options that will switch the search inputs to match the current selection. A11. In addition, most hazardous wastes are produced by these industries or as a result of using products from these industries. For instance, necessary data elements may not be available to properly identify the taxable chemicals and components. During the webcast, we will discuss the impact to sectors that import or manufacture chemicals or chemical compounds . Temporary relief from the penalty for failure to deposit Superfund chemical taxes for 2022 (third and fourth calendar quarters) and the first calendar quarter of 2023 is inNotice 2022-15. Is there a way to check the status of an application for Activity Letter G registration? brands, Corporate income L. No. 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. Chicago | It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. Service. After more than 25 years, two excise taxes on chemicals and imported hazardous substances were reinstated in the Infrastructure Investment and Jobs Act (Pub. 4671. The applicable tax for a hazardous substance depends on its chemical composition. The Superfund Excise Tax becomes effective on July 1, 2022. Connect with other professionals in a trusted, secure, Since the Superfund excise tax expired almost three decades ago, the industrial chemical communitys familiarity with their application is attenuated at best. 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. 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 Raleigh | A6. 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. firms, CS Professional Excise Tax on Chemical Sales The Superfund excise tax on chemical sales is imposed on 42 listed taxable chemicals on a per-ton basis by taxpayers that manufacture or produce a listed chemical in the United States or import it for consumption, use, or warehousing in the United States. environment open to Thomson Reuters customers only. In order to pay for the provisions in The Infrastructure Investment and Jobs Act (also referred to as the Bipartisan Infrastructure Bill), Superfund was reinstated with double the tax . More information on the procedures for petitioning the Secretary to add or remove substances from the list of taxable substances will be released in advance of July 1, 2022. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. 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. How are substances added to or removed from the list of taxable substances? Alternatively, a taxpayer may base the rate for taxable substances on 10% of the value of the import.20. collaboration. Activity letter G is reinstated for persons making inventory exchanges of taxable chemicals under section 4662(c)(2), or persons selling or buying intermediate . Austin | (added June 24, 2022), Q10. 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. 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. The JCT estimated that the proposal would increase revenues by approximately $38.4 billion over a 10-year period. The Treasury Department and the IRS reportedly intend to update Notice 89-61 to reflect the changes made to Section 4672(a)(2) by the IIJA and to make other changes that may be necessary. 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. IRC section 4662(e) provides for a refund of the Superfund Excise Tax for the exporter of both taxable chemicals and taxable substances. See Terms of Use for more information. Substances. 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 . 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. July 1 is fast approaching and the window to prepare for compliance with the reinstated Superfund Tax is brief. Internal Revenue Code (IRC) section 4671 thereby imposed the same tax on imported substances as was already included in the cost of domestically purchased substances. 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. of products and services. The Superfund Excise Tax is imposed on the manufacturer or importer of the listed chemicals, and the tax becomes due upon the first use or sale in the United States.15. 4672(a)(2)(B)(1995). 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superfund excise taxes on chemicals