Section 4671 imposes tax on the sales or use of imported "taxable substances" made from those taxable chemicals. The Superfund Chemicals tax previously expired in 1995. (added June 24, 2022), Q7. Congress directed the Department of Treasury to publish an additional list of the taxable substances by January 1, 2022. A2. The Superfund tax is assessed on the manufacturer or importer of these chemicals. ADVANCED! How do I calculate the section 4671 tax? The Superfund excise taxes are set to expire at the end of 2031. In these cases, the other person would be liable for paying the excise tax, not the initial importer. Integrated software 12I.R.S. Reporting 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. Form 6627 must be led alongside Form 720 on a quarterly basis. consulting, Infrastructure Investment and Jobs Act (IIJA), passed last November, the Internal Revenue Service (IRS) has reinstated the. 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. Section 4662(c)(2) provides an additional exemption from tax liability where a company imports a taxable chemical and exchanges that chemical as part of an inventory exchange with another person. 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. . Chemicals. 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 tax would apply after December 31, 2021, until January 1, 2032. For taxable substances, the importer of the taxable substance is responsible for reporting and paying the section 4671 tax to the IRS. Rep. No. It is imposed on any taxable chemical sold or used by a manufacturer, producer, or importer on or after July 1, 2022.It also is imposed on any taxable substance sold or used by the importer on or after July 1, 2022.The Superfund Tax funds the Hazardous Substance Superfund Trust Fund . How do you calculate the Superfund Excise Tax? Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. This would be for the periodJuly 1-September 30, 2022. See also section 4661(b) for the tax rate for taxable chemicals. Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. Greenville | White House Reviewing Proposed Regulations on Reinstated Superfund You Dont Need a Machine to Predict What the FTC Might Do About Is It Compensable? Some deposit amount is still required by July 29 to satisfy the relief provisions set out in Notice 2022-15. In addition, most hazardous wastes are produced by these industries or as a result of using products from these industries. The Superfund Excise Tax will go back into effect on July 1 st, 2022, after not being in place for over 26 years. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. Notice 2021-66 suspended the procedure in Notice 89-61 because the IRS plans to issue a more current guidance on this matter. This message will not be visible when page is activated. 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). 17Prop. This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. 2Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), Pub. The reinstated Superfund Excise Tax is effective July 1, 2022, through December 31, 2031, absent extension. Chemical manufacturers and importers View Full Firm Disclosure. | Careers 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. A7. Taxpayers must make semimonthly deposits of the Superfund chemical excise taxes. The Superfund Amendments and Reauthorization Act of 1986 was enacted as Pub. The current list is published in IRC section 4672(a)(3) and attached as Exhibit B. 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. Tampa | Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). (a) General rule There is hereby imposed a tax on any taxable chemical sold by the manufacturer, producer, or importer thereof. Assisting with risk analyses and internal processes (design or documentation). Matt Levin Jul 2, 2021. ffalvo@deloitte.com, Marshal Sulayman Cherry Bekaert is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC provide professional services. technology solutions for global tax compliance and decision If you would ike to contact us via email please click here. These FAQs detail what the Superfund chemical excise tax is, how the tax is computed, and who may be liable for the tax. See Section 4671(b)(2). 901, for the initial list of substances that the Secretary has added to the list of taxable substances. 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. SaraBeth Smith corporations. Connect with other professionals in a trusted, secure, *Note: Self-assessing based on 10% of appraisal value will almost always yield a higher tax rate than either of the other methods. Licenses for Exports to Are You Ready for the UPC? 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. sarsmith@deloitte.com, Frank Falvo 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. Section 704.3. 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). Attorney Advertising Notice: Prior results do not guarantee a similar outcome. Do not delete! (added June 24, 2022), Q2. See questions 4-5 for more information on taxable substances and questions 7-9 for more information on calculating the tax imposed by section 4671 (section 4671 tax). After more than 25 years, two excise taxes on chemicals and imported hazardous substances were reinstated in the Infrastructure Investment and Jobs Act (Pub. Effectively tracking necessary data through the supply chain may be a challenge as well. 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. Austin | 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). Will the U.S. Supreme Court Make Marijuana Legal? industry questions. 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. financial reporting, Global trade & 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 Hazardous Substance Superfund financing rate was an excise tax of 9.7 cents per barrel of crude oil that applied from 1987 through 1995. . Taxpayers should be proactive and carefully analyze and consider the potential tax liabilities, tax reporting requirements, and systems impacts as a result. Yes. A9. Assisting with development and implementation of technology solutions to enable identification of taxable chemicals and substances, as well as exemptions. In November 2021, President Biden signed the Infrastructure Investment and Jobs Act. 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. 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. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. Charlotte | Notice 89-61provided guidance under the previously applicable Superfund excise tax. Please see www.deloitte.com/about to learn more about our global network of member firms. Superfund tax on chemicals. Boston | The Carter administration established the Superfund in 1980 to offset the high price tags associated with remediating uncontrolled or abandoned hazardous waste sites. 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. Because of potential exemptions for butane and methane used as a fuel, taxpayers further down the supply chain need to be aware of the procedural issues aecting such chemicals. 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. 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. | Agreed Terms of Use Richmond | In fact, companies that export products comprised of taxable chemicals or substances are entitled to a refund if they paid prior to manufacturing. CERCLA (and therefore the Superfund Excise Taxes) expired in 1985 but was extended for another five-year period through the Superfund Amendments and Reauthorization Act of 1986 (SARA), effective January 1, 1987.7 SARA expanded the Superfund Excise Tax on chemicals to include an additional tax on imported substances derived from taxable chemicals, effective January 1, 1989.8 This additional tax on taxable substances was structured to ensure that the amount of the tax correlated to the composition of the chemicals within the taxable substances.9 In other words, had the substance been purchased domestically, the Superfund Excise Tax on chemicals would have been included as part of the overall price of the substance. A5. The Infrastructure Act essentially doubles these rates with taxes ranging from $0.44 per ton to $9.74 per ton. collaboration. The information here is by no means comprehensive, but it does provide a basic understanding of the law and its implications for affected companies. 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. 8Id. 23I.R.C. The IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. 16I.R.C. research, news, insight, productivity tools, and more. Various exemptions exist for taxable chemicals. 3S. Customer Reviews: Five-Star Enforcement and the Expanding Regulations. 11Infrastructure Investment and Jobs Act, Pub. environment open to Thomson Reuters customers only. 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. Pending further guidance, the previously published tax rates, adjusted for the IIJA increases, and the examples outlined in Notice 89-61 could be helpful in calculating the tax on taxable substances and the potential tax exposure if a substance is subsequently added to the list. Is the rate different for taxable substances? automatically and accurately calculating the amount of excise tax owed. Waters of the United States and Winston Churchill. Find the tax rates for 121 taxable substances. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. services, Comprehensive Environmental Response Compensation, and Liability Act of 1980 (CERCLA). A third excise tax on crude oil and petroleum products was reinstated in the Inflation Reduction Act . Read our analysis and reports on the landmark Supreme Court sales tax case, and learn how it impacts your clients and/or business. A Review of the Developing Legal Landscape Surrounding the "Student-Athlete" Debate. 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. However, the inorganic raw materials required a multi-tiered rubric: (1) the material must be hazardous in a number of forms; (2) the material in some form must be hazardous if spilled; (3) the material must be produced in a large amount; and (4) the material must be capable of increasing the hazard potential of other elements.5, Congress intended for the fees to be imposed "at the beginning of the commercial chain of production, distribution, consumption, and disposal of hazardous substances." accounting firms, For See Notice 2021-66, 2021-52 I.R.B. Social login not available on Microsoft Edge browser at this time. 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? Tax is due upon the first use or first sale of a listed chemical in the United States. 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. IRS issues Superfund Chemical Excise Taxes FAQs FS-2022-31, June 2022 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. A11. 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,. 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