The IRS determined this threshold in consultation with the Environmental Protection Agency and U.S. Customs and Border Protection. 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. It has been almost 30 years since the Superfund excise tax was in effect. The taxes are effective July 1, 2022. The Inflation Reduction Act added excise tax on domestic crude oil and imported petroleum products starting on January 1,2023. Sightline is a tax platform that makes the entire tax process more collaborative and insightful. 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. The Superfund Tax that was established over two decades ago and taxed specific chemicals and hazardous substances has been restored after the passing of the Infrastructure Investment and Jobs Act last year. 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. Legal Disclaimer|Privacy Policy | Copyright 2022 IGenFuels LLC. The taxes will affect companies that manufacture, produce or import listed taxable chemicals or import specified taxable substances, as well as, indirectly, customers of such companies. Reinstating the tax on chemicals will unduly burden consumers. Petitions to Add Polyoxymethylene and Polyphenylene Sulfide. 177-58) reauthorizes Superfund with expanded provisions of doubled rates on Taxable Chemicals, and a vast expansion of Taxable Substances. Any manufacturer, producer, or importer of a taxable chemical is subject to the superfund excise tax. | All Locations, Cherry Bekaert is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC, independently owned entities, provide professional services in an alternative practice structure in accordance with applicable professional standards. Petitions Filed To Add Polyoxymethylene And Polyphenylene Sulfide To List Of Chemical Substances Subject To Superfund Excise Tax: On December 28, 2022, the Initially, the Superfund program called for taxes by manufacturers of crude oil and certain chemicals to fund a trust to pay for environmental cleanup activities. For example, butane and methane are exempt if used in fuel but not if they are used for other purposes. Download list of 42 taxable chemicals and 151 taxable substances. 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. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. 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. During the first, second, and third calendar quarters of2023, the IRS will not withdraw a taxpayers right to use the deposit safe harbor rules of the Excise Tax Procedural Regulations at 26 C.F.R. If you would ike to contact us via email please click here. See also section 4661(b) for the tax rate for taxable chemicals. Calculating Washington DC |, Copyright 2023 Cherry Bekaert. Substances. It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. The Inflation Reduction Act (Pub.L. 2022-26 (Issued 6/28/2022), Exclusive Procedures to Request a Determination under IRC 4672 (a) (2) That a Substance Be Added To/Removed From the List of Taxable Substances under IRC 4672 (a) ( Link) Please Navigating the complex terrain of excise taxation and uncovering opportunities, Stay informed on excise tax-related news with ourKPMG TaxNewsFlasharchive. Download list of 42 taxable chemicals and 151 taxable substances. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); This website uses cookies. She is passionate about supporting animal rescue organizations. Read about their experiences and a few lessons learned along the way. Built by tax professionals for tax professionals. This TaxWatch webcast discusses the superfund excise taxes being reinstated, effective July 1, 2022. Read more about the three reinstated excise taxes. 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. Form 6627, Environmental Taxes, previously used to report the Superfund Tax, will likely be used again to report the tax owed. As a result, Notice 2022-15 provides that SCET taxpayers will be deemed to have satisfied the reasonable cause standard and no Section 6656 penalty will be imposed if (1) the taxpayer makes semimonthly deposits of SCET, even if in the incorrect amount, and (2) any deposit underpayment is paid in full by the due date for filing the Form 720, Quarterly Federal Excise Tax Return, for the applicable quarter. You Meta Believe the GDPR Penalties Are No Joke! Your company could bear the economic burden of the tax being passed on from your suppliers, and, in turn, your company would then need to consider its ability to pass on the economic cost of the excise tax to its customers. To put this in context, tax rates for taxable chemicals range from $0.44 to $9.74 per short ton. The Superfund chemical taxes should be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. The initial list of 50 taxable substances is found in IRC 4672(a)(3). The Environmental Protection Agency (EPA) identifies sites such as Kti Chemicals Inc because they pose or had once posed a potential risk to human health and/or the environment due to contamination by one or more hazardous wastes. This effectively doubled the tax rate of the imported taxable substances as well, and the Infrastructure Bill further See section 4671(b)(1). The Inflation Reduction Act (Pub.L. SECURE 2.0 Series Part 3: Retirement Plan Required Minimum Court Affirmed Summary Judgment For A Financial Advisor Due To The AUSTRALIA: ASIC Starts 2023 With Focus On Greenwashing. 4295) on December 22, 2022, that accomplishes three things: (1) eliminates the requirement to affirmatively elect New Jersey S corporation status, while including an opt-out provision; (2) adopts the federal centralized partnership audit regime, with certain modifications; and (3) ends certain COVID-related extensions. 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. 117-169), which was signed into law on August 16, 2022, reinstated the Petroleum Superfund Tax at a rate of 16.4 cents per barrel. 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. The IRS previously released Notice 2021-66, providing guidance on the reinstatement of the SCET under the Infrastructure Investment and Jobs Act (sometimes referred to as the bipartisan infrastructure bill) enacted on November 15, 2021. The section 4661 tax is imposed as a rate per ton of a taxable chemical. Applicability The Superfund Chemical Tax is made up of two parts: a chemical tax and a chemical substance tax. Manufacturers, producers, or importers that sell or use any of these chemicals must pay a tax of $0.22 to $4.87 per ton, depending on the chemical. Nearly three decades after expiring, the Superfund chemical excise tax is back. However, the first At the time of publication of these FAQs, 151 substances are listed as taxable substances. There are actually two types of Superfund excise taxes: a tax on the sale or use of chemicals by the manufacturer, producer or importer of those chemicals and a tax on the sale or use of imported substances comprised of more than 20 percent in weight or value of taxable chemicals. See section 4672(a)(1). Requesting additions and/or deletions to the taxable substances list pursuant to updated IRS guidance and procedure. 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). Companies must report the reinstated Superfund excise taxes onForm 6627, Environmental Taxes, attached toForm 720, Quarterly Federal Excise Tax Return. The IRS recently issued FAQs and published tax rates for 121 of the 151 taxable substances. IRS publishes initial Superfund chemical list January 11, 2022 The IRS recently released guidance ( Notice 2021-66 ,) providing key information on the excise taxes imposed on certain chemicals and substances under Sections 4661 and 4671often referred to as Superfund excise taxes. Class Action Year in Review: The Rise Of The Self-Tapping Website? Start Here. 2022-19: Relief for S Corporation Owners, Financial Secrecy Under Attack in the United States: Final Regulations Issued for Beneficial Ownership Information Reporting, 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. The information contained herein is not intended to be written advice concerning one or more Federal tax matters subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230. Any taxable chemical or substance also qualifies for a Superfund Tax Credit. These credits are accrued when a taxable chemical or taxable substance is exported. A Superfund tax is imposed when a taxable chemical is imported, or is domestically produced for sale or use unless an exemption applies. South Florida | 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 If your organization believes it may be subject to the reinstated Superfund Excise taxes, be prepared to begin reporting on chemical use. The Infrastructure Bill reinstated the Superfund Excise Taxes on chemicals and taxable substances, effective July 1, 2022. This would be for the periodJuly 1-September 30, 2022. 2017 See Section 4671(b)(2). While the final taxable substance list and exact rates have yet to be finalized, costs will be calculated by weight or value of the contained taxable chemical. These taxes expired more than 25 years ago. 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. Funds collected will be added to the Hazardous Substance Superfund Trust. See the full preliminary list in Internal Revenue Code 4661, 4671, 4672; Notice 2021-66. The rate of excise tax per ton is based on the amount of each chemical included in the substance. FS-2022-31, June 2022. This law levies taxes on the manufacture, production, or importation of 42 specific chemicals and another 121 chemical Ascend Performance Materials is the premium provider of high quality chemicals, fibers and plastics. 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. A11. The applicable rates of tax and related 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). Attorney Advertising Notice: Prior results do not guarantee a similar outcome. This ABA Tax Times article provides an illustration of the challenges faced by the oil and gas industry in applying one of these special rules related to two products derived from natural gas: methane and butane. Who should lead the charge? The Superfund Excise Tax: Back in action. The Superfund Chemicals Excise Tax Makes a Comeback. 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. Are semimonthly deposits required? Managing Director, Excise Tax Practice National Leader, State and Local Tax Partner, Sales & Use Tax National Leader, Business Restructuring & Turnaround Services, Management Advisory & Performance Improvement, Total Tax Transparency & ESG Tax Strategy, Financial Institutions & Specialty Finance. But under the Biden plan, those taxes would be reinstated. Superfund excise taxes are reported on Form 6627, Environmental Taxes, which must be attached to Form 720 Quarterly Federal Excise Tax Return. Does Your Cyber Insurance Policy Cover a Ransomware Attack? . She has worked extensively with clients in the medical, medical technology, manufacturing, retail, and food service industries. Many entities are struggling with its application. Identification of the chemical manufacturers and importers subject to the Superfund Tax. Cherry Bekaert Advisory LLC and its subsidiary entities are not licensed CPA firms. 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). A1. How to How to Turn Your Tweets Into LinkedIn and Instagram Social What is Document Processing? (added June 24, 2022), Q2. Currently, there are 42 taxable chemicals, each with a specified tax rate imposed on a per-ton basis, and 151 taxable substances for which the tax rate is dependent on the substances unique chemical composition. Now and for the future. With over 10 years of experience, Sales Tax Manager Elizabeth Perez Gonzalez specializes in sales and use tax services. IRC 4671 imposes the excise tax on the sale or use by an importer of specified taxable substances (as initially identified in IRC 4672(a)(3) and IRS Notice 2021-66). The new tax doubles the previous tax rate on Taxable Chemicals and Taxable Substances. Managing Licenses, Careers As reinstated, the excise tax rates are doubled from pre-1996 levels and range from $0.44 cents per ton to $9.74 per ton. The Superfund chemical excise tax can affect a company even if it is not directly liable for the tax, because non-liable companies could still bear the economic cost of the tax passed on by suppliers. Yes. In addition, our guarantee ensures that we will even defend such claims under audit. The taxes are reported quarterly on the IRS Form 720, which is part of the Quarterly Federal Excise Tax Return. 429 (2021)), effective July 1, 2022, with modifications to the applicable rates of tax and other provisions related to those taxes. The microbusiness also charges $5 for delivery. The Inflation Reduction Act (Pub.L. Certain non-fuel and agricultural uses of some of these chemicals were exempted from the excise tax. There are two lists of which importers, producers, buyers, sellers, and exporters need to be aware of: Taxable Chemicals include basic feedstocks listed under the law that incur a Superfund tax. Accordingly, these FAQs may not address any particular taxpayer's specific facts and circumstances, and they may be updated or modified upon further review. On November 15, 2021, President Biden signed into law theInfrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. Who is responsible for reporting and paying Superfund chemical excise taxes? Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. Notice 2021-66 suspended the procedure in Notice 89-61 because the IRS plans to issue a more current guidance on this matter. During her free time Elizabeth enjoys going to concerts, traveling, hanging out with her pets, and caring for her succulent plants. Aerojet and its subsidiaries have However, the first deposit of Superfund Tax is due as early as July 29, 2022. In order to pay for As a result, Notice 2022-15 provides welcome relief and affords SCET taxpayers additional time to perfect their SCET deposit process. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. 11 In addition to the reinstatement of the taxes, (added June 24, 2022), Q11. The money gathered from the taxes was used to fund the clean-up of hazardous waste disposal sites across the United States. Nursing Homes Brace for Reforms and Heightened Government Scrutiny. Manufacturers, laboratories and other businesses may begin to see these excise taxes passed along to them on invoices from their suppliers. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. 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