Houston | 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). Certain services may not be available to attest clients under the rules and regulations of public accounting. There are two separate Superfund chemical excise taxes: a tax on the sale or use of "taxable chemicals" under section 4661 of the Internal Revenue Code and a tax on the sale or use of imported "taxable substances" under section 4671 (all section references are to the Internal Revenue Code unless otherwise stated). The initial list of 50 taxable substances is found in IRC 4672(a)(3). For taxable substances, the importer of the taxable substance is responsible for reporting and paying the section 4671 tax to the IRS. These FAQs detail what the Superfund chemical excise tax is, how the tax is computed, and who may be liable for the tax. Exceptional organizations are led by a purpose. 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. Yes. 14Joint Committee on Taxation, Estimated Revenue Effects of the Provisions in Division H of an Amendment in the Nature of a Substitute to H.R. 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. : Advanced Marketing Compels Trial on Arbitration in a TCPA Health Plans Gag Clause Attestations Due December 31, 2023. This memorandum explains why. msulayman@deloitte.com, Stephane Lunan 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 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 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. Many entities are struggling with its application. The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. Telecommunications, Media & Entertainment, Budget bill extends and addresses fuel excise taxes and incentives, Budget reconciliation, infrastructure, and what comes next. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten-year effective . 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. Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). 22The IRS does not require that the tax be included in the total cost of the product or separately line itemed in an invoice. Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. Part of the Tax News & Views podcast series. EPA Announces Availability Of Environmental Justice Thriving Energy & Sustainability M&A Activity February 2023, OSHA Implements Pilot Program to Streamline Complaint Intake Process. . Substances may be added or removed from the list of taxable substances at a later date. See how we connect, collaborate, and drive impact across various locations. Section 80201 of the IIJA reinstates the Superfund excise tax on certain chemical substances under Sections4661and4671of the Internal Revenue Code (Tax Code), effectiveJuly 1, 2022. An official website of the United States Government. Hampton Roads | 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. Suite. Exporters Taxpayers should be proactive and carefully analyze and consider the potential tax liabilities, tax reporting requirements, and systems impacts as a result. Find the tax rates for 121 taxable substances. The more you buy, the more you save with our quantity 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. 10I.R.C. The Petroleum Superfund Tax is proposed to be indexed for inflation beginning in calendar year 2023. 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. Congress directed the Department of Treasury to publish an additional list of the taxable substances by January 1, 2022. Companies with a large volume of transactions should consider automating their tax calculation and reporting processes to increase efficiency and accuracy. 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. Tampa | However, the first deposit of Superfund Tax is due as early as July 29, 2022. 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. The IRS has yet to issue detailed guidance or a Frequently Asked Questions (FAQ) document to clarify the nuances of applicability of the reinstated Superfund excise tax. 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. The original excise tax expired on December 31, 1995. At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. 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. Assisting with filing refund claims and reporting requirements around exemption certificates. This current iteration is set to expire on December 31, 2031. Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. Alternatively, a taxpayer may base the rate for taxable substances on 10% of the value of the import.20. Abusive Arbitrage Devices Its Time to Get Reacquainted (Episode 2 B&C Biobased and Sustainable Chemicals Practice Group Bergeson & Campbell, P.C. 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. L. 117-58), effective July 1, 2022. Customer Reviews: Five-Star Enforcement and the Expanding Regulations. 9See I.R.C. The original Hazardous Substance Superfund trust was established to pay for the hazardous-substance cleanup program created by the Comprehensive Environmental Response Compensation, and Liability Act of 1980 (CERCLA) The IIJA reinstates the cleanup program until 2031, and the taxes collected are expected to total more than $14 billion over the next ten years. I am an importer of taxable substances. White House Reviewing Proposed Regulations on Reinstated Superfund You Dont Need a Machine to Predict What the FTC Might Do About Is It Compensable? Section 704.3. July 1 is fast approaching and the window to prepare for compliance with the reinstated Superfund Tax is brief. firms, CS Professional 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 information here is by no means comprehensive, but it does provide a basic understanding of the law and its implications for affected companies. (added June 24, 2022), Q8. 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. 19I.R.C. 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. In addition, exporters of chemicals and substances which were subject to the Superfund Tax can request a refund of the tax previously paid. Are semimonthly deposits required? 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. Yes. This would be for the periodJuly 1-September 30, 2022. In brief. The tax directly . The excise taxes are effective July 1, 2022. 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 Additionally, the Infrastructure Investment and Jobs Act ("IIJA") double the tax rate on chemicals or . Providence | These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. 4671. accounting, Firm & workflow The list of 42 chemicals and their respective excise tax rates is found in Internal Revenue Code (IRC) 4661(b). Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661(b). A4. Cherry Bekaert is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC provide professional services. 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. 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. For example, butane and methane are exempt if they are being used as fuel, but NOT if they are being used for some other purpose. Heard on: Revenue from a new excise tax on chemicals like Benzene and Mercury would go . 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. Explore Deloitte University like never before through a cinematic movie trailer and films of popular locations throughout Deloitte University. Accordingly, these FAQs may not address any particular taxpayer's specific facts and circumstances, and they may be updated or modified upon further review. First, the Section 4661 chemical excise tax rate was doubled from its prior iteration to a range of $0.44 per ton up to $9.74, depending on how a chemical (from a list of 42) is sold or used. Charlotte | Section 80201 of the bill would revive long-expired Superfund excise taxes at twice their previous level. Nota Bene Episode 160: European Update: Oliver Heinisch and Scott Federal Communications Commission to Consider Rules and Proposals to Whats the Standard? The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. management, More for accounting (b) Amount of Tax The amount of tax imposed by subsection (a) shall be determined in accordance with the following table: (c) Termination No tax shall be imposed by this section after December 31, 2031. How are substances added to or removed from the list of taxable substances? The Infrastructure Investment and Jobs Act, which President Biden signed into law on November 15, 2021, reinstates Superfund excise taxes on the sale and import of certain chemicals as part of the law's revenue raising provisions. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. The rates will be included in the instructions to Form 6627, Environmental Taxes, and under Recent Developments for Form 6627, Environmental Taxes. 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 It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. Treas. 4661 imposes tax on the sale or use by the manufacturer, producer, or importer of 42 listed chemicals. BIPA ALERT: Illinois Supreme Court Opens the Door to Punitive, President Biden to Nominate Julie Su as New Secretary of Labor, The European Unitary Patent: Why Retailers Should Care, New York City Employers Prepare for AI Bias Law [VIDEO], Administration's WOTUS Rule Muddies Jurisdictional Waters. Austin | The tax may be passed along to customers. 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 relevance of this guidance to the new tax is unclear. If you would ike to contact us via email please click here. Specifically, taxable substances include the 50 substances on the initial list of taxable substances in Section 4672(a)(3) and 101 taxable substances added by the IRS in December 2021, throughIRS Notice 2021-66. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. Updated procedural guidance on how to request the determination has not yet been published by the IRS as of the date of this article. Federally Recognized Holidays, Employer Considerations for DOLs New AEWR Rule. (added June 24, 2022), Q13. 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. 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. The Superfund excise taxes are part of Subtitle D, Chapter 38 of the Tax Code. The Superfund tax on chemicals is also a tax on the import of taxable substances. This box/component contains JavaScript that is needed on this page. 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. Second, an importer or exporter of a substance (or other interested person) can petition the Secretary to add the substance to or remove the substance from the list of taxable substances. The taxes apply only to imported chemicals or substances, not those for export. 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. (added June 24, 2022), Treasury Inspector General for Tax Administration, IRS issues Superfund Chemical Excise Taxes FAQs. See also section 4661(b) for the tax rate for taxable chemicals. The section 4661 tax is imposed as a rate per ton of a taxable chemical. Analyzing Superfund Excise Tax calculations and reporting requirements based on a companys unique business scenario. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. Yes. President Joe Biden called for reinstating the Superfund taxes as part of his $2 trillion infrastructure proposal . The following is an FAQ to help companies get up to speed on what the Superfund Chemical Excise Taxes will require of them. What is a taxable chemical? The excise tax was applied to a list of 42 chemicals used predominantly in the oil, gas, and chemical industries. Companies may also rely on the absence of a clear inclusion of articles in the statute and the exclusion of articles under the previous application of the Superfund excise tax. 2022 Superfund excise taxes. A15. The JCT estimated that the proposal would increase revenues by approximately $38.4 billion over a 10-year period. of products and services. (added June 24, 2022), Q11. What is a taxable substance? Additionally, similar to what happened between 1990 and 1995 when importers and exporters petitioned the IRS to determine whether various chemical substances would qualify as taxable substances, taxpayers may again request a written determination from the IRS as to whether a product they export or import qualifies as a taxable substance, if its chemical makeup includes at least 20% of a listed taxable chemical in IRC section 4661.21 However, IRS Notice 2021-66 suspended prior guidance (IRS Notice 89-61) as to how to request this determination, and taxpayers await additional guidance from the IRS as to the procedure to do so. A substance may be removed from the list of taxable substances if the Secretary determines that taxable chemicals constitute 20 percent or less of the weight and 20 percent or less of the value of the materials used to produce the substance . Due to the complicated nature of the tax assessments, and the detailed information required, gaps in existing systems and processes may exist. The term "ton" is. corporations. At the time of publication of these FAQs, 151 substances are listed as taxable substances. Recent FTC Enforcement Action Merits Cyber Insurance Coverage Review, Two Ways to Redefine & Achieve CRM Success. 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. accounts, Payment, Sec. National Law Review, Volume XII, Number 139, Public Services, Infrastructure, Transportation, Mandatory Arbitration Agreements Remain Valid in California, Antitrust Practitioners Expect Activity With Climate Issues. The latest reiteration of the excise tax will be comprised of two separate taxes on (1) chemical sales and (2) chemical importers. The Reinstated Superfund Excise Taxes. 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. For instance, necessary data elements may not be available to properly identify the taxable chemicals and components. Companies must report the reinstated Superfund excise taxes onForm 6627, Environmental Taxes, attached toForm 720, Quarterly Federal Excise Tax Return. 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. L. No. 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. The Superfund is a federal excise tax on various hazardous chemicals. 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 Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. Calculating the federal excise tax liability, including taking into account available exemptions. Otherwise, companies risk finding out about this tax when they are audited and risk becoming liable for penalties. View Full Firm Disclosure. (added June 24, 2022), Q15. See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. A7. The National Law Review is a free to use, no-log in database of legal and business articles. Washington DC |, Copyright 2023 Cherry Bekaert. The IIJA also reinstated the Superfund excise tax on the import for sale or use of any taxable substance underSection 4671of the Tax Code. (added June 24, 2022), Q12. Since its reinstatement, the excise tax has raised many questions and caused significant industry consternation. (added June 24, 2022), Q3. A8. Companies opting for the latter run the risk, however, of incurring penalties, should the IRS adopt a different view. IRC section 4662 directs the IRS to release guidance as to the appropriate manner of reporting exempt sales or claiming refunds. and services for tax and accounting professionals. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. Applicants for registration may call 859-320-4091 and select menu option #1. Everyone loves infrastructure, but it pays to read the fine print. A2. (added June 24, 2022), Q2. Tax Implications and Financial Business Guidance Regarding the Coronavirus. brands, Corporate income 52.4661-1 4662-4, 48 Fed. 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. 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. Words With Friends, Part 1: Insurance Requirements and Contracts, Legislator Proposes To Expand CFL To Encompass "Commercial CERCLA PFAS Scope May Broaden To Many More PFAS, AI Avatar App is the Latest Target of BIPA Class Action Litigation. 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. 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. From 1987 through 1995, an excise tax also applied to the sale by the manufacturer, producer or importer of 42 specified chemicals. Expanded Employee Retention Credit (ERC) & how our professionals can assist you. 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 Taxpayers must make semimonthly deposits of the Superfund chemical excise taxes. 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,. Try our solution finder tool for a tailored set Notice 2021-66 suspended the procedure in Notice 89-61 because the IRS plans to issue a more current guidance on this matter. 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. See section 4671(b)(1). Augusta | 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? Arizona Gets to Keep Its State-Operated Workplace Safety and Health Manufacturers Legal Considerations for Staffing Reductions, PCAOB Enforcement Activity Up Sharply in 2022. 2023. 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. To make an impact that matters by creating trust and confidence in a TCPA Health Plans Gag Clause due. Of incurring penalties, should the IRS as of the excise taxes FAQs taxes... Import of taxable substances, not those for export to the sale or use any... Alternatively, a taxpayer may base the rate for taxable substances at a later.. 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Audited and risk becoming liable for penalties, Q2 FTC Enforcement Action Merits Cyber Insurance Coverage Review Two! Cinematic movie trailer and films of popular locations throughout Deloitte University like never before a! Ike to contact us via email please click here by creating trust and confidence in more... An impact that matters by creating trust and confidence in a more equitable society ) ( 3 ) we,... Chemical industries of any taxable substance underSection 4671of the tax rate for taxable substances a... Unique business scenario new AEWR Rule the chemicals Superfund tax is effective of! ( c ) -1 of the tax assessments, and the Hazardous tax! Applied to a list of taxable substances is found in IRC 4672 ( )! L. 117-58 ), Q12 expire on December 31, 2031 would go to the nature! Of his $ 2 trillion infrastructure proposal 160: European Update: Oliver Heinisch and Scott Communications! 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Iija also reinstated the Superfund tax is brief is to make an impact that by. Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys other!