In addition, exporters of chemicals and substances which were subject to the Superfund Tax can request a refund of the tax previously paid. More information about reliance is available. These FAQs were announced in IR-2022-131. 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. Charter Brokerage can help you mitigate the Superfund taxes paid on these taxable chemicals. Chemicals. (added June 24, 2022), Q8. Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661(b). AllRightsReserved. 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 section 4661 tax is imposed as a rate per ton of a taxable chemical. The money gathered from the taxes Please reach out to our team if you have any questions about the implications of the infrastructure bill. The National Law Review is not a law firm nor is www.NatLawReview.com intended to be a referral service for attorneys and/or other professionals. Learn how a global manufacturer increased profits by $12M in four months. Hampton Roads | Learn how tax plays a key role in your business while the stakes continue to be high in regards to managing potential changes to US and global tax policy. 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. IRC section 4661(b) lists 42 chemicals that are once again subject to the Superfund Excise Tax effective July 1, 2022. Tax News & Views, our current events-focused tax podcast, can help provide clarity on the latest tax news and developments that could affect your business. The IIJA also reinstated the Superfund excise tax on the import for sale or use of any taxable substance underSection 4671of the Tax Code. Aside from this quarterly filing, taxpayers Permit & License. At the time of publication of these FAQs, 151 substances are listed as taxable substances. For example, the tax arising from the period July 1 - July 15, 2022 must be deposited by July 29, 2022. A11. It is unclear whether and how the statute means to differentiate a substance from an article, and if so, whether the IRS would apply the definition of article under the Toxic Substances Control Act (TSCA). Chemicals will be taxed based on how they're sold, used, or stored and can range from $0.44 to $9.74 and will be charged on a per-ton basis. A7. For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. Los Angeles | Pennsylvania Sales and Use Tax for Construction Contractors and Their Customers. Final Regulations Governing Illinois Equal Pay Acts Certification Weekly Bankruptcy Alert: January 17, 2023 (For the week ending Bankruptcy Court Allows Service of a Subpoena Via Twitter. 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. 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. The information contained herein is of a general nature and based on authorities that are subject to change. 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 WebWork with outside vendor on Superfund Excise tax compliance; Ascend Performance Materials is the premium provider of high quality chemicals, fibers and plastics. Do Not Sell My Personal Information as to BDO Investigative Due Diligence. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. Chicago | The relevance of this guidance to the new tax is unclear. 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. The manufacturer or importer pays the excise tax for chemicals, which is due on the first use or sale in the United States. 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). The IRS has provided taxpayers temporary relief from penalties for failure to deposit superfund chemical taxes in the third and fourth calendar quarters of 2022 and the first quarter of 2023 through Notice 2022-15. 429, Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). Yes. Notice 2022-15 recognizes the burden on taxpayers, explicitly noting the short time frame between the reinstatement of the Superfund chemical taxes and the due date of the first deposit, the unavailability of the 40.6302(c)-1(b)(2) deposit safe harbor in 2022, the possible difficulties of computing the correct amount of tax during the third calendar quarter of 2022 (which is both the first calendar quarter the taxes are in effect and the look-back quarter for the first calendar quarter of 2023), and the number of new taxpayers owing Superfund chemical taxes that have not previously had to comply with the deposit requirements of section 6302.. She is passionate about supporting animal rescue organizations. The NLR does not wish, nor does it intend, to solicit the business of anyone or to refer anyone to an attorney or other professional. 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. Charter is different from tax teams because we dont just focus on compliance we also find the credits your company qualifies to receive. Section 4671(a) imposes an excise tax on the sale or use of a taxable substance by the importer of the taxable substance. Notice 2021-66 does not specify the tax rate for each taxable substance. If you are not responsible for paying and reporting the excise tax to the IRS but purchase any of the listed chemicals or substances from your suppliers, review the potential economic impact of the reinstated excise tax on your company. The term Superfund refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. Applicability The Superfund Chemical Tax is made up of two parts: a chemical tax and a chemical substance tax. DOE Publishes Notice of Intent to Fund Clean Hydrogen Projects. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. The content and links on www.NatLawReview.comare intended for general information purposes only. Are Your Companys Year-End Compensation Accruals Tax Deductible? The excise tax collection expired in 1995 but resumed on July 1, 2022. The Inflation Reduction Act (Pub.L. The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. 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. Since its reinstatement, the excise tax has raised many questions and caused significant industry consternation. All rights reserved. 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. Petitions to Add Polyoxymethylene and Polyphenylene Sulfide. All rights reserved. 429 (2021)), effective July 1, 2022, with modifications to the applicable rates of tax and other provisions related to those taxes. See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. The taxes are reported quarterly on the IRS Form 720, which is part of the Quarterly Federal Excise Tax Return. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. The taxes apply to any taxable chemical under Internal Revenue Code (IRC) 4661 and any taxable substance under IRC 4671. Charter will compile all required documentation, submit summary details for credit to the appropriate entity, and maintain all the necessary documentation for credits, all while providing complete confidentiality in third-party situations. 11 In addition to the reinstatement of the taxes, (added June 24, 2022), Q4. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. 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. Home Guidance Article Superfund Excise Taxes on Chemicals and Substances: How to Prepare. Ethylene and propylene may also be exempt, but only when used in the production of fuel (motor fuel, diesel fuel, aviation fuel, or jet fuel). There are 42 chemicals listed in section 4661(b). Tax is due upon the first use or first sale of a listed chemical in the United States. A15. Many in the industrial chemical community are unfamiliar with the Superfund excise tax legacy, and the IRS is seemingly unprepared for the learning curve challenge the reactivation of the tax has created. (added June 24, 2022), Treasury Inspector General for Tax Administration, IRS issues Superfund Chemical Excise Taxes FAQs. 11758), which was signed into law on November 15, 2021, reinstated theChemicals Superfund Tax and the Hazardous Substances Tax at twice the prior rates through 2031. See Notice 2021-66, 2021-52 I.R.B. A6. That authority COPYRIGHT 2023 RKL. 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. Statement in compliance with Texas Rules of Professional Conduct. 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). Cannabis Excise Tax Calculation. The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. What is a taxable chemical? The Superfund excise tax is currently set to expire on December 31, 2031. These taxes expired more than 25 years ago. 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 should be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. However, the first The Superfund taxes are expected to generate approximately $14.5 billion over a 10-year period. 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. Even companies that have been on the market for decades may not have many employees who were around when the previous excise tax applied. It has been almost 30 years since the Superfund excise tax was in effect. Until then, companies may take the IRS previous position as an indication of how it is likely to view articles and fabricated products under the current Superfund excise tax. South Florida | The exemptions identify taxable chemicals that are exempt due to their specific use. The first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). Nashville | The applicable tax ranges from $.48 to $9.47 per ton. 177-58) and was signed on November 15, 2021. (added June 24, 2022), Q15. What is a taxable substance? An official website of the United States Government. Connecting with our core purpose through a renewed lens. How are the Superfund chemical excise taxes reported? Additional substances may be added if the weight or value of the substances is greater than 20% of the contained taxable chemical. 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. Duration: 00:12:55. Part II of IRS Form 6627 has been updated to reflect these rates. Aside from this quarterly filing, taxpayers with a quarterly liability of greater than $2,500 will be required to make semi-monthly tax deposits of at least 95 percent of the net tax liability incurred during the tax period (unless a safe harbor 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. Beginning Your Sustainability Journey? The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. In 2022, IRS received petitions to add polyoxymethylene and polyphenylene sulfide to the list of The new tax doubles the previous tax rate on Taxable Chemicals and Taxable Substances. Read more about the three reinstated excise taxes. 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