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. The Superfund chemical excise taxes previously expired on December 31, 1995. on a wide range of chemicals and substances. The law imposes a tax on any taxable chemical sold by the manufacturer, producer, or importer. Tax Managing Director (added June 24, 2022), Q10. Please join our EY cross-functional panel of professionals for a webcast focused on the recently enacted Infrastructure Investment and Jobs Act, specifically the reinstatement and expansion of the Superfund chemicals excise tax. The reinstated Superfund Excise Tax is effective July 1, 2022, through December 31, 2031, absent extension. The excise tax was applied to a list of 42 chemicals used predominantly in the oil, gas, and chemical industries. 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 . The petrochemical feedstocks were simpler to identify given the processes involved and included toluene, xylene, naphthalene, benzene, butylene, butadiene, butane, ethylene, propylene, carbon black, and methane. Since its reinstatement, the excise tax has raised many questions and caused significant industry consternation. Will the U.S. Supreme Court Make Marijuana Legal? Federally Recognized Holidays, Employer Considerations for DOLs New AEWR Rule. See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. (added June 24, 2022), Q5. Creditor Stung By Academy Of Motion Picture Arts And Sciences Bylaws. Systems and processes will also need to be established in order to properly calculate and remit taxes that are due, as well as apply for refunds or exemptions. The Superfund Excise Tax is not permanent and . Form 6627 must be led alongside Form 720 on a quarterly basis. management, Document Form 6627 must be filed alongside Form 720 on a quarterly basis. . 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. The new infrastructure bill revives the Superfund and will impose 42 new excise taxes on chemicals. Section 4671(a) imposes an excise tax on the sale or use of a taxable substance by the importer of the taxable substance. SaraBeth Smith Attorney Advertising Notice: Prior results do not guarantee a similar outcome. 20I.R.C. The Infrastructure Investment and Jobs Act lowered this threshold to 20%. This memorandum explains why. Each chemical has a specified rate of tax, imposed on a per-ton basis, as identified in Exhibit A. Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). Prior to 1996, the rates of tax on those chemicals ranged from $0.22 per ton to $4.87 per ton. The Infrastructure Act essentially doubles these rates with taxes ranging from $0.44 per ton to $9.74 per ton. 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). 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. The Reinstated Superfund Excise Tax for Chemicals and Imported Substances As of July 1, 2022, The Infrastructure Investment and Jobs Act (IIJA) has reinstated excise taxes imposed on certain chemicals and imported chemical substances. Butane and methane users L. 117-58), effective July 1, 2022. 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. L. 99-499, 42 U.S.C. (added June 24, 2022), Q12. 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. (a) General rule There is hereby imposed a tax on any taxable chemical sold by the manufacturer, producer, or importer thereof. The original excise tax expired on December 31, 1995. Matt Levin Jul 2, 2021. July 1 is fast approaching and the window to prepare for compliance with the reinstated Superfund Tax is brief. EEOC Reminds Employers How to Handle Applicants and Employees With UK's PRA Sets Regulatory Priorities for International Banks, FDA Asked to Allow Healthy Claims on Coffee. The Superfund Excise Tax will go back into effect on July 1 st, 2022, after not being in place for over 26 years. Effective July 1, 2022, as required by the Infrastructure Investment and Jobs Act (IIJA)passed last November, the Internal Revenue Service (IRS) has reinstated the Superfund Chemical Excise Tax on a wide range of chemicals and substances. During 1979 Senate discussions, it was estimated that expenditures for hazardous waste disposal sites related to chemicals would be $200 million (versus $40 million for sites related to crude oil).3 During this congressional hearing, it was determined that the proposed system of fees would cover: (1) crude oil; (2) petrochemical feedstocks; and (3) certain highly toxic and/or high-volume inorganic materials including heavy metals, halogens, acids, bases, and ammonia.4. When is the first return due? Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. 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. . 19I.R.C. 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. Due to the complicated nature of the tax assessments, and the detailed information required, gaps in existing systems and processes may exist. They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. 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. | Agreed Terms of Use In our experience, it generally takes at least three months to fully implement and test a new business process and system implementation. 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. Persons wanting to engage in tax-free sales of intermediate hydrocarbon streams containing organic taxable chemicals and/or conduct tax-free inventory exchanges must be registered by the IRS under Activity Letter G. Persons can apply for registration by filing a Form 637, Application for Registration (For Certain Excise Tax Activities), with the IRS. Desperate Times, Desperate Measuring Cups FTC Brings Enforcement Trending in Telehealth: February 20 26, 2023, IRS Sets Deadline For Using 401(K) Plan Forfeitures, How Generative AI Generates Legal Issues in the Games Industry, DOJ Announces New Nationwide Voluntary Self-Disclosure Policy. 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). How are the Superfund chemical excise taxes reported? 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. Chemical tax to clean up toxic sites gets new life as part of infrastructure deal. US Executive Branch Update February 27, 2023. The term " Superfund " refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. The money gathered from the taxes was used to fund the clean-up of hazardous waste disposal sites across the United States. Many entities are struggling with its application. How do I calculate the section 4661 tax? Hampton Roads | 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. Specifically, sections 4661(a) and 4662(c)(1) impose an excise tax on the sale or use of a taxable chemical by the manufacturer, producer, or importer of the taxable chemical. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. 3684 (Aug. 2, 2021). 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). View Full Firm Disclosure. *Note: Self-assessing based on 10% of appraisal value will almost always yield a higher tax rate than either of the other methods. Amendments. Everyone loves infrastructure, but it pays to read the fine print. This assessment should include a review of the transaction life cycle, master data setup, cost computation and recognition, and general entry posting. The Superfund tax on chemicals is also a tax on the import of taxable substances. Exemptions are available for some exported taxable chemicals and substances, as well as for chemicals/substances used in certain kinds of fertilizer, animal feed, and fuel. The Superfund excise taxes are part of Subtitle D, Chapter 38 of the Tax Code. 8Id. What is the purpose of the Superfund Chemical Excise Taxes? The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. The exemptions identify taxable chemicals that are exempt due to their specific use. Strictly Confidential? I am an importer of taxable substances. Hydrocarbon streams containing mixtures of organic taxable chemicals. 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. Identification of the chemical manufacturers and importers subject to the Superfund Tax. Charlotte | 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. 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. Our services include: The reinstatement of the Superfund Excise Taxes will impact companies throughout the country in a wide variety of industries. 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 IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. Audit & 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. In addition to having deep tax technical knowledge surrounding federal excise taxes, Deloitte leverages leading technology tools and processes. Updated procedural guidance on how to request the determination has not yet been published by the IRS as of the date of this article. They were reinstated by section 80201(c)(3) of the Infrastructure Investment and Jobs Act (Public Law 117-58, 135 Stat. 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 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. (added June 24, 2022), Q8. Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. Licenses for Exports to Are You Ready for the UPC? The information here is by no means comprehensive, but it does provide a basic understanding of the law and its implications for affected companies. No. Tampa | 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. 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. collaboration. 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 entities falling under the Cherry Bekaert brand are independently owned and are not liable for the services provided by any other entity providing services under the Cherry Bekaert brand. 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. 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. 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. A semimonthly period is the first fifteen (15) days of a calendar month or the portion of a calendar month following the 15th day of the month. See Section 4671(b)(2). At the time of publication of these FAQs, 151 substances are listed as taxable substances. Due to the complicated nature of the Superfund Excise Tax and the granularity of the tax rate structure, gaps in existing systems and processes may exist. For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. 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. Frequently Asked Questions: Superfund Chemical Excise Taxes. 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 . Section 80201 of the bill would revive long-expired Superfund excise taxes at twice their previous level. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. What do companies need to do in order to prepare for these taxes? Providence | (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. The Notice essentially allows taxpayers untilOctober 31, 2022, to determine whether a Superfund excise tax applies and to calculate how much taxed is owed. Arizona Gets to Keep Its State-Operated Workplace Safety and Health Manufacturers Legal Considerations for Staffing Reductions, PCAOB Enforcement Activity Up Sharply in 2022. 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. May exist the determination has not yet been published by the IRS as of the of... 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