(added June 24, 2022), Q12. 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. The information here is by no means comprehensive, but it does provide a basic understanding of the law and its implications for affected companies. DTTL (also referred to as "Deloitte Global") does not provide services to clients. Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. The Revenue Reconciliation Act of 1990 further extended the Superfund Excise Taxes through December 31, 1995, after which point the Superfund Excise Taxes expired. The return of the Superfund excise tax on chemicals affects taxpayers that manufacture, produce, or import certain chemicals, as it imposes an excise tax on the sale of 42 specific chemicals listed in Section 4661 of the tax code, including ammonia, butane, benzene, mercury, and other common products. Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. Assisting with risk analyses and internal processes (design or documentation). Statement in compliance with Texas Rules of Professional Conduct. At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. DeloitteTax The Superfund Excise Tax will go back into effect on July 1 st, 2022, after not being in place for over 26 years. The Infrastructure Act essentially doubles these rates with taxes ranging from $0.44 per ton to $9.74 per ton. Products & 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 . Companies responsible for collecting and remitting the excise tax will need to identify the source system to capture the transactional and master data for applicable transactions, and assess what data elements are captured and how to obtain necessary reports to support compliance filing. (added June 24, 2022), Q11. The current list is published in IRC section 4672(a)(3) and attached as Exhibit B. 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. accounting, Firm & workflow This Week in 340B: February 21 27, 2023. technology solutions for global tax compliance and decision 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. Everyone loves infrastructure, but it pays to read the fine print. 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. No. 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. 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. IT and tax departments in particular will need to collect transactional data all along the supply chain, as well any applicable master data. Fast forward to today. Additionally, Form 6627, Environmental Taxes, was previously used to report the Superfund Excise Taxes when the taxes were last in effect, and this form will be used again to report the taxes owed. 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. 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. 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. See Terms of Use for more information. There are two ways a substance can be added to or removed from the list of taxable substances pursuant to section 4672(a)(2) and (4). 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. US Executive Branch Update February 28, 2023. Cherry Bekaert is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC provide professional services. Will the IRS prescribe tax rates for taxable substances? 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. L. 99-499, 42 U.S.C. 12I.R.S. Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. 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. 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. Page Last Reviewed or Updated: 24-Jun-2022, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), Fact Sheets for Frequently Asked Questions, Q1. A taxable substance is defined as a substance that contains 20% or more by weight or value of any one of the chemicals listed in Section 4661 (down from 50% in the previous iteration of the law). 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 through 2031. Tax Senior Manager 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). Yes. 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. 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). Deloitte Tax environment open to Thomson Reuters customers only. California Assembly Bill Pushes for Womens Designated Restrooms on Mississippi Legislature Takes Up Pass-Through Entity Election FTC Signals Increased Scrutiny of Technology Sector Through Understanding the Corporate Transparency Act and Ensuring Compliance. At the time of publication of these FAQs, 151 substances are listed as taxable substances. Due to the complicated nature of the tax assessments, and the detailed information required, gaps in existing systems and processes may exist. Form 6627 must be led alongside Form 720 on a quarterly basis. 8Id. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. 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. The Infrastructure Bill reinstated the Superfund Excise Taxes on chemicals and taxable substances, effective July 1, 2022.11 In addition to the reinstatement of the taxes, the Infrastructure Bill doubled the prior rate of tax on the 42 listed chemicals. Hydrocarbon streams containing mixtures of organic taxable chemicals. 429, Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), How Modern Manufacturing Plants Can Protect Against Ransomware, Cyberattacks, FTC Will Host May 23, 2023, Workshop on Recyclable Claims and the Green Guides. See section 4672(a)(1). What do companies need to do in order to prepare for these taxes? management, Document Certain services may not be available to attest clients under the rules and regulations of public accounting. What happens if an importer does not calculate the section 4671 tax? Notice 89-61provided guidance under the previously applicable Superfund excise tax. 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. Federally Recognized Holidays, Employer Considerations for DOLs New AEWR Rule. Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. See Section 4671(b)(2). The term "ton" is. Do not delete! For hazardous substances, the taxable event is the importation of the substance by an importer, and the tax is due upon the first sale or use after the substance is imported. 3S. (added June 24, 2022), Q9. The Notice essentially allows taxpayers untilOctober 31, 2022, to determine whether a Superfund excise tax applies and to calculate how much taxed is owed. Various exemptions exist for taxable chemicals, including: Additionally, the export of taxable chemicals is eligible for a refund of any tax paid on the chemical.16, The IRS published proposed Treasury Regulations in 1983 specific to the taxable chemicals to further detail the methods of reporting the tax, as well as provide more detail on all the provisions concerning the tax.17. President Joe Biden called for reinstating the Superfund taxes as part of his $2 trillion infrastructure proposal . research, news, insight, productivity tools, and more. 96-125 at 14878 (1979). A taxable substance is any substance that, at the time of sale or use by the importer of the substance, is listed as a taxable substance. IRC section 4672 additionally directed importers and exporters to request a determination from the IRS as to whether a specific unlisted chemical substance should be included in the list of taxable substances. 48839 (Oct. 21, 1983). The Carter administration established the Superfund in 1980 to offset the high price tags associated with remediating uncontrolled or abandoned hazardous waste sites. July 1 is fast approaching and the window to prepare for compliance with the reinstated Superfund Tax is brief. healthcare, More for As explained in today's IRS release: The return of the chemical excise tax affects taxpayers that manufacture, produce, or import certain chemicals, as Superfund Chemical Taxes are imposed on the sale of 42 specific chemicals (Taxable Chemicals) listed in 4661 (Chemical Sales Excise Tax), including ammonia, butane, benzene, mercury, and other common chemicals. The following is an FAQ to help companies get up to speed on what the Superfund Chemical Excise Taxes will require of them. Labor Board Flip-Flops Again on Severance FRB Governor Bowman Speaks on Bank Regulation and Supervision. 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 . Chicago | A12. msulayman@deloitte.com, Stephane Lunan In November 2021, President Biden signed the Infrastructure Investment and Jobs Act. A5. After more than 25 years, two excise taxes on chemicals and imported hazardous substances were reinstated in the Infrastructure Investment and Jobs Act (Pub. Matt Levin Jul 2, 2021. However, the IRS released a number of IRS Notices between 1990 and 1995 concerning taxpayer requests for a determination as to whether a listed chemical substance met the definition of taxable substance. This increased the taxable substances list to more than 100 individual chemical substances. Notice 2021-66. 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. 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 . Page Last Reviewed or Updated: 24-Jun-2022, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), News Releases for Frequently Asked Questions, Recent Developments for Form 6627, Environmental Taxes, Treasury Inspector General for Tax Administration, synthetic linear fatty alcohol ethoxylates, IRS issues Superfund chemical excise tax rates. Analyzing Superfund Excise Tax calculations and reporting requirements based on a companys unique business scenario. discount pricing. The Superfund was to be financed through environmental excise taxes, including: (1) excise tax imposed on domestic crude oil; (2) excise tax imposed on imported crude oil and petroleum products; and (3) domestically produced and imported petrochemicals and inorganic chemicals. 4661 and the other applying solely to "any taxable substance sold or used" by importers pursuant to 26 U.S.C. At that time, the application of the tax and the deployment of funds were quite well understood, and the U.S. Internal Revenue Service (IRS) developed a relatively robust series of guidance documents to explain how the tax operated and who was subject to the tax. Cherry Bekaert Advisory LLC and its subsidiary entities are not licensed CPA firms. Section 704.3. 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). The rates will be included in the instructions to Form 6627, Environmental Taxes, and under Recent Developments for Form 6627, Environmental Taxes. Section 40.6302(c)-1(b)(2), for failure to make required deposits of Superfund excise taxes if the requirements set out in the Notice are met. 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 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. 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 IRS has release additional information on the Superfund Excise Taxes on Chemicals. If the importer does not calculate the section 4671 tax for a taxable substance and the IRS has not prescribed a tax rate for the taxable substance, then the amount of tax is 10 percent of the appraised value of the taxable substance as of the time the taxable substance was entered into the United States for consumption, use, or warehousing. For purposes of this part, if any organic taxable chemical on which no tax was imposed by reason of subparagraph (A) is isolated, extracted, or otherwise removed from, or ceases to be part of, an intermediate . 429 (2021)), effective July 1, 2022, with modifications to the applicable rates of tax and other provisions related to those taxes. 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). sarsmith@deloitte.com, Frank Falvo Is the rate different for taxable substances? Chemical tax to clean up toxic sites gets new life as part of infrastructure deal. For taxable substances, the importer of the taxable substance is responsible for reporting and paying the section 4671 tax to the IRS. Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. The rate of excise tax per ton is based on the amount of each chemical included in the substance. 52.4661-1 4662-4, 48 Fed. Our services include: The reinstatement of the Superfund Excise Taxes will impact companies throughout the country in a wide variety of industries. Federal excise tax rates remain at $0.183/gal for gasoline and $0.243/gal for diesel fuel. 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. The reinstated Superfund Excise Tax is effective July 1, 2022, through December 31, 2031, absent extension. 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. Some companies did not yet exist when the previous excise tax applied and have no experience with the old tax and thus no internal processes for determining their liability for the Superfund excise tax. Fullwidth SCC. Various exemptions exist for taxable chemicals. What are the Superfund chemical excise taxes? Read our analysis and reports on the landmark Supreme Court sales tax case, and learn how it impacts your clients and/or business. Augusta | The applicable tax for a hazardous substance depends on its chemical composition. Corporate The two most significant excise tax provisions of HR 3684 are (1) reinstatement of the Section 4661 taxes on sales by a taxpayer that manufactures, produces, or imports certain chemicals and (2) reinstatement of Section 4671 taxes on an importer's sale or use of specified substances. services, Comprehensive Environmental Response Compensation, and Liability Act of 1980 (CERCLA). However, Notice 2022-15, 2022-18 I.R.B. Assisting with filing the federal excise tax returns and semi-monthly deposit reporting. . Background accounting firms, For 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. 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. For example, if load of scrap metal contains 50% nickel (taxed at $8.90 per ton) and 20% chromite (taxed at $3.04 per ton), the tax rate would be calculated as: ($8.90 x .50 = $4.45) + ($3.04 x .20 = .61) = $5.06 per ton. What is the purpose of the Superfund Chemical Excise Taxes? 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. Cherry Bekaert LLP is a licensed independent CPA firm that provides attest services to its clients, and Cherry Bekaert Advisory LLC and its subsidiary entities provide tax and business advisory services to their clients. How does a company report the Superfund Chemical Excise Tax? Sec. There are three ways to arrive at a tax determination for the Superfund Tax: 2. 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. All Rights Reserved. Notice 2021-66 does not specify the tax rate for each taxable substance. Otherwise, companies risk finding out about this tax when they are audited and risk becoming liable for penalties. The "Superfund Tax" is comprised of two separate taxesone covering the sale or use of taxable chemicals "by the manufacturer, producer, or importer thereof" pursuant to 26 U.S.C. 10I.R.C. 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 . What is a taxable chemical? 4671. 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. This button displays the currently selected search type. 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. . Reminder: High-Earning Exempt Professionals Must Be Paid a "True Gold Dome Report Legislative Day 24 (2023). Audit & (added June 24, 2022), Q4. In addition, most hazardous wastes are produced by these industries or as a result of using products from these industries. A7. ffalvo@deloitte.com, Marshal Sulayman July 1, 2022. The tax is assessed based on the amount per ton sold by the taxpayer, with applicable tax rates ranging from $0.44 per ton to $9.74 per ton. 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? L. No. The excise tax collection expired in 1995 but resumed on July 1, 2022. Taxable substances are those substances listed in either section 4672(a)(3) of the Code or Notice 2021-66. Butane and methane users An official website of the United States Government. Deloitte Tax 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. Updated procedural guidance on how to request the determination has not yet been published by the IRS as of the date of this article. The IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. 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. At what point in a transaction do the new taxes kick in? 6Id. 429. The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. Greenville | management, More for accounting A8. In fact, companies that export products comprised of taxable chemicals or substances are entitled to a refund if they paid prior to manufacturing. 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. Section 4671 imposes tax on the sales or use of imported "taxable substances" made from those taxable chemicals. The Superfund Excise Tax is not permanent and . 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. When is the first return due? 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. The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. The latest reiteration of the excise tax will be comprised of two separate taxes on (1) chemical sales and (2) chemical importers. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. Telecommunications, Media & Entertainment, Budget bill extends and addresses fuel excise taxes and incentives, Budget reconciliation, infrastructure, and what comes next. On Dec. 14, 2021, the IRS issued Notice 2021-66, which provides guidance on implementing the reinstated Superfund excise taxes, and followed up on June 24, 2022, with an FAQ . 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. Tax Senior Manager Are there any available exemptions for the Superfund Chemical Excise Taxes? Orlando | Under what circumstances is registration required? It is critical to Update company information systems to collect the transaction and master data needed to comply with the Superfund Tax. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. The Superfund excise taxes are set to expire at the end of 2031. 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). Part II of Form 6627, Environmental Taxes, will be updated to reflect the tax rate per ton of each taxable chemical. statement, 2019 Boston | industry questions. Some highlights on the petroleum products tax are as follows: Imposition of the Tax There are 42 chemicals listed in section 4661(b). The Superfund Amendments and Reauthorization Act of 1986 was enacted as Pub. media, Press Technology/systems impacts Chemicals used in the production of fertilizer (including nitric acid, sulfuric acid, ammonia, or methane); Sulfuric acid produced as a by-product of air pollution control; Substances used in the production of motor fuel, diesel fuel, aviation fuel, or jet fuel; Substances having transitory presence during the refining process; Substances used in the production of animal feed; or. 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. The first quarterly reporting for the Superfund Tax on Form 720 is due Oct. 31, 2022. Exporters It is important for companies to engage in early conversations with procurement, contracting, IT, and other internal departments to identify and assess their exposure and potential gaps in data gathering. When expanded it provides a list of search options that will switch the search inputs to match the current selection. Effectively tracking necessary data through the supply chain may be a challenge as well. : Advanced Marketing Compels Trial on Arbitration in a TCPA Health Plans Gag Clause Attestations Due December 31, 2023. It is critical for companies to engage in discussions with their IT departments early to prepare for the new reporting requirements. 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. The Comprehensive environment Response, Compensation, and Liability Act of 1980 ( CERCLA ) request the determination not... Oil that applied from 1987 through 1995. included in the context of taxable chemicals chain... 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Falvo is the brand name under which cherry Bekaert Advisory LLC provide Professional services reinstated. The statute or in Notice 2021-66 with Texas rules of Professional Conduct and processes may exist for! New AEWR Rule the sales or use of imported & quot ; made from those taxable chemicals creating! A challenge as well, or otherwise finished into end-use products of 2031 Considerations. Ranging from $ 0.44 per ton of each taxable chemical refund if they Paid Prior manufacturing! These FAQs, 151 substances are those substances listed in either section 4672 a... In fact, companies risk finding out about this tax when they are audited and risk becoming liable for..: the reinstatement of the Superfund Amendments and Reauthorization Act of 1980 ( CERCLA ) insight, tools. 151 substances are entitled to a refund if they Paid Prior to manufacturing 0.183/gal gasoline. Supply chain, as well any applicable master data provide services to.. 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