superfund excise taxes on chemicals

This current iteration is set to expire on December 31, 2031. services, Comprehensive Environmental Response Compensation, and Liability Act of 1980 (CERCLA). 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. What happens if an importer does not calculate the section 4671 tax? It's codified in IRC Sections 4671 and 4672, both of which were added by the Superfund Amendments and Reauthorization Act of 1986. 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. msulayman@deloitte.com, Stephane Lunan research, news, insight, productivity tools, and more. 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. A cloud-based tax tax, Accounting & Excise taxes are reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. 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. 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. The Superfund chemical excise taxes previously expired on December 31, 1995. 4672(a)(2)(B)(1995). 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. 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. A7. 11Infrastructure Investment and Jobs Act, Pub. 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 excise taxes are effective July 1, 2022. Are there any available exemptions for the Superfund Chemical Excise Taxes? making. 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). The Superfund tax is assessed on the manufacturer or importer of these chemicals. Notice 2021-66. No. A5. 4671. (added June 24, 2022), Q3. Section 80201(c)(1) of the IIJA modified the method for determining whether a substance is a taxable substance by lowering the required percentage of taxable chemicals used to produce the substance from 50 percent to 20 percent of the weight (or the value) of the materials used to produce such substance. The superfund excise taxes will affect taxpayers that manufacture, produce, or import certain chemicals found in fuels and industrial products. The rate of excise tax per ton is based on the amount of each chemical included in the substance. Substances may be added or removed from the list of taxable substances at a later date. A1. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. Strictly Confidential? Importers Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661 (b). The rationale for the fee collection point was so that the fee would be equally distributed among all hazardous waste generators and suppliers.6. IT'S HAPPENING! Raleigh | Reg. Notice 2021-66. 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. As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. Analyzing Superfund Excise Tax calculations and reporting requirements based on a companys unique business scenario. South Florida | A6. The Notice essentially allows taxpayers untilOctober 31, 2022, to determine whether a Superfund excise tax applies and to calculate how much taxed is owed. A14. 18I.R.S. Nashville | 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. 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. 48839 (Oct. 21, 1983). 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. Corporate Taxpayers may petition the IRS to determine whether a substance falls within the taxable substances list. L. 96- 510, 42 U.S.C. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. 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 is not permanent and . Telecommunications, Media & Entertainment, Budget bill extends and addresses fuel excise taxes and incentives, Budget reconciliation, infrastructure, and what comes next. 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. 4661 and the other applying solely to "any taxable substance sold or used" by importers pursuant to 26 U.S.C. It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. GT's The Performance Review Episode 19: Is the Fight Over AB 51 5 Reasons Community Associations Need an Attorney That Specializes in New York Proposes Regulatory Review and Approval of Material Health CMS Issues Long-Awaiting Medicare Advantage RADV Final Rule, Preventing the Use of Cryptocurrencies to Evade Sanctions. There are 42 chemicals listed in section 4661(b). To accomplish this, the current system capability should be assessed. The Infrastructure Bill lowers the thresholdfor a chemical substance to meet the definition of taxable substance, thus more imports may be subject to this tax. 13I.R.C. | 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. 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 Superfund tax rate will now be adjusted annually to . The $1.2 trillion infrastructure bill making its way through the Senate contains a $14.55 billion tax hike on American chemical and mineral producers. (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. 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. chrigong@deloitte.com. Congress directed the Department of Treasury to publish an additional list of the taxable substances by January 1, 2022. governments, Explore our When are the new Superfund Chemical Excise taxes due? 2022 Superfund excise taxes. Assisting with development and implementation of technology solutions to enable identification of taxable chemicals and substances, as well as exemptions. Social login not available on Microsoft Edge browser at this time. I am an importer of taxable substances. on chemicals through 31 December 2031 at double the 1995 rates, when superfund taxes were last implemented. : Advanced Marketing Compels Trial on Arbitration in a TCPA Health Plans Gag Clause Attestations Due December 31, 2023. Key considerations for dealings with the reinstated Superfund Tax include: For producers, importers, exporters, and customers of businesses making and distributing identified chemicals and substances, action is needed quickly. 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. 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. 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. For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. Taxable substances are those substances listed in either section 4672(a)(3) of the Code or Notice 2021-66. Tax Managing Director The term " Superfund " refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. Tax is due upon the first use or first sale of a listed chemical in the United States. environment open to Thomson Reuters customers only. Providence | The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. See Section 4671(b)(2). 11001 (2021). 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. This Week in 340B: February 21 27, 2023. . Complete Analysis of the Tax Cuts and Jobs Act, The future of Indirect Tax (IDT): How to take charge of change, How to overcome the most common challenges of tax engine implementation, The Tax Technology Transformation: Getting Started. 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. In addition, most hazardous wastes are produced by these industries or as a result of using products from these industries. 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. 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 Part 40regarding filing, deposits, and related procedural issues apply to companies subject to the reinstated Superfund excise taxes. The Superfund excise taxes are set to expire at the end of 2031. Taxpayers must meet the guidelines in the Notice to qualify for this relief. Since the Superfund excise tax expired almost three decades ago, the industrial chemical communitys familiarity with their application is attenuated at best. 9See I.R.C. 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. However, the inorganic raw materials required a multi-tiered rubric: (1) the material must be hazardous in a number of forms; (2) the material in some form must be hazardous if spilled; (3) the material must be produced in a large amount; and (4) the material must be capable of increasing the hazard potential of other elements.5, Congress intended for the fees to be imposed "at the beginning of the commercial chain of production, distribution, consumption, and disposal of hazardous substances." 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. 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. 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). The first quarterly Superfund tax reporting on Form 720, quarterly Federal excise tax per ton for.! June 24, 2022 ), Q3 listed in either section 4672 ( a ) ( 1995 ) taxable. Current system capability should be assessed substances listed in section 4661 ( )., when Superfund taxes were last implemented tools, and more through 31 2031. On the amount of each chemical included in the substance, produce, or import certain chemicals in... Added June 24, 2022 and will remain in effect until the of! 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