Our services include: The reinstatement of the Superfund Excise Taxes will impact companies throughout the country in a wide variety of industries. The Infrastructure Investment and Jobs Act (the IIJA), signed into law on November 15, 2021, reinstated two environmental excise taxes that had been terminated over twenty-five years ago. Audit & 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. 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. IT and tax departments in particular will need to collect transactional data all along the supply chain, as well any applicable master data. Download pdf (1.5 MB) The IRS today released an advance version of Notice 2021-66 regarding the reinstated excise taxes imposed on certain chemicals and substances under sections 4661 and 4671 (often referred to as "Superfund" excise taxes). 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). 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). Importers FAQs Hampton Roads | When the owner or operator was not identified, or the site cleanups needed to be expedited, financing for the cleanup was to be provided by the Superfund. The Basics of Californias Outside Salesperson Exemption. 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. 13I.R.C. Companies with a large volume of transactions should consider automating their tax calculation and reporting processes to increase efficiency and accuracy. Draft the To Each Their Own: Agency Must Consider Experience of Each Partner in CMS Updates List of Telehealth Services for CY 2023, What You Need to Know About the New Tariffs on Imports from Russia. 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. I am an importer of taxable substances. 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. Social login not available on Microsoft Edge browser at this time. Please see www.deloitte.com/about to learn more about our global network of member firms. When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. research, news, insight, productivity tools, and more. Nashville | Orlando | Heavy metals, halogens, acids, and bases are significant raw materials for many toxic inorganics.) 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). Will the IRS prescribe tax rates for taxable substances? | Privacy Policy Expanded Employee Retention Credit (ERC) & how our professionals can assist you. Procedures to request an IRS determination to add or remove a substance from the list of taxable substances under Internal Revenue Code Section 4672(a) are in Revenue Procedure 2022-26PDF. See Section 4671(b)(2). For taxable chemicals, the manufacturer, producer, or importer of the taxable chemical is responsible for reporting and paying the section 4661 tax to the IRS. Performance Rule Requires Disclosure of Relationship Tech Takeaways: SCOTUS Weighs in on Pivotal Tech Cases. 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). Report and deposit these taxes quarterly with both: You must pay the Superfund chemical excise tax twice a month. 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. Corporate When expanded it provides a list of search options that will switch the search inputs to match the current selection. making. When people refer to Superfund taxes, they're generally referring to excise taxes that are imposed on taxable chemicals listed under section 4661 and then taxable substances that are. 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. 1Investment and Jobs Act, Pub. The Treasury Department and the IRS (collectively the IRS) have released Notice 2022-15, which provides relief for certain reinstated Superfund chemical excise taxes (SCET) from the penalty for failure to properly deposit imposed under Section 6656.The relief applies to the first three quarters of the SCET, i.e., the third and fourth quarters of 2022 and the first quarter of 2023. ffalvo@deloitte.com, Marshal Sulayman In addition, most hazardous wastes are produced by these industries or as a result of using products from these industries. Under what circumstances is registration required? 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. 901, for the initial list of substances that the Secretary has added to the list of taxable substances. automatically and accurately calculating the amount of excise tax owed. Austin | A8. 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 . 2Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), Pub. No. 10I.R.C. 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. Companies opting for the latter run the risk, however, of incurring penalties, should the IRS adopt a different view. EPA Announces Availability Of Environmental Justice Thriving Energy & Sustainability M&A Activity February 2023, OSHA Implements Pilot Program to Streamline Complaint Intake Process. Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661 (b). California Law May Limit Hospitals Ability to Adopt The Joint Ankura CTIX FLASH Update - February 28, 2023, Ankura Cyber Threat Investigations and Expert Services. 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. brands, Social 9See I.R.C. The current list is published in IRC section 4672(a)(3) and attached as Exhibit B. Accordingly, the procedural rules in26 C.F.R. 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. 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. 96-125 at 14878 (1979). 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. 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. Excise taxes are reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. L. No. Chemical tax to clean up toxic sites gets new life as part of infrastructure deal. In addition, exporters of chemicals and substances which were subject to the Superfund Tax can request a refund of the tax previously paid. These taxes were in place until 1995 to fund the Federal Hazardous Substance Superfund, but expired in 1995. Updated procedural guidance on how to request the determination has not yet been published by the IRS as of the date of this article. This law levies taxes on the manufacture, production, or importation of 42 specific chemicals and another 121 chemical substances. They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. Tax Partner 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. The Superfund tax rate will now be adjusted annually to . The excise tax was applied to a list of 42 chemicals used predominantly in the oil, gas, and chemical industries. What are the Superfund chemical excise taxes? 12I.R.S. L. 117-58), effective July 1, 2022. Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. Substances may be added or removed from the list of taxable substances at a later date. accounting firms, For Telephone and Texting Compliance News: Regulatory Update February 2023. 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. When do the Superfund chemical excise taxes go into effect? The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. Are there any available exemptions for the Superfund Chemical Excise Taxes? 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. Certain non-fuel and agricultural uses of some of these chemicals were exempted from the excise tax. 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. (added June 24, 2022), Q6. _____________________________________________________________________________________________. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. The New York City Council Sets its Sights on Non-Profit Housing DOJ Announces New Voluntary Self-Disclosure Policy for U.S. Attorney Supreme Court: Salary, Not Daily Pay, Required for FLSA Overtime Time Is Money: A Quick Wage-Hour Tip on the Tip Credit, EDPB issues its Opinion on the EU-U.S. Data Privacy Framework, Hunton Andrews Kurths Privacy and Cybersecurity. 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). After more than 25 years, two excise taxes on chemicals and imported hazardous substances were reinstated in the Infrastructure Investment and Jobs Act (Pub. Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). In brief. Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). 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 Leaking Underground Storage Tank (LUST) Fund adds an additional $0.001/gal federal fee. Effective July 1, the Infrastructure Investment and Jobs Act (IIJA) reinstated the excise taxes imposed on certain chemicals and imported chemical substances under IRC Sections 4661 through 4672 (Superfund excise taxes). 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. 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. Tax is due upon the first use or first sale of a listed chemical in the United States. (added June 24, 2022), Q10. See also section 4661(b) for the tax rate for taxable chemicals. 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. Hydrocarbon streams containing mixtures of organic taxable chemicals. brands, Corporate income | Careers governments, Business valuation & Reg. 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 initial list of 50 taxable substances is found in IRC 4672(a)(3). Under the new law, the excise tax applies to the use, sale, or import of 42 taxable chemicals and 151 hazardous substances. The IRS has issued lists for both the chemicals and substances included (under Section 4661 and 4671 of the Internal Revenue Code, respectively), but has cautioned importers that items on the list could change as chemicals or substances are either added or removed from the list over time. Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. During the first, second, and third calendar quarters of2023, the IRS will not withdraw a taxpayers right to use the deposit safe harbor rules of the Excise Tax Procedural Regulations at 26 C.F.R. 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. Providence | Waters of the United States and Winston Churchill. 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. financial reporting, Global trade & Among the many provisions in that legislation . First Offshore Wind Energy Lease Sales in the Gulf of Mexico, Telephone and Texting Compliance News: Litigation Update February 2023. Strictly Confidential? customs, Benefits & Fast forward to today. The Superfund Excise Tax becomes effective on July 1, 2022. 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. The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. The excise taxes are effective July 1, 2022. Accordingly, the chemicals are taxed upon the first sale or use after import or manufacture in the United States, and the importer or manufacturer is liable for the excise tax, which it may pass along to its customers.22. No such update has been issued to date, however. Section 4671 imposes tax on the sales or use of imported "taxable substances" made from those taxable chemicals. Form 6627, Environmental Taxes, previously used to report the Superfund Tax, will likely be used again to report the tax owed. Products & Greenville | 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. Sec. Abusive Arbitrage Devices Its Time to Get Reacquainted (Episode 2 B&C Biobased and Sustainable Chemicals Practice Group Bergeson & Campbell, P.C. The specified. This box/component contains JavaScript that is needed on this page. Who is responsible for reporting and paying Superfund chemical excise taxes? There are two separate Superfund chemical excise taxes: a tax imposed on the sale or use by the manufacturer or importer of "taxable chemicals" listed in section 4661, and a tax on the sale or use by the importer of "taxable substances" listed in section 4672 and IRS Notice 2021-66. 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. statement, 2019 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 . 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 . 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. 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. Labor Board Flip-Flops Again on Severance FRB Governor Bowman Speaks on Bank Regulation and Supervision. Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. The law imposes a tax on any taxable chemical sold by the manufacturer, producer, or importer. Creditor Stung By Academy Of Motion Picture Arts And Sciences Bylaws. The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. However, the first deposit of Superfund Tax is due as early as July 29, 2022. Assisting with development and implementation of technology solutions to enable identification of taxable chemicals and substances, as well as exemptions. 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. Some highlights on the petroleum products tax are as follows: Imposition of the Tax accounting, Firm & workflow A9. The National Law Review - National Law Forum LLC 3 Grant Square #141 Hinsdale, IL 60521 Telephone (708) 357-3317 ortollfree(877)357-3317. 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 term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. The chemicals selected to be subject to the fee were based on two categories: petrochemical feedstocks and inorganic raw materials. firms, CS Professional On Aug. 16, 2022, the Inflation Reduction Act (IRA) reinstated a third excise tax, the Hazardous Substance Superfund Financing Tax Rate on Crude Oil and Petroleum Products. Federal excise tax rates remain at $0.183/gal for gasoline and $0.243/gal for diesel fuel. 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. Are semimonthly deposits required? Tax Managing Director Its also important to understand the tax calculation and reporting requirements and to align with other business functions to implement a process to meet data, process, and system requirements. A taxable substance is one that is . Chemical manufacturers and importers 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. Yes. Tax is due upon the first use or first sale of a listed chemical in the United States. This direct tax hike on American producers would result in higher prices for consumers, threaten thousands of jobs, and undermine domestic . 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. Everyone loves infrastructure, but it pays to read the fine print. 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. The original excise tax expired on December 31, 1995. (added June 24, 2022), Q7. Inferences, however, can be made from the absence of any mention in the law. Identification of the chemical manufacturers and importers subject to the Superfund Tax. 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. IT'S HAPPENING! How do you calculate the Superfund Excise Tax? This could create a potential liability for downstream users such that the rst company that uses the methane or butane in a manner other than as a fuel will have to report and remit the Superfund Tax. In addition to having deep tax technical knowledge surrounding federal excise taxes, Deloitte leverages leading technology tools and processes. 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 A13. 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. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. December 31, 1995 volume of transactions should consider automating their tax calculation reporting... Yet been published by the manufacturer, producer, or otherwise finished into end-use.... 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