This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. A12. 2022 Superfund excise taxes. A third excise tax on crude oil and petroleum products was reinstated in the Inflation Reduction Act . Certain non-fuel and agricultural uses of some of these chemicals were exempted from the excise tax. Some highlights on the petroleum products tax are as follows: Imposition of the Tax This law levies taxes on the manufacture, production, or importation of 42 specific chemicals and another 121 chemical substances. Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. The excise taxes are effective July 1, 2022. See section 4672(a)(1). 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. When do the Superfund chemical excise taxes go into effect? Cherry Bekaert is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC provide professional services. ONESOURCE Determination gives companies the ability to quickly comply with Superfund Excise and Hazardous Substance taxes by automatically and accurately calculating the amount of excise tax owed. Thomson Reuters/Tax & Accounting. 18I.R.S. Heres how to analyze the implications and plan now for the revitalized Superfund Excise Tax. 4661. (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. 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. Waters of the United States and Winston Churchill. 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. Performance Rule Requires Disclosure of Relationship Tech Takeaways: SCOTUS Weighs in on Pivotal Tech Cases. 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 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. technology solutions for global tax compliance and decision corporations. The tax rates of the listed chemicals were based on the percentage of the individual chemicals found in the hazardous waste sites. 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 . 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. This tax provided a federal fund to remediate toxic spill sites when a responsible party could not be identified. and accounting software suite that offers real-time 3S. Self-assess the rate based on 10% of the appraisal value of the imported substances.*. 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. consulting, Infrastructure Investment and Jobs Act (IIJA), passed last November, the Internal Revenue Service (IRS) has reinstated the. What Is the Difference Between a Grandfathered and a Grandmothered Health Plan? The Superfund is a federal excise tax on various hazardous chemicals. However, the first deposit of Superfund Tax is due as early as July 29, 2022. 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. msulayman@deloitte.com, Stephane Lunan 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 Tampa | 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 . Heavy metals, halogens, acids, and bases are significant raw materials for many toxic inorganics.) The current list is published in IRC section 4672(a)(3) and attached as Exhibit B. As explained in today's IRS release: This Week in 340B: February 21 27, 2023. IRC section 4662(e) provides for a refund of the Superfund Excise Tax for the exporter of both taxable chemicals and taxable substances. The proposal would essentially create a new excise tax on the manufacture, production, or importation of 42 chemicals. The superfund excise taxes will affect taxpayers that manufacture, produce, or import certain chemicals found in fuels and industrial products. brands, Corporate income Alternatively, a taxpayer may base the rate for taxable substances on 10% of the value of the import.20. 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. 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. financial reporting, Global trade & A5. 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. 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. Accordingly, these FAQs may not address any particular taxpayer's specific facts and circumstances, and they may be updated or modified upon further review. Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). See also I.R.C. A Review of the Developing Legal Landscape Surrounding the "Student-Athlete" Debate. 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. The new Superfund requires companies to identify which of 42 chemicals they're using, volume of each in production processes and outputs. It's codified in IRC Sections 4671 and 4672, both of which were added by the Superfund Amendments and Reauthorization Act of 1986. Yes. 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. 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. Taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the tax. Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. Please enable JavaScript to view the site. Integrated software Tax Managing Director Companies that import taxable chemicals or taxable substances will be liable for the excise tax. Richmond | (added June 24, 2022), Q15. 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. See Terms of Use for more information. Do Issuers Fail To File Form Ds Because They Fear Trolls? They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. The tax expired under its terms in the mid-1990s but has now been reinstated. 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. 4672(b)(1). The Superfund tax on chemicals is also a tax on the import of taxable substances. Matt Levin Jul 2, 2021. The rates will be included in the instructions to Form 6627, Environmental Taxes, and under Recent Developments for Form 6627, Environmental Taxes. Los Angeles | ffalvo@deloitte.com, Marshal Sulayman Deposit payments with the Electronic Federal Tax Payment System (EFTPS). 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. For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. Deloittte Tax 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. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. : Advanced Marketing Compels Trial on Arbitration in a TCPA Health Plans Gag Clause Attestations Due December 31, 2023. As soon as possible, companies that import any of the taxable chemicals or substances on the IRSs list need to conduct a thorough assessment of their manufacturing processes to find out when, where, and how the Superfund Chemical Excise Tax might apply. Find the tax rates for 121 taxable substances. Even companies that have been on the market for decades may not have many employees who were around when the previous excise tax applied. Specifically, the statute provides that to qualify as a taxable substance, taxable chemicals listed in IRC section 4662 must constitute more than 50 percent of the weight (or more than 50 percent of the value) of the materials used to produce such substance (determined on the basis of the predominant method of production).10. Substances may be added or removed from the list of taxable substances at a later date. DTTL and each of its member firms are legally separate and independent entities. Taxable substances include substances where taxable chemicals constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce such substance (as determined based on the predominant method of production). 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). Boston | (added June 24, 2022), Q10. The latest reiteration of the excise tax will be comprised of two separate taxes on (1) chemical sales and (2) chemical importers. How do I calculate the section 4661 tax? Tax is due upon the first use or first sale of a listed chemical in the United States. 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 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. 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. | 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. An exporter who did not pay the initial assessment of the Superfund Tax may still be entitled to the refund if certain condition are met. customs, Benefits & Sec. L. 96- 510, 42 U.S.C. 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. For example, butane and methane are exempt if they are being used as fuel, but NOT if they are being used for some other purpose. (a) General rule There is hereby imposed a tax on any taxable chemical sold by the manufacturer, producer, or importer thereof. Telecommunications, Media & Entertainment, Budget bill extends and addresses fuel excise taxes and incentives, Budget reconciliation, infrastructure, and what comes next. Congress set up a trust fund, or "Superfund," to clean up and mitigate environmental damage using new taxes imposed on 42 taxable chemicals that Congress identified as having the potential to cause harm upon improper handling or disposal. 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. Tax Implications and Financial Business Guidance Regarding the Coronavirus. Service. First Offshore Wind Energy Lease Sales in the Gulf of Mexico, Telephone and Texting Compliance News: Litigation Update February 2023. Analyzing and assisting in documenting available exemptions (e.g., certain taxable chemicals used in the production of fuel). Accordingly, the procedural rules in26 C.F.R. 1043, provides transitional relief for the third and fourth calendar quarters of 2022, and the first calendar quarter of 2023, regarding the failure to deposit penalties imposed by section 6656 for failures to deposit Superfund chemical excise taxes through March 31, 2023. 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. Cherry Bekaert LLP is a licensed CPA firm that provides attest services, and Cherry Bekaert Advisory LLC and its subsidiary entities provide tax and advisory services. , the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022 this... Boston | ( added June 24, superfund excise taxes on chemicals, excise taxes are on... Requires Disclosure of Relationship Tech Takeaways: SCOTUS Weighs in on Pivotal Tech Cases appraisal value of the Legal. 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