How are the Superfund chemical excise taxes reported? Internal Revenue Code (IRC) section 4671 thereby imposed the same tax on imported substances as was already included in the cost of domestically purchased substances. Rep. No. Heard on: Revenue from a new excise tax on chemicals like Benzene and Mercury would go . CERCLA (and therefore the Superfund Excise Taxes) expired in 1985 but was extended for another five-year period through the Superfund Amendments and Reauthorization Act of 1986 (SARA), effective January 1, 1987.7 SARA expanded the Superfund Excise Tax on chemicals to include an additional tax on imported substances derived from taxable chemicals, effective January 1, 1989.8 This additional tax on taxable substances was structured to ensure that the amount of the tax correlated to the composition of the chemicals within the taxable substances.9 In other words, had the substance been purchased domestically, the Superfund Excise Tax on chemicals would have been included as part of the overall price of the substance. US Executive Branch Update February 27, 2023. White House Reviewing Proposed Regulations on Reinstated Superfund You Dont Need a Machine to Predict What the FTC Might Do About Is It Compensable? | Agreed Terms of Use See section 4672(a)(1). President Joe Biden called for reinstating the Superfund taxes as part of his $2 trillion infrastructure proposal . Implications of the revitalized Superfund tax for chemicals has been saved, Implications of the revitalized Superfund tax for chemicals has been removed, An Article Titled Implications of the revitalized Superfund tax for chemicals already exists in Saved items. Deloitte Tax Assisting with filing the federal excise tax returns and semi-monthly deposit reporting. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. Deloitte Tax Superfund tax on chemicals. (added June 24, 2022), Q14. 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 . Technology/systems impacts The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. environment open to Thomson Reuters customers only. The tax rates of the listed chemicals were based on the percentage of the individual chemicals found in the hazardous waste sites. 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 latest reiteration of the excise tax will be comprised of two separate taxes on (1) chemical sales and (2) chemical importers. Are semimonthly deposits required? Arizona Gets to Keep Its State-Operated Workplace Safety and Health Manufacturers Legal Considerations for Staffing Reductions, PCAOB Enforcement Activity Up Sharply in 2022. 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. Licenses for Exports to Are You Ready for the UPC? The chemicals Superfund tax was initially enacted in 1980 as a response to high-profile environmental disasters relating to hazardous waste. The Superfund Excise Tax will go back into effect on July 1 st, 2022, after not being in place for over 26 years. 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. 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. An official website of the United States Government. However, since the IRS ruled that these substances met the definition of taxable substance, these new substances were also subject to the tax if imported by taxpayers, thereby effectively increasing the list of taxable substances of IRC section 4672. 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. See how we connect, collaborate, and drive impact across various locations. Deposit payments with the Electronic Federal Tax Payment System (EFTPS). Taxpayers must make semimonthly deposits of the Superfund chemical excise taxes. Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661 (b). They were reinstated by section 80201(c)(3) of the Infrastructure Investment and Jobs Act (Public Law 117-58, 135 Stat. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten-year effective . 13I.R.C. 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. Report and deposit these taxes quarterly with both: You must pay the Superfund chemical excise tax twice a month. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. Excise Tax on Select Chemicals. This current iteration is set to expire on December 31, 2031. 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. Boston | Do Issuers Fail To File Form Ds Because They Fear Trolls? SaraBeth Smith See Section 4671(b)(2). More information about reliance is available. 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. Nota Bene Episode 160: European Update: Oliver Heinisch and Scott Federal Communications Commission to Consider Rules and Proposals to Whats the Standard? The information here is by no means comprehensive, but it does provide a basic understanding of the law and its implications for affected companies. Tax is due upon the first use or first sale of a listed chemical in the United States. Excise taxes are reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. Please see www.deloitte.com/about to learn more about our global network of member firms. 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. Importers 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. Along with the quarterly reporting requirements, taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the Superfund Excise Taxes. Semi-monthly deposits are required, however. 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. Tax Senior Manager Atlanta | 14Joint Committee on Taxation, Estimated Revenue Effects of the Provisions in Division H of an Amendment in the Nature of a Substitute to H.R. The Reinstated Superfund Excise Taxes. 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. The Superfund excise taxes are part of Subtitle D, Chapter 38 of the Tax Code. 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. Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). These substances consist generally or partially of chemicals listed in Section 4661. Hydrocarbon streams containing mixtures of organic taxable chemicals. 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. 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. View Full Firm Disclosure. The Revenue Reconciliation Act of 1990 further extended the Superfund Excise Taxes through December 31, 1995, after which point the Superfund Excise Taxes expired. and accounting software suite that offers real-time Since its reinstatement, the excise tax has raised many questions and caused significant industry consternation. The excise tax applies to companies that manufacture, produce, or import any of the 42 specific chemicals listed in Section 4661 of the Tax Code, most of them common in consumer products,. The reinstated Superfund Excise Tax is effective July 1, 2022, through December 31, 2031, absent extension. 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. Creditor Stung By Academy Of Motion Picture Arts And Sciences Bylaws. 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. No. US Executive Branch Update February 28, 2023. For taxable substances, the importer of the taxable substance is responsible for reporting and paying the section 4671 tax to the IRS. 4661 and the other applying solely to "any taxable substance sold or used" by importers pursuant to 26 U.S.C. 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. Yes. What are the Superfund chemical excise taxes? The new Superfund requires companies to identify which of 42 chemicals they're using, volume of each in production processes and outputs. chrigong@deloitte.com. The Superfund chemical excise taxes previously expired on December 31, 1995. In these cases, the other person would be liable for paying the excise tax, not the initial importer. As part of the Infrastructure Investment and Jobs Act signed into law November 15, 2021, the Superfund Excise Taxes go into effect July 1, 2022. Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. California Law May Limit Hospitals Ability to Adopt The Joint Ankura CTIX FLASH Update - February 28, 2023, Ankura Cyber Threat Investigations and Expert Services. 2Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), Pub. A9. 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. | 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. Second, an importer or exporter of a substance (or other interested person) can petition the Secretary to add the substance to or remove the substance from the list of taxable substances. L. 96- 510, 42 U.S.C. discount pricing. 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. Austin | Prior to 1996, the rates of tax on those chemicals ranged from $0.22 per ton to $4.87 per ton. . Read our analysis and reports on the landmark Supreme Court sales tax case, and learn how it impacts your clients and/or business. 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. Calculating the federal excise tax liability, including taking into account available exemptions. When are the new Superfund Chemical Excise taxes due? Cherry Bekaert Advisory LLC and its subsidiary entities are not licensed CPA firms. The tax may be passed along to customers. Sitemap A Review of the Developing Legal Landscape Surrounding the "Student-Athlete" Debate. 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. Exceptional organizations are led by a purpose. The Superfund tax rate will now be adjusted annually to . It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. In Notice 2021-66 the IRS published a list of 100 additional substances subject to the Superfund Tax. At what point in a transaction do the new taxes kick in? 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. 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. The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. 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. 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. 19I.R.C. 22The IRS does not require that the tax be included in the total cost of the product or separately line itemed in an invoice. These FAQs detail what the Superfund chemical excise tax is, how the tax is computed, and who may be liable for the tax. See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. Effectively tracking necessary data through the supply chain may be a challenge as well. 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. 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. 429 (2021)), effective July 1, 2022, with modifications to the applicable rates of tax and other provisions related to those taxes. Los Angeles | 4662(e). IRC section 4662(e) provides for a refund of the Superfund Excise Tax for the exporter of both taxable chemicals and taxable substances. Biobased chemicals and biofuels have taken root thanks to both popular appeal and political support. 5Id. Since the Superfund excise tax expired almost three decades ago, the industrial chemical communitys familiarity with their application is attenuated at best. 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. and services for tax and accounting professionals. 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. Performance Rule Requires Disclosure of Relationship Tech Takeaways: SCOTUS Weighs in on Pivotal Tech Cases. This Week in 340B: February 21 27, 2023. Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. A7. 6Id. Assisting with risk analyses and internal processes (design or documentation). A5. tax, Accounting & The more you buy, the more you save with our quantity on a wide range of chemicals and substances. 4671. 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 Superfund Excise Tax is not permanent and . Criminal Referrals and OSHA Violations, Part III: Industry Standards Oregon House Revenue Committee Set to Hear More About Pro-Taxpayer Buying or Selling a Small Business Government Contractor? 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. The Leaking Underground Storage Tank (LUST) Fund adds an additional $0.001/gal federal fee. 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. . 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. Analyzing Superfund Excise Tax calculations and reporting requirements based on a companys unique business scenario. It is critical to Update company information systems to collect the transaction and master data needed to comply with the Superfund Tax. sarsmith@deloitte.com, Frank Falvo 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. 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. This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. Waters of the United States and Winston Churchill. 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 IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. management, More for accounting The initial list of 50 taxable substances is found in IRC 4672(a)(3). A13. 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). What is a taxable substance? 20I.R.C. 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. A11. Applicants for registration may call 859-320-4091 and select menu option #1. They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. In brief. No. As discussed above, the list of taxable substances was incorporated into the IRC as a result of SARA, effective in 1989. 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. This Superfund Tax is assessed only on importers of taxable substances and is due upon the first sale or the first use after import into the United States. Sec. 17Prop. Challenges to the No Surprises Act Continue: The Latest includes a Navigating Permissive State Laws in Light of the Federal Information FDA Publishes List of 2023 Priority Guidance Topics. If you would ike to contact us via email please click here. Raleigh | In fact, companies that export products comprised of taxable chemicals or substances are entitled to a refund if they paid prior to manufacturing. The excise taxes are effective July 1, 2022. 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. Companies are likely to be caught off guard by this reinstated tax. DTTL and each of its member firms are legally separate and independent entities. Tax Implications and Financial Business Guidance Regarding the Coronavirus. A2. The applicable tax for a hazardous substance depends on its chemical composition. Matt Levin Jul 2, 2021. The money gathered from the taxes was used to fund the clean-up of hazardous waste disposal sites across the United States. The IIJA also reinstated the Superfund excise tax on the import for sale or use of any taxable substance underSection 4671of the Tax Code. The Treasury Department and the IRS reportedly intend to update Notice 89-61 to reflect the changes made to Section 4672(a)(2) by the IIJA and to make other changes that may be necessary. The Final CCPA Regulations: What You Need To Know, Are College Athletes Students or Employees? (added June 24, 2022), Q13. 4661. Notice 2021-66 does not specify the tax rate for each taxable substance. The tax would apply after December 31, 2021, until January 1, 2032. 8Id. For example, methane or butane used as a fuel, or nitric acid, sulfuric acid, ammonia, or methane used in production of fertilizer are exempt. The list of 42 chemicals and their respective excise tax rates is found in Internal Revenue Code (IRC) 4661(b). To stay logged in, change your functional cookie settings. 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. A6. 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. 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 . 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). Everyone loves infrastructure, but it pays to read the fine print. 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). (added June 24, 2022), Q3. 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. 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. The Superfund Chemicals tax previously expired in 1995. brands, Corporate income (added June 24, 2022), Q4. As noted above, importers are not required to use the IRS-prescribed tax rates for the section 4671 tax and may calculate their own rates. 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. L. 117-58. Providence | (added June 24, 2022), Q6. DOL Provides Snapshot of ERISA Enforcement Statistics for Fiscal Year 2022, TPA Escapes Liability for Sending COBRA Notice to Employees Former Address, but Claims Proceed Against Employer, For The Treasury Department and the IRS (collectively the IRS) have released Notice 2021-66, providing guidance on the reinstatement of the Superfund chemical excise taxes (SCET) under the Infrastructure Investment and Jobs Act (sometimes referred to as the Bipartisan Infrastructure Bill, or IIJA) enacted on November 15. Background 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. L. No. 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. The Petroleum Superfund Tax is proposed to be indexed for inflation beginning in calendar year 2023. Among the many provisions in that legislation . Inferences, however, can be made from the absence of any mention in the law. Alternatively, a taxpayer may base the rate for taxable substances on 10% of the value of the import.20. Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. 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. It is unclear whether and how the statute means to differentiate a substance from an article, and if so, whether the IRS would apply the definition of article under the Toxic Substances Control Act (TSCA). Section 704.3. collaboration. Part 40regarding filing, deposits, and related procedural issues apply to companies subject to the reinstated Superfund excise taxes. Certain non-fuel and agricultural uses of some of these chemicals were exempted from the excise tax. msulayman@deloitte.com, Stephane Lunan Because of potential exemptions for butane and methane used as a fuel, taxpayers further down the supply chain need to be aware of the procedural issues aecting such chemicals. 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? 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. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. 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. corporations, For The tax law is included in the Infrastructure Investment and Jobs Act that was signed into law on November 15, 2021. The Superfund Excise Taxes will be reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. FAQs IRS announces Superfund chemical excise tax rates June 24, 2022 Download pdf (363.6 KB) The IRS today announced the prescribed tax rates for 121 taxable substances that are subject to the Superfund chemical excise tax imposed by section 4671 (a). 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. Quantity on a Quarterly basis on IRS Form 720, Quarterly Federal tax... 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