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. Excise Tax on Select Chemicals. 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. 17Prop. For example, methane or butane used as a fuel, or nitric acid, sulfuric acid, ammonia, or methane used in production of fertilizer are exempt. . Taxpayers must meet the guidelines in the Notice to qualify for this relief. msulayman@deloitte.com, Stephane Lunan Are there any available exemptions for the Superfund Chemical Excise Taxes? Taxable substances are defined inSection 4672as any substance that, at the time of sale or use by the importer, is listed as a taxable substance. Inferences, however, can be made from the absence of any mention in the law. At the time of publication of these FAQs, 151 substances are listed as taxable substances. The IRS has release additional information on the Superfund Excise Taxes on Chemicals. Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. How does a company report the Superfund Chemical Excise Tax? The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. (a) General rule There is hereby imposed a tax on any taxable chemical sold by the manufacturer, producer, or importer thereof. 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. Audit & The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. 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 Infrastructure Investment and Jobs Act, which President Biden signed into law on November 15, 2021, reinstates Superfund excise taxes on the sale and import of certain chemicals as part of the law's revenue raising provisions. In addition, exporters of chemicals and substances which were subject to the Superfund Tax can request a refund of the tax previously paid. This Week in 340B: February 21 27, 2023. The following is an FAQ to help companies get up to speed on what the Superfund Chemical Excise Taxes will require of them. 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. 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. Background To accomplish this, the current system capability should be assessed. Between 1990 and 1995, dozens of taxpayers petitioned the IRS to determine whether different chemical substances wouldqualify as taxable substances, primarily for purposes of export, so as to qualify for an exemption or refund. 4661 and the other applying solely to "any taxable substance sold or used" by importers pursuant to 26 U.S.C. 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 Superfund Chemicals tax previously expired in 1995. 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. statement, 2019 Taxpayers should be proactive and carefully analyze and consider the potential tax liabilities, tax reporting requirements, and systems impacts as a result. 10I.R.C. The taxes apply only to imported chemicals or substances, not those for export. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. Chicago | Corporate 21See I.R.C. Are semimonthly deposits required? Is there a way to check the status of an application for Activity Letter G registration? 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 tax expired under its terms in the mid-1990s but has now been reinstated. 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. releases, Your See also I.R.C. 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. 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. (added June 24, 2022), Q4. 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. Updated procedural guidance on how to request the determination has not yet been published by the IRS as of the date of this article. management, Document Consider the action items above, particularly the last one, making sure the information systems are in place to capture the data needed to comply with this tax. Get the insight and tools you need to fully understand and comply with changes resulting from this major tax reform. Tax Managing Director See section 4672(a)(1). The Revenue Reconciliation Act of 1990 further extended the Superfund Excise Taxes through December 31, 1995, after which point the Superfund Excise Taxes expired. Statement in compliance with Texas Rules of Professional Conduct. The Carter administration established the Superfund in 1980 to offset the high price tags associated with remediating uncontrolled or abandoned hazardous waste sites. 9601-9675 (2021). There are three ways to arrive at a tax determination for the Superfund Tax: 2. Abusive Arbitrage Devices Its Time to Get Reacquainted (Episode 2 B&C Biobased and Sustainable Chemicals Practice Group Bergeson & Campbell, P.C. Since its reinstatement, the excise tax has raised many questions and caused significant industry consternation. 9See I.R.C. media, Press Federal excise tax rates remain at $0.183/gal for gasoline and $0.243/gal for diesel fuel. Sec. 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. Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). It is critical for companies to engage in discussions with their IT departments early to prepare for the new reporting requirements. The tax may be passed along to customers. While the majority of the listed chemicals are taxable by the manufacturer or importer upon the rst sale or use, butane and methane only become taxable upon the rst use other than as a fuel. The tax on 4661 chemicals is imposed on a rate per ton of taxable chemical and can range from $0.44 to $9.74 per ton. On November 15, 2021, President Biden signed into law the Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. 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. Social login not available on Microsoft Edge browser at this time. 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 . Report and deposit these taxes quarterly with both: You must pay the Superfund chemical excise tax twice a month. A1. Deloitte Tax 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. | Privacy Policy Read our analysis and reports on the landmark Supreme Court sales tax case, and learn how it impacts your clients and/or business. Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661 (b). 429. 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 Superfund Excise Tax is not permanent and . Alternatively, a taxpayer may base the rate for taxable substances on 10% of the value of the import.20. Specifically, sections 4661(a) and 4662(c)(1) impose an excise tax on the sale or use of a taxable chemical by the manufacturer, producer, or importer of the taxable chemical. Helping businesses navigate financial due diligence engagements and domestic and cross-border transactions. These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. 19I.R.C. Deposit payments with the Electronic Federal Tax Payment System (EFTPS). The Basics of Californias Outside Salesperson Exemption. A Review of the Developing Legal Landscape Surrounding the "Student-Athlete" Debate. Deloitte Tax Yes. The tax directly . 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. Reg. 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. The Superfund is a federal excise tax on various hazardous chemicals. Semi-monthly payments should be made by the 15 th and 30 th of each month, but the IRS is providing relief from penalties for non-payment up through the first quarter of 2023. 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. The rate of excise tax per ton is based on the amount of each chemical included in the substance. November 24, 2021. governments, Explore our 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. 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. The Infrastructure Investment and Jobs Act, section 80201, reinstates the excise taxes imposed on certain chemical substances by sections 4661 and 4671, effective July 1, 2022. A2. The Superfund chemical excise taxes previously expired on December 31, 1995. Try our solution finder tool for a tailored set Orlando | Comprehensive There are two separate Superfund chemical excise taxes: a tax on the sale or use of "taxable chemicals" under section 4661 of the Internal Revenue Code and a tax on the sale or use of imported "taxable substances" under section 4671 (all section references are to the Internal Revenue Code unless otherwise stated). Boston | Expanded Employee Retention Credit (ERC) & how our professionals can assist you. 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. (added June 24, 2022), Q12. 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. 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 . corporations. Deloitte Tax Recent FTC Enforcement Action Merits Cyber Insurance Coverage Review, Two Ways to Redefine & Achieve CRM Success. This current iteration is set to expire on December 31, 2031. 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). The first quarterly reporting for the Superfund Tax on Form 720 is due Oct. 31, 2022. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. Excise taxes are reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. Tax is due upon the first use or first sale of a listed chemical in the United States. The excise tax applies to companies that manufacture, produce, or import any of the 42 specific chemicals listed inSection 4661of the Tax Code, most of them common in consumer products, including ammonia, butane, benzene, and mercury. Thomson Reuters/Tax & Accounting. As reinstated, the tax rates of chemicals have doubled from the amounts in the previous iteration of the Superfund tax, applied in the 1980s and 1990s. Nota Bene Episode 160: European Update: Oliver Heinisch and Scott Federal Communications Commission to Consider Rules and Proposals to Whats the Standard? Hampton Roads | Chemical manufacturers and importers 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. Tax Senior Manager 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 . 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. Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. This box/component contains JavaScript that is needed on this page. Atlanta | 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. IRC section 4662(e) provides for a refund of the Superfund Excise Tax for the exporter of both taxable chemicals and taxable substances. To the Superfund chemical excise tax IRS is expected to issue guidance prior to theJuly 1 2022. System capability should be assessed taxes will require of them are there any available exemptions the! 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