The taxes, which should go in effect on 1 July 2022, are estimated to raise approximately $14.45bn over a 10-year period 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 . 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. 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 901, for the initial list of substances that the Secretary has added to the list of taxable substances. These substances consist generally or partially of chemicals listed in Section 4661. Tax Managing Director There are other exemptions as welle.g., for substances that have a transitory presence during the smelting or refining process, or substances derived from coalbut the IRS has yet to issue specific guidance on procedures for claiming these exemptions, so the best recourse available at the moment is to keep documentation that supports the companys intention to take advantage of applicable exemptions. 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. These taxes were in place until 1995 to fund the Federal Hazardous Substance Superfund, but expired in 1995. 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. 4662(b)(1). It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. SaraBeth Smith 4672(a)(2)(B)(2021). The IRS has release additional information on the Superfund Excise Taxes on Chemicals. 3684 (Aug. 2, 2021). The tax directly . An importer of a taxable substance is subject to the section 4671 tax on the sale or use of the taxable substance on or after July 1, 2022. The rates are listed in IRS release IR-2022-133 (June 24, 2022). A Review of the Developing Legal Landscape Surrounding the "Student-Athlete" Debate. Analyzing Superfund Excise Tax calculations and reporting requirements based on a companys unique business scenario. Since the Superfund excise tax expired almost three decades ago, the industrial chemical communitys familiarity with their application is attenuated at best. See Section 4671(b)(2). The rationale for the fee collection point was so that the fee would be equally distributed among all hazardous waste generators and suppliers.6. November 24, 2021. Assisting with filing refund claims and reporting requirements around exemption certificates. It has been almost 30 years since the Superfund excise tax was in effect. 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. Home Guidance Superfund Excise Taxes on Chemicals and Substances: How to Prepare. The rate of excise tax per ton is based on the amount of each chemical included in the substance. Recent FTC Enforcement Action Merits Cyber Insurance Coverage Review, Two Ways to Redefine & Achieve CRM Success. 18I.R.S. accounting firms, For How do I calculate the section 4671 tax? 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. See Terms of Use for more information. For example, methane or butane used as a fuel, or nitric acid, sulfuric acid, ammonia, or methane used in production of fertilizer are exempt. L. 99-499, approved Oct. 17, 1986. Customer Reviews: Five-Star Enforcement and the Expanding Regulations. 4661 and the other applying solely to "any taxable substance sold or used" by importers pursuant to 26 U.S.C. Abusive Arbitrage Devices Its Time to Get Reacquainted (Episode 2 B&C Biobased and Sustainable Chemicals Practice Group Bergeson & Campbell, P.C. Section 4661 imposes a per-ton tax, ranging from $0.44 to $9.74 per ton on the following 42 chemicals: From 1987 through 1995, an excise tax also applied to the sale by the manufacturer, producer or importer of 42 specified chemicals. 52.4661-1 4662-4, 48 Fed. They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. Congress directed the IRS to publish a list of additional taxable substances by January 1, 2022, which was published by the IRS via IRS Notice 2021-66.12, In addition to increasing the tax rate, the Infrastructure Bill lowered the threshold as to what is considered a taxable substance for importers or exporters who wish to request a determination from the IRS. policy, Privacy DTTL and each of its member firms are legally separate and independent entities. The excise taxes are effective July 1, 2022. 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. environment open to Thomson Reuters customers only. A8. 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. Waters of the United States and Winston Churchill. Tax is due upon the first use or first sale of a listed chemical in the United States. Companies that import taxable chemicals or taxable substances will be liable for the excise tax. 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. Applicants for registration may call 859-320-4091 and select menu option #1. 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. 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. An official website of the United States Government. Technology/systems impacts More for Additionally, Form 6627, Environmental Taxes, was previously used to report the Superfund Excise Taxes when the taxes were last in effect, and this form will be used again to report the taxes owed. Chemicals. Chicago | 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. Section 704.3. 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. Substances. Some highlights on the petroleum products tax are as follows: Imposition of the Tax The information here is by no means comprehensive, but it does provide a basic understanding of the law and its implications for affected companies. Yes. The Reinstated Superfund Excise Taxes. 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. (added June 24, 2022), Q7. Expanded Employee Retention Credit (ERC) & how our professionals can assist you. In these cases, the other person would be liable for paying the excise tax, not the initial importer. See also section 4661(b) for the tax rate for taxable chemicals. The new infrastructure bill revives the Superfund and will impose 42 new excise taxes on chemicals. Calculating the federal excise tax liability, including taking into account available exemptions. Instead, Section 4671(b) provides that the amount of tax imposed with respect to any taxable substance is equal to the amount of tax that would have been imposed by Section 4661 on the taxable chemicals used as materials in the manufacture of the taxable substance, if such taxable chemicals had been sold in the United States for use in the manufacture or production of the taxable substance. No such update has been issued to date, however. 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. corporations. 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. Frequently Asked Questions: Superfund Chemical Excise Taxes. releases, Your To stay logged in, change your functional cookie settings. healthcare, More for A12. Tampa | Everyone loves infrastructure, but it pays to read the fine print. Deposit payments with the Electronic Federal Tax Payment System (EFTPS). Will Changes to the Option To Tax Regime Impact UK Insolvency Sales? (added June 24, 2022), Q5. Thomson Reuters/Tax & Accounting. 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. See section 4672(a)(1). on a wide range of chemicals and substances. The term "ton" is. 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? The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten-year effective . Excise taxes are reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. DTTL (also referred to as "Deloitte Global") does not provide services to clients. 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. 16I.R.C. Accordingly, these FAQs may not address any particular taxpayer's specific facts and circumstances, and they may be updated or modified upon further review. Assisting with risk analyses and internal processes (design or documentation). The content and links on www.NatLawReview.comare intended for general information purposes only. 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. Deloitte Tax The latest reiteration of the excise tax will be comprised of two separate taxes on (1) chemical sales and (2) chemical importers. Certain services may not be available to attest clients under the rules and regulations of public accounting. 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. Section 80201 of the bill would revive long-expired Superfund excise taxes at twice their previous level. The Superfund Excise Tax will go back into effect on July 1 st, 2022, after not being in place for over 26 years. 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 organic chemicals are derived from petrochemical feedstocks. The Superfund Amendments and Reauthorization Act of 1986 was enacted as Pub. slunan@deloitte.com, Christina Gong Are semimonthly deposits required? The JCT estimated that the proposal would increase revenues by approximately $38.4 billion over a 10-year period. These FAQs were announced in IR-2022-131. (added June 24, 2022), Q8. Find the tax rates for 121 taxable substances. 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. 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. The Superfund tax on chemicals is also a tax on the import of taxable substances. The Superfund excise taxes are part of Subtitle D, Chapter 38 of the Tax Code. of products and services. At what point in a transaction do the new taxes kick in? Taxpayers must make semimonthly deposits of the Superfund chemical excise taxes. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. 4672(a)(2)(B)(1995). Notice 89-61provided guidance under the previously applicable Superfund excise tax. 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