View Full Firm Disclosure. This effectively doubled the tax rate of the imported taxable substances as well, and the Infrastructure Bill further increased the alternative method of calculation of the taxable substances to 10% the value of import. They were reinstated by section 80201(c)(3) of the Infrastructure Investment and Jobs Act (Public Law 117-58, 135 Stat. The initial list of 50 taxable substances is found in IRC 4672(a)(3). A5. Therefore, a chemical substance could qualify as a taxable substance if taxable chemicals listed in IRC section 4662 constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce such substance.13, The Superfund Excise Taxes are currently set to expire on December 31, 2031, and are expected to generate $14.4 billion of revenue (or approximately $1.2 billion annually).14, IRC section 4661(b) lists 42 chemicals, identified in Exhibit A. (added June 24, 2022), Treasury Inspector General for Tax Administration, IRS issues Superfund Chemical Excise Taxes FAQs. Try our solution finder tool for a tailored set Are there any available exemptions for the Superfund Chemical Excise Taxes? The specified. Calculate the rate based on the percentage amount of each listed chemical included in the substance. After more than 25 years, two excise taxes on chemicals and imported hazardous substances were reinstated in the Infrastructure Investment and Jobs Act (Pub. The tax may be passed along to customers. Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. Tax Partner Excise taxes are reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. accounting firms, For Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). 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 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. The Superfund Excise Taxes will be reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. The Superfund is a federal excise tax on various hazardous chemicals. The Superfund Amendments and Reauthorization Act of 1986 was enacted as Pub. 4671(b). Superfund tax on chemicals. When is the first return due? corporations, For An official website of the United States Government. Suite. Reminder: High-Earning Exempt Professionals Must Be Paid a "True Gold Dome Report Legislative Day 24 (2023). The tax expired under its terms in the mid-1990s but has now been reinstated. Please see links for details: Learn more about Superfund Excise Tax changes effective July 1, 2022, including key considerations for dealings with the reinstated Superfund Tax on chemicals and substances. Companies are likely to be caught off guard by this reinstated tax. discount pricing. (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. See section 4671(b)(1). For purposes of claiming refunds under section 4662(e) for section 4661 tax paid on chemicals used in the production of an exported substance, in the case of a petition of an importer or exporter (i) that is filed and accepted by the Secretary before January 1, 2023, (ii) that seeks to add the substance to the list of taxable substances, and (iii) based on which the Secretary adds the substance to the list of taxable substances, both the filing date of the petition and the date the substance is added to the list of taxable substances will be deemed to be July 1, 2022. Customer Reviews: Five-Star Enforcement and the Expanding Regulations. 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. All organic chemicals are derived from petrochemical feedstocks. Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. Yes. chrigong@deloitte.com. In our experience, it generally takes at least three months to fully implement and test a new business process and system implementation. Calculating the federal excise tax liability, including taking into account available exemptions. 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. 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). (a) General rule There is hereby imposed a tax on any taxable chemical sold by the manufacturer, producer, or importer thereof. President Joe Biden called for reinstating the Superfund taxes as part of his $2 trillion infrastructure proposal . What do companies need to do in order to prepare for these taxes? 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. In Notice 2021-66 the IRS published a list of 100 additional substances subject to the Superfund Tax. governments, Explore our Are semimonthly deposits required? Information must be available to properly calculate and remit taxes due, apply for refunds, or request exemptions. Service. L. 99-499, 42 U.S.C. 429 (2021)), effective July 1, 2022, with modifications to the applicable rates of tax and other provisions related to those taxes. 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. No such update has been issued to date, however. 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. Since its reinstatement, the excise tax has raised many questions and caused significant industry consternation. 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. 9601-9675 (2021). 4Id. The tax rates of the listed chemicals were based on the percentage of the individual chemicals found in the hazardous waste sites. Importers On November 15, 2021, President Biden signed into law the Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. Analyzing Superfund Excise Tax calculations and reporting requirements based on a companys unique business scenario. The Superfund chemical excise taxes previously expired on December 31, 1995. IT and tax departments in particular will need to collect transactional data all along the supply chain, as well any applicable master data. Some highlights on the petroleum products tax are as follows: Imposition of the Tax Taxpayers must make semimonthly deposits of the Superfund chemical excise taxes. (added June 24, 2022), Q15. 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. Form 6627 must be filed alongside Form 720 on a quarterly basis. 13I.R.C. Friday Development: New Sanctions and Export Controls to Address Weekly IRS Roundup February 20 February 24, 2023, Everything to Know About Unbundled Legal Services. *Note: Self-assessing based on 10% of appraisal value will almost always yield a higher tax rate than either of the other methods. IT'S HAPPENING! 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. Heavy metals, halogens, acids, and bases are significant raw materials for many toxic inorganics.) Social login not available on Microsoft Edge browser at this time. tax, Accounting & 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. 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. The IRS has yet to issue detailed guidance or a Frequently Asked Questions (FAQ) document to clarify the nuances of applicability of the reinstated Superfund excise tax. 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. 12I.R.S. 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 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. Tax Managing Director 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. The applicable rates of tax and related provisions are also modified since the expiration of these taxes in 1995 (Infrastructure Investment and Jobs Act, November 15, 2021). Products & 4662(e). 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. The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. For instance, necessary data elements may not be available to properly identify the taxable chemicals and components. Houston | 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. Exceptional organizations are led by a purpose. What happens if an importer does not calculate the section 4671 tax? How do I calculate the section 4671 tax? Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of 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. A list of taxable chemical substances and procedures for the reinstated Superfund chemical taxes are in Notice 2021-66. 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). The Basics of Californias Outside Salesperson Exemption. 4672(a)(2)(B)(1995). How Modern Manufacturing Plants Can Protect Against Ransomware, FTC Will Host May 23, 2023, Workshop on Recyclable Claims and the Appellate Court Affirmed An Order Denying A Beneficiarys Request For An Overview of Why Class Action Privacy Lawsuits May Have Just Gotten Gold Dome Report Legislative Day 26 (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. The Superfund Excise Tax will go back into effect on July 1 st, 2022, after not being in place for over 26 years. 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