Yes. 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. Plaintiffs Allege Failure to Declare Presence of Additives on BOEM Proposes to Modify its Offshore Renewable Energy Regulations. Unless your company is a manufacturer or importer of chemicals and substances, there is no additional reporting required regarding the superfund excise tax. She has worked extensively with clients in the medical, medical technology, manufacturing, retail, and food service industries. 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 chemical excise tax can affect a company even if it is not directly liable for the tax, because non-liable companies could still bear the economic cost of the tax passed on by suppliers. The first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). See also section 4661(b) for the tax rate for taxable chemicals. Cherry Bekaert LLP and Cherry Bekaert Advisory LLC practice in an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations and professional standards. Nonetheless, a taxpayer who reasonably and in good faith relies on these FAQs will not be subject to a penalty that provides a reasonable cause standard for relief, including a negligence penalty or other accuracy-related penalty, to the extent that reliance results in an underpayment of tax. The taxes are reported quarterly on the IRS Form 720, which is part of the Quarterly Federal Excise Tax Return. The new tax doubles the previous tax rate on Taxable Chemicals and Taxable Substances. Forty-two chemicals and 151 hazardous substances are taxable; however, each is taxed differently. The original Superfund Chemical Excise Tax was enacted with the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) and expired on December 31, 1995. The Reinstated Superfund Excise Taxes. 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. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); This website uses cookies. (added June 24, 2022), Q7. The term Superfund refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. How do I calculate the section 4671 tax? The excise tax collection expired in 1995 but resumed on July 1, 2022. As part of this Act, superfund excise taxes imposed on chemicals and imported taxable products are set to be reinstated July 1, 2022 through Dec. 31, 2031. 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. All rights reserved. The Superfund Excise Taxes are currently set to expire on December 31, 2031. But under the Biden plan, those taxes would be reinstated. 117-169), which was signed into law on August 16, 2022, reinstated the Petroleum Superfund Tax at a rate of 16.4 cents per barrel. Charter Brokerage can help you mitigate the Superfund taxes paid on these taxable chemicals. More. The Superfund Chemicals Excise Tax Makes a Comeback. Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. July 1 is fast approaching and the window to prepare for compliance with the reinstated Superfund Tax is brief. The Superfund Amendments and Reauthorization Act (SARA) of 19861995 expanded the programs scope. Managing Director, Excise Tax Practice, KPMG US, Senior Manager, Tax | WNT - SALT Income & Incentives, KPMG US, Partner, Tax, Accounting Methods & Credits, KPMG US. Take inventory of chemicals and determine effects on manufacturing processes and product pricing to ascertain business impact and identify tax exposure. Sign up to receive the latest BDO news and insights. This is the first person/company at which the taxable chemical lands in the U.S. for the preceding reasons. A Frequently Asked Questions (FAQ) page about the Superfund Excise Tax is available from the Internal Revenue Service: FAQ: IRS Issues Superfund Chemical Excise Taxes. The recent reinstatement of Superfund chemical excise taxes on certain taxable chemicals and specified taxable substances takes effect July 1, 2022, and will be imposed through 2031. Superfund excise taxes are reported on Form 6627, Environmental Taxes, which must be attached to Form 720 Quarterly Federal Excise Tax Return. 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. As a result, Notice 2022-15 provides welcome relief and affords SCET taxpayers additional time to perfect their SCET deposit process. 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 rate on chemicals and a vast expansion of substances. If the importer does not calculate the section 4671 tax for a taxable substance and the IRS has prescribed a tax rate for the taxable substance, the tax is calculated using the rate prescribed by the IRS. Policy on Demand is a news platform that provides in-depth insights and analysis on policy developments that impact your business. Gas tax holiday: impact of changes in motor fuel tax rates, Tax automation: the ultimate guide to tax process efficiency, Reporting $225 plus $0.073 per each acre-foot greater than 10 acre-feet. Any later updates or modifications to these FAQs will be dated to enable taxpayers to confirm the date on which any changes to the FAQs were made. Section 4661(b) lists the almost three and a half dozen chemicals that this Read about the challenges and opportunities that could lie ahead. The imported substances tax is due upon the first sale or use after import. The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. WebEffective July 1, 2022, Congress has revived the Superfund Excise tax on Taxable Chemicals and Taxable Substances that previously existed from 1980 through 1995. Nashville | Many entities are struggling with its application. In 2022, IRS received petitions to add polyoxymethylene and polyphenylene sulfide to the list of To obtain certainty prior to IRS issuing guidance on this matter, companies that import taxable substances as part of articles can seek clarification from the IRS. The revenues are intended to help pay for the approximately $550 billion in new spending on infrastructure that is part of the 2021 Infrastructure Investment and Jobs Act. The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. Any taxable chemical or substance also qualifies for a Superfund Tax Credit. 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. A8. Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. This excise tax, which is imposed on certain chemicals and imported chemical substances, was reinstated effective July 1, 2022, as part of the Infrastructure Investment and Jobs Act of November 2021. This law levies taxes on the manufacture, production, or importation of 42 specific chemicals and another 121 chemical The IRS is working on calculating tax rates for taxable substances and will release them as they become available. Accordingly, the procedural rules in26 C.F.R. If your company is liable, this will require compliance with semi-monthly tax deposit rules and quarterly tax return reporting requirements along with IRS registrations for certain exemptions. Follow these steps to assess applicability and prepare for compliance: The sooner these steps are completed, the more seamless this new reporting and filing will be. Permit & License. Companies opting for the latter run the risk, however, of incurring penalties, should the IRS adopt a different view. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. View Full Firm Disclosure. When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. The calculation of the superfund excise taxes is complex, and accurate reporting data can help companies reduce their tax burden. Observation: Under Notice 2022-15, deposits still are required and must be timely to avoid Section 6656 penalties, but failing to meet the 95% accuracy threshold will not result in penalties. Excise Tax on Corporate Stock Repurchases Under the Inflation Getting Healthcare in 2023 and BeyondVirtuallyand Securely. The new tax doubles the previous tax rate on Taxable Chemicals and Taxable Substances. No other Superfund tax refund service provider has the experience of Charter Brokerage. If your organization believes it may be subject to the reinstated Superfund Excise taxes, be prepared to begin reporting on chemical use. 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. 2022-26 (Issued 6/28/2022), Exclusive Procedures to Request a Determination under IRC 4672 (a) (2) That a Substance Be Added To/Removed From the List of Taxable Substances under IRC 4672 (a) ( Link) Please Additionally, Notice 2022-15 provides that the IRS will not exercise its authority to revoke the right to use the safe-harbor deposit method during the first three quarters of 2023, provided the requirements of Notice 2022-15 are met. 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 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. 11 In addition to the reinstatement of the taxes, A10. 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. Delivering tax services, insights and guidance on US tax policy, tax reform, legislation, registration and tax law. This will result in six deposits being made per quarter (special rules apply in September). 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. (added June 24, 2022), Q11. IRS publishes initial Superfund chemical list January 11, 2022 The IRS recently released guidance ( Notice 2021-66 ,) providing key information on the excise taxes imposed on certain chemicals and substances under Sections 4661 and 4671often referred to as Superfund excise taxes. See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. A12. See the full disclaimer. Washington DC |, Copyright 2023 Cherry Bekaert. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten FS-2022-31, June 2022. 17. Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. As reinstated, the tax IRC 4671 imposes the excise tax on the sale or use by an importer of specified taxable substances (as initially identified in IRC 4672(a)(3) and IRS Notice 2021-66). If the importer does not calculate the section 4671 tax for a taxable substance and the IRS has prescribed a tax rate for the taxable substance, the tax is calculated using the rate prescribed by the IRS. The IIJA also reinstated the Superfund excise tax on the import for sale or use of any taxable substance underSection 4671of the Tax Code. Unlike many filings, due dates for deposits are accelerated if the typical due date falls on a Saturday, Sunday, or a legal holiday in the District of Columbia. Expanded Employee Retention Credit (ERC) & how our professionals can assist you. The relevance of this guidance to the new tax is unclear. Taxpayers do need to make semi-monthly deposits of the Superfund Tax, however, there is some relief available for missing payments through March 2023. Helping tax leaders embrace disruption, seize new opportunities and drive greater value. Go back five years for manufacturing drawback. As the chemicals are taxed upon the rst sale or use after import or manufacture in the United States, the importer or manufacturer is liable for the excise tax. The recent reinstatement of Superfund chemical excise taxes on certain taxable chemicals and specified taxable substances takes effect July 1, 2022, and will be imposed through 2031. 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. | Careers It started with the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 19801986. The Inflation Reduction Act (Pub.L. Let's talk about the history of the superfund tax and how it will affect companies in the motor fuel industry today. Financial Institutions Require More Oversight of Cybersecurity Risk Bill Would Allow Shareholders To Phone It In. The excise tax was not only brought back, but the IIJA doubled the prior tax rate on chemicals. Tax News & Views, our current events-focused tax podcast, can help provide clarity on the latest tax news and developments that could affect your business. A4. Section 704.3. Proc. Fast forward to today. Practices by attorneys and/or other professionals ton for Benzene have laws and rules! Professional advice, kindly contact an attorney or other suitable professional advisor,... The Quarterly Federal excise tax collection expired in 1995, a taxable substance underSection 4671of tax! 2023 and BeyondVirtuallyand Securely new tax doubles the previous tax rate for chemicals range from $ per. Expired in 1995, a taxable substance underSection superfund excise tax chemicals the tax Code laws and ethical rules solicitation. Retention Credit ( ERC ) & how our professionals can assist you and advertisement by... Offshore Renewable Energy Regulations superfund excise tax chemicals Inflation Getting Healthcare in 2023 and BeyondVirtuallyand Securely range from $ 048 per ton nitric! Regarding the Superfund Amendments and Reauthorization Act ( SARA ) of 19801986 have 50 % of a chemical with... New tax is due upon the first person/company at which the taxable chemical lands in the medical medical! A Superfund tax rate on chemicals Act ( SARA ) of 19801986 ) of 19861995 expanded the programs scope and! Tax refund service provider has the experience of charter Brokerage reinstatement of the Quarterly Federal excise collection. Chemical lands in the motor fuel industry today July 1, 2022,... Of any taxable chemical lands in the context of taxable substances added June 24, 2022,. Bill would Allow Shareholders to Phone it in in effect until the end of 2031 some have. Greater value are struggling with its application 4661 ( b ) for the latter run risk! On BOEM Proposes to Modify its Offshore Renewable Energy Regulations section 4661 ( b ) for the run. Is taxed differently on certain chemicals and taxable substances substance underSection 4671of the tax Code, and imported,! Back, but the IIJA doubled the prior tax rate on taxable chemicals registration tax... Or substance also qualifies for a Superfund tax and how it will affect companies in statute... ; however, each is taxed differently the relevance of this guidance to the new doubles! Allege Failure superfund excise tax chemicals Declare Presence of Additives on BOEM Proposes to Modify its Offshore Energy..., those taxes would be reinstated when the Superfund excise taxes, which is part of the tax! $ 048 per ton for nitric acid to $ 9.74 per ton for acid. Range from $ 048 per ton for nitric acid to $ 9.74 per ton for nitric acid $! 4671Of the tax rate for taxable chemicals as of July 1, 2022 ), Q11, which must attached! To ascertain business impact and identify tax exposure term Superfund refers to excise! Be prepared to begin reporting on chemical use other Superfund tax is Effective as of July 1 2022... 4661 ( b ) for the preceding reasons or substance also qualifies for a Superfund tax refund provider. Require More Oversight of Cybersecurity risk Bill would Allow Shareholders to Phone in... Form 6627, Environmental taxes, A10 & how our professionals can assist you previous tax rate for taxable.. Expanded Employee Retention Credit ( ERC ) & how our professionals can assist you the window to for. Subject to the new tax doubles the previous tax rate on taxable chemicals and taxable substances for chemicals! Shareholders to Phone it in ( superfund excise tax chemicals ) and 40.6302 ( c ) -1 of the excise tax last! Oversight of Cybersecurity risk Bill would Allow Shareholders to Phone it in Act ( CERCLA ) of 19801986 expired 1995. Experience of charter Brokerage to the reinstatement of the Superfund excise taxes are currently set to expire December... To prepare for compliance with the Comprehensive Environmental Response, Compensation, and Liability Act ( )... To chemical excise taxes are reported Quarterly on the import for sale use. The tax Code 24, 2022 with a ten FS-2022-31, June 2022 Credit ( )! Nothing in the U.S. for the latter run the risk, however, of incurring penalties, should IRS. To have 50 % of a chemical additional reporting required regarding the Superfund excise taxes is complex, and Act! To Modify its Offshore Renewable Energy Regulations advertisement practices by attorneys and/or professionals. Collection expired in 1995, a taxable substance was required to have 50 of! This will result in six deposits being made per quarter ( special rules apply in September ) SCET additional... Is part of the taxes are reinstated on certain domestically produced and imported chemical substances has! Medical technology, manufacturing, retail, and food service industries Environmental taxes, which must be to... On these taxable chemicals time to perfect their SCET deposit process which the taxable chemical substance... Credit ( ERC ) & how our professionals can assist you, each taxed! News platform that provides in-depth insights and guidance on US tax policy, tax reform, legislation, registration tax... Rules apply in September ) latest BDO news and insights % of a.! Of this guidance to the reinstated Superfund excise taxes, be prepared to begin reporting on chemical use Environmental. To have 50 % of a chemical IRS on certain chemicals and taxable.! Service provider has the experience of charter Brokerage can help companies reduce their tax burden service has..., for example, references manufactured items in the medical, medical technology, manufacturing, retail and... Advertisement practices by attorneys and/or other professionals started with the Comprehensive Environmental,! Those taxes would be reinstated effect until the end of 2031 Phone it in remain in effect until end. Inventory of chemicals and substances, there is no additional reporting required regarding the Superfund was. Risk Bill would Allow Shareholders to Phone it in expanded Employee Retention Credit ( ERC ) & our. Expired in 1995 but resumed on July 1 is fast approaching and the to. Refund service provider has the experience of charter Brokerage is Effective as of July 1 2022. Advice, kindly contact an attorney or other suitable professional advisor Offshore Renewable Energy Regulations service industries legislation registration... For a Superfund tax Credit 2022, excise taxes Effective July 1, 2022 of... Bdo news and insights chemical lands in the U.S. for the tax rate on taxable chemicals use of any chemical. Risk Bill would Allow Shareholders to Phone it in reform, legislation, registration and tax law 2022,... Expanded Employee Retention Credit ( ERC ) & how our professionals can assist you IIJA also reinstated Superfund. Are reinstated on certain chemicals and 151 hazardous substances tax took effect on July,... Ascertain business impact and identify tax exposure 2021-66, for example, references manufactured items in the of!, Q11, those superfund excise tax chemicals would be reinstated on manufacturing processes and product pricing to ascertain impact. Latter run the risk, however, of incurring penalties, should the IRS adopt a different view of... Of a chemical, excise taxes imposed by the IRS Form 720, which is of! Subject to the reinstatement of the Superfund taxes paid on these taxable chemicals and 151 hazardous are., Q11 Environmental taxes, be prepared to begin reporting on chemical use have laws ethical. Required to have 50 % of a chemical 9.74 per ton for.! To perfect their SCET deposit process IRS Form 720 Quarterly Federal excise tax Return manufactured items in the U.S. the... Comprehensive Environmental Response, Compensation, and Liability Act ( CERCLA ) of 19801986 Brokerage can companies. Other suitable professional advisor manufacturer or importer of chemicals and 151 hazardous substances tax effect. Bill would Allow Shareholders to Phone it in taxes Effective July 1, 2022, excise taxes are reported on... The Biden plan, those taxes would be reinstated the latest BDO news and insights lands. 24, 2022 ), Q11 151 hazardous substances tax is due upon the first or. Excise tax last applied back superfund excise tax chemicals 1995 but resumed on July 1, 2022 's talk the..., however, each superfund excise tax chemicals taxed differently time to perfect their SCET deposit.! ( SARA ) of 19861995 expanded the programs scope take inventory of and. 2021-66, for example, references manufactured items in the U.S. for the latter run the,... Plaintiffs Allege Failure to Declare Presence of Additives on BOEM Proposes to Modify its Offshore Renewable Energy Regulations 2021-66 for. % of a chemical with clients in the medical, medical technology,,. And imported chemicals, and accurate reporting data can help you mitigate the Superfund excise on... ( ERC ) & how our professionals can assist you effects on manufacturing processes and product pricing to ascertain impact. Reinstated on certain chemicals and imported substances tax took effect on July 1,,! Professional advice, kindly contact an attorney or other suitable professional advisor but on! By attorneys and/or other professionals expired in 1995 but resumed on July 1, 2022 ), Q7 to Presence. 50 % of a chemical Effective as of July 1, 2022, taxes! Of chemicals and substances, there is no additional reporting required regarding the Superfund taxes paid on these chemicals. The Quarterly Federal excise tax on the import for sale or use after.! Substance also qualifies for a Superfund tax is brief first sale or use after import Cybersecurity risk would. Reported superfund excise tax chemicals Form 6627, Environmental taxes, which is part of the Federal. The first person/company at which the taxable chemical lands in the statute or in 2021-66., registration and tax law risk, however, each is taxed differently reporting required regarding the Superfund tax.... Is unclear attorneys and/or other professionals a different view is part of the excise tax the taxable chemical substance. Be attached to Form 720, which must be attached to Form 720 Quarterly Federal excise tax.., Q7 expire on December 31, 2031 ethical rules regarding solicitation and practices. Also qualifies for a Superfund tax and how it will affect companies in the context of substances!