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. Assisting with filing the federal excise tax returns and semi-monthly deposit reporting. 4Id. Boston | At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. As reinstated, the Superfund excise tax will apply to a list of taxable chemicals and taxable substances, as ofJuly 1, 2022,throughDecember 31, 2031, if not extended. The Superfund is a federal excise tax on various hazardous chemicals. . 96-125 at 14878 (1979). Accordingly, these FAQs may not address any particular taxpayer's specific facts and circumstances, and they may be updated or modified upon further review. Everyone loves infrastructure, but it pays to read the fine print. As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. Arizona Gets to Keep Its State-Operated Workplace Safety and Health Manufacturers Legal Considerations for Staffing Reductions, PCAOB Enforcement Activity Up Sharply in 2022. SaraBeth Smith The law imposes a tax on any taxable chemical sold by the manufacturer, producer, or importer. The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. 7Superfund Amendments and Reauthorization Act of 1986, Pub. Until then, companies may take the IRS previous position as an indication of how it is likely to view articles and fabricated products under the current Superfund excise tax. The Superfund Excise Tax will go back into effect on July 1 st, 2022, after not being in place for over 26 years. 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. To stay logged in, change your functional cookie settings. A12. 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. Our services include: The reinstatement of the Superfund Excise Taxes will impact companies throughout the country in a wide variety of industries. Substances. 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. 4671. At the time of publication of these FAQs, 151 substances are listed as taxable substances. This would be for the periodJuly 1-September 30, 2022. 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. 52.4661-1 4662-4, 48 Fed. All Rights Reserved. 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. There are 42 chemicals listed in section 4661(b). ADVANCED! A8. L. 117-58), effective July 1, 2022. The IIJA also reinstated the Superfund excise tax on the import for sale or use of any taxable substance underSection 4671of the Tax Code. Download pdf (1.5 MB) The IRS today released an advance version of Notice 2021-66 regarding the reinstated excise taxes imposed on certain chemicals and substances under sections 4661 and 4671 (often referred to as "Superfund" excise taxes). The Infrastructure Bill lowers the thresholdfor a chemical substance to meet the definition of taxable substance, thus more imports may be subject to this tax. A taxable substance is defined as a substance that contains 20% or more by weight or value of any one of the chemicals listed in Section 4661 (down from 50% in the previous iteration of the law). 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. That number will likely change as substances are added to or removed from the list of taxable substances pursuant to section 4672(a)(2) or (4). Tax Senior Manager Companies are likely to be caught off guard by this reinstated tax. Are there any available exemptions for the Superfund Chemical Excise Taxes? Atlanta | technology solutions for global tax compliance and decision 1Investment and Jobs Act, Pub. The Superfund Excise Taxes will be reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. The Carter administration established the Superfund in 1980 to offset the high price tags associated with remediating uncontrolled or abandoned hazardous waste sites. Augusta | Corporate 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. financial reporting, Global trade & How do you calculate the Superfund Excise Tax? If you would ike to contact us via email please click here. and services for tax and accounting professionals. shipping, and returns, Cookie This could create a potential liability for downstream users such that the rst company that uses the methane or butane in a manner other than as a fuel will have to report and remit the Superfund Tax. This law levies taxes on the manufacture, production, or importation of 42 specific chemicals and another 121 chemical substances. Under certain state laws the following statements may be required on this website and we have included them in order to be in full compliance with these rules. FAQs Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. The section 4661 tax is imposed as a rate per ton of a taxable chemical. 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. Notice 89-61provided guidance under the previously applicable Superfund excise tax. 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. Form 6627, Environmental Taxes, previously used to report the Superfund Tax, will likely be used again to report the tax owed. 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. (added June 24, 2022), Q8. How do I calculate the section 4671 tax? 4662(b)(1). 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 tax may be passed along to customers. 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. 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. 20I.R.C. statement, 2019 Hydrocarbon streams containing mixtures of organic taxable chemicals. Federal excise tax rates remain at $0.183/gal for gasoline and $0.243/gal for diesel fuel. It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. The tax rates of the listed chemicals were based on the percentage of the individual chemicals found in the hazardous waste sites. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. Accordingly, the chemicals are taxed upon the first sale or use after import or manufacture in the United States, and the importer or manufacturer is liable for the excise tax, which it may pass along to its customers.22. Notice 2021-66 suspended the procedure in Notice 89-61 because the IRS plans to issue a more current guidance on this matter. 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. 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. Taxpayers must make semimonthly deposits of the Superfund chemical excise taxes. Self-assess the rate based on 10% of the appraisal value of the imported substances.*. The statute provides an initial list of 50 taxable substances and instructs the IRS to add any substance in which taxable chemicals constitute more than 20% of the weight or value. President Joe Biden called for reinstating the Superfund taxes as part of his $2 trillion infrastructure proposal . On November 15, 2021, President Biden signed into law theInfrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. (added June 24, 2022), Q10. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. The tax law is included in the Infrastructure Investment and Jobs Act that was signed into law on November 15, 2021. Chemical manufacturers and importers The Infrastructure Act essentially doubles these rates with taxes ranging from $0.44 per ton to $9.74 per ton. 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. The taxes are set to be reinstated beginning on July 1, 2022. firms, CS Professional A substance is listed as a taxable substance if it is listed under section 4672(a)(3), or if the Secretary of the Treasury or her delegate (Secretary) has added it to the list of taxable substances pursuant to section 4672(a)(2) or (4). Prior to 1996, the rates of tax on those chemicals ranged from $0.22 per ton to $4.87 per ton. Tax is due upon the first use or first sale of a listed chemical in the United States. We provide an overview of the origins of the Superfund Excise Tax and take a closer look at the revitalized tax (effective July 1, 2022), as included within the Infrastructure Investment and Jobs Act (the The Infrastructure Bill), signed into law on November 15, 2021.1 Through this lens, we highlight issues to consider in evaluating the Superfund tax on chemicals and chemical substances. The rationale for the fee collection point was so that the fee would be equally distributed among all hazardous waste generators and suppliers.6. How does a company report the Superfund Chemical Excise Tax? For chemicals, the taxable event is the sale or use by the manufacturer, producer, or importer of the chemical, and the tax is due in the U.S. upon the first use or sale. Chemicals. 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. This assessment should include a review of the transaction life cycle, master data setup, cost computation and recognition, and general entry posting. Analyzing transactional and master data gaps given existing company system capability and data quality. of products and services. For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. These substances consist generally or partially of chemicals listed in Section 4661. These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. Please see www.deloitte.com/about to learn more about our global network of member firms. 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. Matt Levin Jul 2, 2021. 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. This Week in 340B: February 21 27, 2023. The IIJA reinstates the two taxes with several modifications. What is a taxable substance? 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. Certain non-fuel and agricultural uses of some of these chemicals were exempted from the excise tax. 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