IRS issues Superfund chemical excise tax rates IR-2022-132, June 24, 2022 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). NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. 48839 (Oct. 21, 1983). Will the IRS prescribe tax rates for taxable substances? Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661 (b). 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. Nota Bene Episode 160: European Update: Oliver Heinisch and Scott Federal Communications Commission to Consider Rules and Proposals to Whats the Standard? These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. Yes. Cherry Bekaert LLP is a licensed independent CPA firm that provides attest services to its clients, and Cherry Bekaert Advisory LLC and its subsidiary entities provide tax and business advisory services to their clients. The IRS has release additional information on the Superfund Excise Taxes on Chemicals. and services for tax and accounting professionals. It's codified in IRC Sections 4671 and 4672, both of which were added by the Superfund Amendments and Reauthorization Act of 1986. : Advanced Marketing Compels Trial on Arbitration in a TCPA Health Plans Gag Clause Attestations Due December 31, 2023. 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. More information about reliance is available. Fullwidth SCC. accounting, Firm & workflow FAQs 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. Excise Tax on Select Chemicals. This button displays the currently selected search type. 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 excise taxes are effective July 1, 2022. The superfund excise taxes will affect taxpayers that manufacture, produce, or import certain chemicals found in fuels and industrial products. Statement in compliance with Texas Rules of Professional Conduct. The latest reiteration of the excise tax will be comprised of two separate taxes on (1) chemical sales and (2) chemical importers. The IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. These FAQs were announced in IR-2022-131. Explore all After more than 25 years, two excise taxes on chemicals and imported hazardous substances were reinstated in the Infrastructure Investment and Jobs Act (Pub. Customer Reviews: Five-Star Enforcement and the Expanding Regulations. ffalvo@deloitte.com, Marshal Sulayman Yes. As explained in today's IRS release: Companies responsible for collecting and remitting the excise tax will need to identify the source system to capture the transactional and master data for applicable transactions, and assess what data elements are captured and how to obtain necessary reports to support compliance filing. 16I.R.C. Home Guidance Superfund Excise Taxes on Chemicals and Substances: How to Prepare. July 1 is fast approaching and the window to prepare for compliance with the reinstated Superfund Tax is brief. Prior to 1996, the rates of tax on those chemicals ranged from $0.22 per ton to $4.87 per ton. Heavy metals, halogens, acids, and bases are significant raw materials for many toxic inorganics.) The Reinstated Superfund Excise Taxes. Certain services may not be available to attest clients under the rules and regulations of public accounting. Assisting with risk analyses and internal processes (design or documentation). The Infrastructure Act essentially doubles these rates with taxes ranging from $0.44 per ton to $9.74 per ton. Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. The term "ton" is. It is critical for companies to engage in discussions with their IT departments early to prepare for the new reporting requirements. 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. The Basics of Californias Outside Salesperson Exemption. 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. 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. Is the rate different for taxable substances? 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. See also section 4661(b) for the tax rate for taxable chemicals. Notice 2021-66. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. A6. 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. . In Notice 2021-66 the IRS published a list of 100 additional substances subject to the Superfund Tax. The Superfund Excise Tax becomes effective on 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. Inferences, however, can be made from the absence of any mention in the law. 2022 Superfund excise taxes. The tax may be passed along to customers. Cherry Bekaert: Tax, Audit and Advisory Services, Superfund Excise Taxes on Chemicals and Substances: How to Prepare, Maximize the Supply Chain Revolution Panel Discussion, 2023 Legislative Landscape: Expanding Opportunities for Manufacturers, The U.S. and Global Economic Manufacturing Outlook for 2023, Private Equity Industry Report: 2022 Trends and 2023 Outlook, Cybersecurity Maturity Model Certification, Business Intelligence and Data Analytics Services, Digital Strategy & Transformation Services, Government Contractor Consulting Services, SBA 8(a) Business Development Program Consulting Services, Information Technology Audit & Consulting, Cybersecurity Maturity Model Certification (CMMC), Outsourced Sales Tax Compliance and Managed Services, IRS issues Superfund Chemical Excise Tax Rates, IRS issues Superfund Chemical Excise Taxes FAQs, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. Historical reporting requirements for Superfund excise taxes Prior to the expiration of the Superfund excise taxes in 1995, taxpayers were required to register under Form 637, Application for Registration (For Certain Excise Tax Activities), activity letter G (Persons making inventory exchanges of taxable chemicals under section 4662(c)(2) or persons selling or buying management, More for accounting More information on the procedures for petitioning the Secretary to add or remove substances from the list of taxable substances will be released in advance of July 1, 2022. | All Locations, Cherry Bekaert is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC, independently owned entities, provide professional services in an alternative practice structure in accordance with applicable professional standards. As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. Taxable substances include substances where taxable chemicals constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce such substance (as determined based on the predominant method of production). 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). statement, 2019 The rates will be included in the instructions to Form 6627, Environmental Taxes, and under Recent Developments for Form 6627, Environmental Taxes. Assisting with development and implementation of technology solutions to enable identification of taxable chemicals and substances, as well as exemptions. 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. Heres how to analyze the implications and plan now for the revitalized Superfund Excise Tax. technology solutions for global tax compliance and decision See section 4671(b)(1). Notice 2021-66 suspended the procedure in Notice 89-61 because the IRS plans to issue a more current guidance on this matter. The Superfund Excise Tax is imposed on the manufacturer or importer of the listed chemicals, and the tax becomes due upon the first use or sale in the United States.15. Strictly Confidential? governments, Business valuation & They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. Treas. Tax Senior Manager Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. Effectively tracking necessary data through the supply chain may be a challenge as well. What is the purpose of the Superfund Chemical Excise Taxes? Greenville | Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. 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), Q7. The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. 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. shipping, and returns, Cookie 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. Among the many provisions in that legislation . Form 6627, Environmental Taxes, previously used to report the Superfund Tax, will likely be used again to report the tax owed. Alternatively, a taxpayer may base the rate for taxable substances on 10% of the value of the import.20. What is a taxable chemical? The JCT estimated that the proposal would increase revenues by approximately $38.4 billion over a 10-year period. Various exemptions exist for taxable chemicals, including: Additionally, the export of taxable chemicals is eligible for a refund of any tax paid on the chemical.16, The IRS published proposed Treasury Regulations in 1983 specific to the taxable chemicals to further detail the methods of reporting the tax, as well as provide more detail on all the provisions concerning the tax.17. For instance, necessary data elements may not be available to properly identify the taxable chemicals and components. (added June 24, 2022), Q11. . At what point in a transaction do the new taxes kick in? Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. (added June 24, 2022), Q2. 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). Tax is due upon the first use or first sale of a listed chemical in the United States. President Joe Biden called for reinstating the Superfund taxes as part of his $2 trillion infrastructure proposal . Please enable JavaScript to view the site. IT'S HAPPENING! Products & Because these FAQs have not been published in the Internal Revenue Bulletin, they will not be relied on or used by the IRS to resolve a case. Matt Levin Jul 2, 2021. Various exemptions exist for taxable chemicals. The Hazardous Substance Superfund financing rate was an excise tax of 9.7 cents per barrel of crude oil that applied from 1987 through 1995. . 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. 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. 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. ADVANCED! Yes. Words With Friends, Part 1: Insurance Requirements and Contracts, Legislator Proposes To Expand CFL To Encompass "Commercial CERCLA PFAS Scope May Broaden To Many More PFAS, AI Avatar App is the Latest Target of BIPA Class Action Litigation. 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. Semi-monthly payments should be made by the 15th and 30th of each month, but the IRS is providing relief from penalties for non-payment up through the first quarter of 2023. 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. Technology/systems impacts Background See also I.R.C. Procedures to request an IRS determination to add or remove a substance from the list of taxable substances under Internal Revenue Code Section 4672(a) are in Revenue Procedure 2022-26PDF. 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. The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. The Superfund excise taxes are set to expire at the end of 2031. The Superfund excise taxes are set to expire at the end of 2031. Notice 2021-66 does not specify the tax rate for each taxable substance. 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. 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. Your comprehensive guide to the Act's many changes to the Internal Revenue Code, and their implications for businesses and individuals. 1Investment and Jobs Act, Pub. 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. Friday Development: New Sanctions and Export Controls to Address Weekly IRS Roundup February 20 February 24, 2023, Everything to Know About Unbundled Legal Services. The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. 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