Greenville | More for At what point in a transaction do the new taxes kick in? The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. Accordingly, the procedural rules in26 C.F.R. ffalvo@deloitte.com, Marshal Sulayman The Infrastructure Investment and Jobs Act lowered this threshold to 20%. For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. In addition to the reinstatement of the federal superfund excise tax on chemicals and substances that went into effect on July 1, 2022, the Hazardous Substance Superfund excise tax went into effect on January 1, 2023 as part of the Inflation Reduction Act of 2022. Chicago | Your comprehensive guide to the Act's many changes to the Internal Revenue Code, and their implications for businesses and individuals. 4661 imposes tax on the sale or use by the manufacturer, producer, or importer of 42 listed chemicals. On November 15, 2021, President Biden signed into law the Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. 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. . Applicants for registration may call 859-320-4091 and select menu option #1. Taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the tax. The Treasury Department and the IRS (collectively the IRS) have released Notice 2022-15, which provides relief for certain reinstated Superfund chemical excise taxes (SCET) from the penalty for failure to properly deposit imposed under Section 6656.The relief applies to the first three quarters of the SCET, i.e., the third and fourth quarters of 2022 and the first quarter of 2023. Chemical manufacturers and importers (added June 24, 2022), Q13. 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. This law levies taxes on the manufacture, production, or importation of 42 specific chemicals and another 121 chemical substances. It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. 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 tax directly . Many entities are struggling with its application. To stay logged in, change your functional cookie settings. 12I.R.S. The Reinstated Superfund Excise Taxes. : Advanced Marketing Compels Trial on Arbitration in a TCPA Health Plans Gag Clause Attestations Due December 31, 2023. 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. In addition, exporters of chemicals and substances which were subject to the Superfund Tax can request a refund of the tax previously paid. policy, Privacy 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. Criminal Referrals and OSHA Violations, Part III: Industry Standards Oregon House Revenue Committee Set to Hear More About Pro-Taxpayer Buying or Selling a Small Business Government Contractor? Substances. Some companies did not yet exist when the previous excise tax applied and have no experience with the old tax and thus no internal processes for determining their liability for the Superfund excise tax. A8. The Revenue Reconciliation Act of 1990 further extended the Superfund Excise Taxes through December 31, 1995, after which point the Superfund Excise Taxes expired. Companies with a large volume of transactions should consider automating their tax calculation and reporting processes to increase efficiency and accuracy. Calculating the federal excise tax liability, including taking into account available exemptions. (added June 24, 2022), Q11. The Final CCPA Regulations: What You Need To Know, Are College Athletes Students or Employees? | Privacy Policy A14. Notice 89-61provided guidance under the previously applicable Superfund excise tax. research, news, insight, productivity tools, and more. Even companies that have been on the market for decades may not have many employees who were around when the previous excise tax applied. Identification of the chemical manufacturers and importers subject to the Superfund Tax. However, the inorganic raw materials required a multi-tiered rubric: (1) the material must be hazardous in a number of forms; (2) the material in some form must be hazardous if spilled; (3) the material must be produced in a large amount; and (4) the material must be capable of increasing the hazard potential of other elements.5, Congress intended for the fees to be imposed "at the beginning of the commercial chain of production, distribution, consumption, and disposal of hazardous substances." Superfund tax on chemicals. Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. Will Changes to the Option To Tax Regime Impact UK Insolvency Sales? Waters of the United States and Winston Churchill. Exceptional organizations are led by a purpose. corporations, For 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. 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. A11. 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. The content and links on www.NatLawReview.comare intended for general information purposes only. 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. 23I.R.C. 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. firms, CS Professional Section 80201 of the bill would revive long-expired Superfund excise taxes at twice their previous level. 18I.R.S. Calculate the rate based on the percentage amount of each listed chemical included in the substance. An official website of the United States Government. and accounting software suite that offers real-time The Superfund Excise Tax is not permanent and . DTTL and each of its member firms are legally separate and independent entities. On Dec. 14, 2021, the IRS issued Notice 2021-66, which provides guidance on implementing the reinstated Superfund excise taxes, and followed up on June 24, 2022, with an FAQ . Corporate Heavy metals, halogens, acids, and bases are significant raw materials for many toxic inorganics.) The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. Section 4661 imposes a per-ton tax, ranging from $0.44 to $9.74 per ton on the following 42 chemicals: collaboration. California Assembly Bill Pushes for Womens Designated Restrooms on Mississippi Legislature Takes Up Pass-Through Entity Election FTC Signals Increased Scrutiny of Technology Sector Through Understanding the Corporate Transparency Act and Ensuring Compliance. More information about reliance is available. 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. Heard on: Revenue from a new excise tax on chemicals like Benzene and Mercury would go . They were reinstated by section 80201(c)(3) of the Infrastructure Investment and Jobs Act (Public Law 117-58, 135 Stat. Cherry Bekaert LLP is a licensed CPA firm that provides attest services, and Cherry Bekaert Advisory LLC and its subsidiary entities provide tax and advisory services. 4662(b)(1). During 1979 Senate discussions, it was estimated that expenditures for hazardous waste disposal sites related to chemicals would be $200 million (versus $40 million for sites related to crude oil).3 During this congressional hearing, it was determined that the proposed system of fees would cover: (1) crude oil; (2) petrochemical feedstocks; and (3) certain highly toxic and/or high-volume inorganic materials including heavy metals, halogens, acids, bases, and ammonia.4. See also I.R.C. See section 4671(b)(3). (added June 24, 2022), Q7. The Superfund tax is assessed on the manufacturer or importer of these chemicals. IT'S HAPPENING! A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. 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. This message will not be visible when page is activated. 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. This button displays the currently selected search type. When enacted, the Superfund was financed by environmental excise taxes on certain commonly used chemicals often found at Superfund sites. Reminder: High-Earning Exempt Professionals Must Be Paid a "True Gold Dome Report Legislative Day 24 (2023). slunan@deloitte.com, Christina Gong Heres how to analyze the implications and plan now for the revitalized Superfund Excise Tax. See how we connect, collaborate, and drive impact across various locations. Biobased chemicals and biofuels have taken root thanks to both popular appeal and political support. See also section 4661(b) for the tax rate for taxable chemicals. Sec. 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. Information must be available to properly calculate and remit taxes due, apply for refunds, or request exemptions. This Week in 340B: February 21 27, 2023. This would be for the periodJuly 1-September 30, 2022. 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. Specifically, the statute provides that to qualify as a taxable substance, taxable chemicals listed in IRC section 4662 must constitute more than 50 percent of the weight (or more than 50 percent of the value) of the materials used to produce such substance (determined on the basis of the predominant method of production).10. This box/component contains JavaScript that is needed on this page. 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. 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). Our use of the terms our Firm and we and us and terms of similar import, denote the alternative practice structure of Cherry Bekaert LLP and Cherry Bekaert Advisory LLC. Excise Tax on Chemical Sales The Superfund excise tax on chemical sales is imposed on 42 listed taxable chemicals on a per-ton basis by taxpayers that manufacture or produce a listed chemical in the United States or import it for consumption, use, or warehousing in the United States. Will the U.S. Supreme Court Make Marijuana Legal? See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. (a) General rule There is hereby imposed a tax on any taxable chemical sold by the manufacturer, producer, or importer thereof. The latest reiteration of the excise tax will be comprised of two separate taxes on (1) chemical sales and (2) chemical importers. The Infrastructure Bill lowered this threshold to 20%. The Superfund Chemicals tax previously expired in 1995. Form 6627 must be led alongside Form 720 on a quarterly basis. A1. 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. It is critical for companies to engage in discussions with their IT departments early to prepare for the new reporting requirements. Specifically, taxable substances include the 50 substances on the initial list of taxable substances in Section 4672(a)(3) and 101 taxable substances added by the IRS in December 2021, throughIRS Notice 2021-66. These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. Los Angeles | Who is responsible for reporting and paying Superfund chemical excise taxes? Some highlights on the petroleum products tax are as follows: Imposition of the Tax DeloitteTax _____________________________________________________________________________________________. The Superfund excise taxes are set to expire at the end of 2031. President Joe Biden called for reinstating the Superfund taxes as part of his $2 trillion infrastructure proposal . 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 (added June 24, 2022), Q8. Licenses for Exports to Are You Ready for the UPC? Good News for American Businesses: H1-B Denial Rates Plummet Under USCIS Extends Comment Period for Proposed Fee Increases, OFCCP Rescinds Trump-Era Religious Exemption Rule. 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. Get the insight and tools you need to fully understand and comply with changes resulting from this major tax reform. Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661 (b). Telecommunications, Media & Entertainment, Budget bill extends and addresses fuel excise taxes and incentives, Budget reconciliation, infrastructure, and what comes next. The list of 42 chemicals and their respective excise tax rates is found in Internal Revenue Code (IRC) 4661(b). Try our solution finder tool for a tailored set When are the new Superfund Chemical Excise taxes due? 4671(b)(2). 21See I.R.C. Austin | The superfund excise taxes will affect taxpayers that manufacture, produce, or import certain chemicals found in fuels and industrial products. Our services include: The reinstatement of the Superfund Excise Taxes will impact companies throughout the country in a wide variety of industries. Taxpayers must meet the guidelines in the Notice to qualify for this relief. Do Issuers Fail To File Form Ds Because They Fear Trolls? 429 (2021)), effective July 1, 2022, with modifications to the applicable rates of tax and other provisions related to those taxes. Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. The Superfund tax on chemicals is also a tax on the import of taxable substances. Certain services may not be available to attest clients under the rules and regulations of public accounting. 6Id. Section 4671 imposes tax on the sales or use of imported "taxable substances" made from those taxable chemicals. 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. The Superfund Excise Taxes will be reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661(b). 4661. 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. The JCT estimated that the proposal would increase revenues by approximately $38.4 billion over a 10-year period. Helping businesses navigate financial due diligence engagements and domestic and cross-border transactions. 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