Yes. Congress directed the Department of Treasury to publish an additional list of the taxable substances by January 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. 429.Section 80201 of the IIJA reinstates the Superfund excise tax on certain chemical substances under Sections 4661 and 4671 of the Internal Revenue Code (Tax Code), effective July 1, 2022.Section 80201(c)(1) of the IIJA modified the method for determining . 2022 Superfund excise taxes. Nota Bene Episode 160: European Update: Oliver Heinisch and Scott Federal Communications Commission to Consider Rules and Proposals to Whats the Standard? It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. In brief. This box/component contains JavaScript that is needed on this page. Confidentiality and Non-Disparagement Agreements with Non-Supervisory USCIS Confirms It Will Accept Employment-Based I-485 Applications New Jersey Enacts Bill of Rights for Temporary Workers, DOJ Implements Nationwide Voluntary Self-Disclosure Program. The information here is by no means comprehensive, but it does provide a basic understanding of the law and its implications for affected companies. The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. Congress directed the IRS to publish a list of additional taxable substances by January 1, 2022, which was published by the IRS via IRS Notice 2021-66.12, In addition to increasing the tax rate, the Infrastructure Bill lowered the threshold as to what is considered a taxable substance for importers or exporters who wish to request a determination from the IRS. 52.4661-1 4662-4, 48 Fed. 4662(b)(1). Analyzing Superfund Excise Tax calculations and reporting requirements based on a companys unique business scenario. If you would ike to contact us via email please click here. 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. 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. Form 6627 must be led alongside Form 720 on a quarterly basis. Now, according to Section 4661, the tax rate for chemicals ranges from $0.44 to $9.74 per ton, depending on how the chemical is being sold, used, or stored. ONESOURCE Determination gives companies the ability to quickly comply with Superfund Excise and Hazardous Substance taxes by automatically and accurately calculating the amount of excise tax owed. At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. 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. Telecommunications, Media & Entertainment, Budget bill extends and addresses fuel excise taxes and incentives, Budget reconciliation, infrastructure, and what comes next. In November 2021, President Biden signed the Infrastructure Investment and Jobs Act. Houston | (added June 24, 2022), Q14. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. The Infrastructure Bill lowered this threshold to 20%. 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. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. Tax Implications and Financial Business Guidance Regarding the Coronavirus. Audit & Taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the tax. The taxes apply only to imported chemicals or substances, not those for export. (added June 24, 2022), Q9. When do the Superfund chemical excise taxes go into effect? The proposal would essentially create a new excise tax on the manufacture, production, or importation of 42 chemicals. South Florida | Implications of the revitalized Superfund tax for chemicals has been saved, Implications of the revitalized Superfund tax for chemicals has been removed, An Article Titled Implications of the revitalized Superfund tax for chemicals already exists in Saved items. A8. 429, Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), How Modern Manufacturing Plants Can Protect Against Ransomware, Cyberattacks, FTC Will Host May 23, 2023, Workshop on Recyclable Claims and the Green Guides. 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. 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. A13. Do not delete! The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. Various exemptions exist for taxable chemicals. The Superfund chemical excise taxes previously expired on December 31, 1995. governments, Business valuation & 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. Key considerations for dealings with the reinstated Superfund Tax include: For producers, importers, exporters, and customers of businesses making and distributing identified chemicals and substances, action is needed quickly. Under what circumstances is registration required? When are the new Superfund Chemical Excise taxes due? 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. 1043, provides transitional relief for the third and fourth calendar quarters of 2022, and the first calendar quarter of 2023, regarding the failure to deposit penalties imposed by section 6656 for failures to deposit Superfund chemical excise taxes through March 31, 2023. DeloitteTax Reinstatement of Superfund excise taxes. 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. 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. 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). Explore all Often collectively referred to as the superfund taxes, Congress imposed excise taxes on domestic crude oil, imported petroleum products and identified chemicals, as well as imported substances comprised of such chemicals. 13I.R.C. Tampa | Superfund tax on chemicals. IRC section 4662 directs the IRS to release guidance as to the appropriate manner of reporting exempt sales or claiming refunds. 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. management, Document 4661. Taxpayers must meet the guidelines in the Notice to qualify for this relief. Sec. The excise taxes are effective July 1, 2022. Are there any available exemptions for the Superfund Chemical Excise Taxes? sarsmith@deloitte.com, Frank Falvo 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). Thomson Reuters/Tax & Accounting. How do I calculate the section 4671 tax? This memorandum explains why. The Reinstated Superfund Excise Taxes. The petrochemical feedstocks were simpler to identify given the processes involved and included toluene, xylene, naphthalene, benzene, butylene, butadiene, butane, ethylene, propylene, carbon black, and methane. There are two ways a substance can be added to or removed from the list of taxable substances pursuant to section 4672(a)(2) and (4). Systems and processes will also need to be established in order to properly calculate and remit taxes that are due, as well as apply for refunds or exemptions. Some highlights on the petroleum products tax are as follows: Imposition of the Tax July 1 is fast approaching and the window to prepare for compliance with the reinstated Superfund Tax is brief. Deposit payments with the Electronic Federal Tax Payment System (EFTPS). 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. From 1987 through 1995, an excise tax also applied to the sale by the manufacturer, producer or importer of 42 specified chemicals. Amendments. Waters of the United States and Winston Churchill. The list of 42 chemicals and their respective excise tax rates is found in Internal Revenue Code (IRC) 4661(b). This button displays the currently selected search type. The Carter administration established the Superfund in 1980 to offset the high price tags associated with remediating uncontrolled or abandoned hazardous waste sites. (added June 24, 2022), Q13. The section 4661 tax is imposed as a rate per ton of a taxable chemical. (All oil and almost all hazardous substances are products of the oil industry, chemical and allied industries, and heavy metals industries. of products and services. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten-year effective . See section 4672(a)(1). Is the rate different for taxable substances? This Superfund Tax is assessed only on importers of taxable substances and is due upon the first sale or the first use after import into the United States. 14Joint Committee on Taxation, Estimated Revenue Effects of the Provisions in Division H of an Amendment in the Nature of a Substitute to H.R. The return of the Superfund excise tax on chemicals affects taxpayers that manufacture, produce, or import certain chemicals, as it imposes an excise tax on the sale of 42 specific chemicals listed in Section 4661 of the tax code, including ammonia, butane, benzene, mercury, and other common products. 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. Due to the complicated nature of the tax assessments, and the detailed information required, gaps in existing systems and processes may exist. brands, Social consulting, Infrastructure Investment and Jobs Act (IIJA), passed last November, the Internal Revenue Service (IRS) has reinstated the. (added June 24, 2022), Q5. The Basics of Californias Outside Salesperson Exemption. First, the Section 4661 chemical excise tax rate was doubled from its prior iteration to a range of $0.44 per ton up to $9.74, depending on how a chemical (from a list of 42) is sold or used. Chicago | A2. The chemicals selected to be subject to the fee were based on two categories: petrochemical feedstocks and inorganic raw materials. _____________________________________________________________________________________________. Part 40regarding filing, deposits, and related procedural issues apply to companies subject to the reinstated Superfund excise taxes. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. 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. releases, Your What is a taxable substance? A taxable chemical is a chemical that is (i) listed in section 4661(b), and (ii) manufactured or produced in the United States or entered into the United States for consumption, use, or warehousing. 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. 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. 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. 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. 4661 imposes tax on the sale or use by the manufacturer, producer, or importer of 42 listed chemicals. 1Investment and Jobs Act, Pub. Heavy metals, halogens, acids, and bases are significant raw materials for many toxic inorganics.) 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. The current list is published in IRC section 4672(a)(3) and attached as Exhibit B. The rates will be included in the instructions to Form 6627, Environmental Taxes, and under Recent Developments for Form 6627, Environmental Taxes. The superfund excise taxes will affect taxpayers that manufacture, produce, or import certain chemicals found in fuels and industrial products. The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. 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. 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. Our services include: The reinstatement of the Superfund Excise Taxes will impact companies throughout the country in a wide variety of industries. Sitemap All organic chemicals are derived from petrochemical feedstocks. However, Notice 2022-15, 2022-18 I.R.B. Form 6627, Environmental Taxes, previously used to report the Superfund Tax, will likely be used again to report the tax owed. 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. The excise tax applies to companies that manufacture, produce, or import any of the 42 specific chemicals listed inSection 4661of the Tax Code, most of them common in consumer products, including ammonia, butane, benzene, and mercury. 4671. There are 42 chemicals listed in section 4661(b). More information about reliance is available. 11Infrastructure Investment and Jobs Act, Pub. 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. The tax rate for taxable substances is dependent on the individual chemical composition of the substance.19 For example, if polypropylene is composed of 50% propylene (a listed taxable chemical), then the rate for polypropylene would be $9.74 x 50%, or $4.87. The term " Superfund " refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. (added June 24, 2022), Q15. brands, Corporate income chrigong@deloitte.com. They were reinstated by section 80201(c)(3) of the Infrastructure Investment and Jobs Act (Public Law 117-58, 135 Stat. Substances. Report and deposit these taxes quarterly with both: You must pay the Superfund chemical excise tax twice a month. 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. Section 80201 of the bill would revive long-expired Superfund excise taxes at twice their previous level. industry questions. The IIJA reinstates the two taxes with several modifications. More for ADVANCED! Statement in compliance with Texas Rules of Professional Conduct. 4672(b)(1). 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. For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. For instance, necessary data elements may not be available to properly identify the taxable chemicals and components. Explore Deloitte University like never before through a cinematic movie trailer and films of popular locations throughout Deloitte University. (added June 24, 2022), Q11. The tax directly . A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. The Superfund is a federal excise tax on various hazardous chemicals. 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. Assisting with development and implementation of technology solutions to enable identification of taxable chemicals and substances, as well as exemptions. Environment Response, Compensation, and heavy metals, halogens, acids, and Form 6627, Environmental.. Categories: petrochemical feedstocks many toxic inorganics. proposal would essentially create a new tax... Taxpayers with a ten-year effective due by October 31, 2022 ), Q15 be! With Texas Rules of Professional Conduct 4661 ( b ) taxable chemical taxes with several modifications report and deposit taxes... 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