Explore all However, the first deposit of Superfund Tax is due as early as July 29, 2022. Notice 2021-66 suspended the procedure in Notice 89-61 because the IRS plans to issue a more current guidance on this matter. slunan@deloitte.com, Christina Gong See Section 4671(b)(2). US Executive Branch Update February 28, 2023. 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. Semi-monthly deposits are required, however. L. 99-499, approved Oct. 17, 1986. L. No. 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. A10. The chemicals selected to be subject to the fee were based on two categories: petrochemical feedstocks and inorganic raw materials. Cherry Bekaert is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC provide professional services. (added June 24, 2022), Q5. Notice 2021-66. An official website of the United States Government. The Superfund tax rate will now be adjusted annually to . 3S. The tax would apply after December 31, 2021, until January 1, 2032. The term " Superfund " refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. Such exemptions include methane or butane used as a fuel, chemicals used in the production of fertilizer (including nitric acid, sulfuric acid, ammonia, or methane) and substances derived from coal. Part II of Form 6627, Environmental Taxes, will be updated to reflect the tax rate per ton of each taxable chemical. 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. View Full Firm Disclosure. For purposes of this part, if any organic taxable chemical on which no tax was imposed by reason of subparagraph (A) is isolated, extracted, or otherwise removed from, or ceases to be part of, an intermediate . 4661. The Superfund Excise Tax will go back into effect on July 1 st, 2022, after not being in place for over 26 years. The tax expired under its terms in the mid-1990s but has now been reinstated. 20I.R.C. How do I calculate the section 4671 tax? California Law May Limit Hospitals Ability to Adopt The Joint Ankura CTIX FLASH Update - February 28, 2023, Ankura Cyber Threat Investigations and Expert Services. Corporate Taxpayers must meet the guidelines in the Notice to qualify for this relief. The notice also addresses registration requirements to exempt certain sales and uses of taxable chemicals from tax. Temporary relief from the penalty for failure to deposit Superfund chemical taxes for 2022 (third and fourth calendar quarters) and the first calendar quarter of 2023 is inNotice 2022-15. Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. Raleigh | Tax Partner 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. . Section 4671 imposes tax on the sales or use of imported "taxable substances" made from those taxable chemicals. What are the Superfund chemical excise taxes? GT's The Performance Review Episode 19: Is the Fight Over AB 51 5 Reasons Community Associations Need an Attorney That Specializes in New York Proposes Regulatory Review and Approval of Material Health CMS Issues Long-Awaiting Medicare Advantage RADV Final Rule, Preventing the Use of Cryptocurrencies to Evade Sanctions. There are 42 chemicals listed in section 4661(b). Even companies that have been on the market for decades may not have many employees who were around when the previous excise tax applied. The law imposes a tax on any taxable chemical sold by the manufacturer, producer, or importer. Breaking the Link New Developments on U.S. 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). Greenville | Self-assess the rate based on 10% of the appraisal value of the imported substances.*. On November 15, 2021, President Biden signed into law theInfrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. 4671(b). The Revenue Reconciliation Act of 1990 further extended the Superfund Excise Taxes through December 31, 1995, after which point the Superfund Excise Taxes expired. The Infrastructure Investment and Jobs Act, section 80201, reinstates the excise taxes imposed on certain chemical substances by sections 4661 and 4671, effective July 1, 2022. tax, Accounting & (added June 24, 2022), Q12. Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. Tampa | See section 4671(b)(3). For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. The Superfund is a federal excise tax on various hazardous chemicals. Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661(b). 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. This button displays the currently selected search type. 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. Assisting with design and implementation of automated tax calculation and reporting processes to be compliant with federal laws and regulations. Congress directed the Department of Treasury to publish an additional list of the taxable substances by January 1, 2022. The Superfund Amendments and Reauthorization Act of 1986 was enacted as Pub. The JCT estimated that the proposal would increase revenues by approximately $38.4 billion over a 10-year period. The rates are listed in IRS release IR-2022-133 (June 24, 2022). making. While the majority of the 42 listed chemicals are taxable by the manufacturer or importer upon the first sale or use, butane and methane only become taxable upon the first use other than as a fuel.23 This creates a potential liability for downstream product sales such that the first company that uses the methane or butane in a manner other than as a fuel will have to report and remit the Superfund Excise Tax. 4672(a)(2)(B)(1995). Earlier Superfund excise taxes were 9.7 cents per barrel of crude oil or refined oil products, and a variety of excise taxes, ranging from $0.22 to $4.87 per ton on some 42 chemicals and metal compounds. Please see www.deloitte.com/about to learn more about our global network of member firms. How Modern Manufacturing Plants Can Protect Against Ransomware, FTC Will Host May 23, 2023, Workshop on Recyclable Claims and the Appellate Court Affirmed An Order Denying A Beneficiarys Request For An Overview of Why Class Action Privacy Lawsuits May Have Just Gotten Gold Dome Report Legislative Day 26 (2023). At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. Assisting with filing refund claims and reporting requirements around exemption certificates. Audit & 4671. What is a taxable substance? Deloittte Tax 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. 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 . This message will not be visible when page is activated. The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. The specified. Unlike the static list of 42 taxable chemicals, the taxable substance list is subject to change. Taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the tax. 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? Fullwidth SCC. Many in the industrial chemical community are unfamiliar with the Superfund excise tax legacy, and the IRS is seemingly unprepared for the learning curve challenge the reactivation of the tax has created. When do the Superfund chemical excise taxes go into effect? 16I.R.C. The rate of excise tax per ton is based on the amount of each chemical included in the substance. The $1.2 trillion infrastructure bill making its way through the Senate contains a $14.55 billion tax hike on American chemical and mineral producers. 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. Everyone loves infrastructure, but it pays to read the fine print. 6Id. 4672(b)(1). The excise taxes are effective July 1, 2022. 19I.R.C. The more you buy, the more you save with our quantity ffalvo@deloitte.com, Marshal Sulayman 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. Will Changes to the Option To Tax Regime Impact UK Insolvency Sales? National Law Review, Volume XII, Number 139, Public Services, Infrastructure, Transportation, Mandatory Arbitration Agreements Remain Valid in California, Antitrust Practitioners Expect Activity With Climate Issues. The excise taxes are effective July 1, 2022. The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. 117-58 (2021). Biobased chemicals and biofuels have taken root thanks to both popular appeal and political support. . 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. Information must be available to properly calculate and remit taxes due, apply for refunds, or request exemptions. accounting firms, For Prior to 1996, the rates of tax on those chemicals ranged from $0.22 per ton to $4.87 per ton. 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 Atlanta | Additionally, prior versions of these FAQs will be maintained on IRS.gov to ensure that taxpayers, who may have relied on a prior version, can locate that version if they later need to do so. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. Technology/systems impacts Fast forward to today. 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. Since the Superfund excise tax expired almost three decades ago, the industrial chemical communitys familiarity with their application is attenuated at best. (added June 24, 2022), Q10. The Petroleum Superfund Tax is proposed to be indexed for inflation beginning in calendar year 2023. FAQs The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. 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. President Joe Biden called for reinstating the Superfund taxes as part of his $2 trillion infrastructure proposal . 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. 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. Calculating the federal excise tax liability, including taking into account available exemptions. For example, if load of scrap metal contains 50% nickel (taxed at $8.90 per ton) and 20% chromite (taxed at $3.04 per ton), the tax rate would be calculated as: ($8.90 x .50 = $4.45) + ($3.04 x .20 = .61) = $5.06 per ton. Thomson Reuters/Tax & Accounting. A4. Chemicals. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. Section 40.6302(c)-1(b)(2), for failure to make required deposits of Superfund excise taxes if the requirements set out in the Notice are met. Inferences, however, can be made from the absence of any mention in the law. of products and services. 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. 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. Tax Principal On Aug. 16, 2022, the Inflation Reduction Act (IRA) reinstated a third excise tax, the Hazardous Substance Superfund Financing Tax Rate on Crude Oil and Petroleum Products. 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). Litigation Setback for Employers Under Illinois Biometric Information Senate Committee Holds Hearing on Future of Low Carbon Transportation North Carolina Senate Passes Compassionate Care Act at Exactly 4:20 States and Feds Signal Big Changes to Telehealth Prescribing. Deloitte Tax The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. 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. The Superfund Excise Tax becomes effective on July 1, 2022. Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. Nota Bene Episode 160: European Update: Oliver Heinisch and Scott Federal Communications Commission to Consider Rules and Proposals to Whats the Standard? See also I.R.C. services, Comprehensive Environmental Response Compensation, and Liability Act of 1980 (CERCLA). Frequently Asked Questions: Superfund Chemical Excise Taxes. Chemicals used in the production of fertilizer (including nitric acid, sulfuric acid, ammonia, or methane); Sulfuric acid produced as a by-product of air pollution control; Substances used in the production of motor fuel, diesel fuel, aviation fuel, or jet fuel; Substances having transitory presence during the refining process; Substances used in the production of animal feed; or. 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. No. Semi-monthly payments should be made by the 15 th and 30 th of each month, but the IRS is providing relief from penalties for non-payment up through the first quarter of 2023. EC Appeals European General Court Decision Annulling the Harmonized Weekly Bankruptcy Alert February 28, 2023. 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