At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. 8Id. 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. They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. No. 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. Heres how to analyze the implications and plan now for the revitalized Superfund Excise Tax. 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. 4671(b)(2). To accomplish this, the current system capability should be assessed. firms, CS Professional Everyone loves infrastructure, but it pays to read the fine print. Explore all How do I calculate the section 4661 tax? Analyzing and assisting in documenting available exemptions (e.g., certain taxable chemicals used in the production of fuel). The Superfund excise taxes are set to expire at the end of 2031. In brief. 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. 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. Assisting with filing the federal excise tax returns and semi-monthly deposit reporting. The unique considerations of butane and methane require taxpayers further down the supply chain to be aware of the procedural issues affecting chemicals. The Infrastructure Investment and Jobs Act lowered this threshold to 20%. making. First, a substance can be added to the list of taxable substances by the Secretary, in consultation with the Administrator of the Environmental Protection Agency and the Commissioner of U.S. Customs and Border Protection, if the Secretary determines that taxable chemicals constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce the substance (determined on the basis of the predominant method of production). There are two separate Superfund chemical excise taxes: a tax on the sale or use of "taxable chemicals" under section 4661 of the Internal Revenue Code and a tax on the sale or use of imported "taxable substances" under section 4671 (all section references are to the Internal Revenue Code unless otherwise stated). 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. The Infrastructure Bill lowered this threshold to 20%. These taxes were in place until 1995 to fund the Federal Hazardous Substance Superfund, but expired in 1995. The Superfund Excise Tax becomes effective on July 1, 2022. : Advanced Marketing Compels Trial on Arbitration in a TCPA Health Plans Gag Clause Attestations Due December 31, 2023. First Offshore Wind Energy Lease Sales in the Gulf of Mexico, Telephone and Texting Compliance News: Litigation Update February 2023. 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. Heard on: Revenue from a new excise tax on chemicals like Benzene and Mercury would go . See questions 4-5 for more information on taxable substances and questions 7-9 for more information on calculating the tax imposed by section 4671 (section 4671 tax). Nashville | What do companies need to do in order to prepare for these taxes? Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. 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. Unless otherwise noted, attorneys are not certified by the Texas Board of Legal Specialization, nor can NLR attest to the accuracy of any notation of Legal Specialization or other Professional Credentials. Audit & Tax Senior Manager 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." Companies with a large volume of transactions should consider automating their tax calculation and reporting processes to increase efficiency and accuracy. All organic chemicals are derived from petrochemical feedstocks. management, Document Creditor Stung By Academy Of Motion Picture Arts And Sciences Bylaws. 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 following is an FAQ to help companies get up to speed on what the Superfund Chemical Excise Taxes will require of them. Corporate US Executive Branch Update February 27, 2023. The reinstated Superfund Excise Tax is effective July 1, 2022, through December 31, 2031, absent extension. NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. Telecommunications, Media & Entertainment, Budget bill extends and addresses fuel excise taxes and incentives, Budget reconciliation, infrastructure, and what comes next. 2022 Superfund excise taxes. 2023. Reinstatement of Superfund excise taxes. Section 4671 imposes tax on the sales or use of imported "taxable substances" made from those taxable chemicals. 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 Under what circumstances is registration required? 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. Tax is due upon the first use or first sale of a listed chemical in the United States. 11001 (2021). governments, Explore our 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. 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. 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 chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. Even companies that have been on the market for decades may not have many employees who were around when the previous excise tax applied. FAQs Is the rate different for taxable substances? See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. The rate of excise tax per ton is based on the amount of each chemical included in the substance. 4671. (added June 24, 2022), Q2. Page Last Reviewed or Updated: 24-Jun-2022, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), News Releases for Frequently Asked Questions, Recent Developments for Form 6627, Environmental Taxes, Treasury Inspector General for Tax Administration, synthetic linear fatty alcohol ethoxylates, IRS issues Superfund chemical excise tax rates. The New York City Council Sets its Sights on Non-Profit Housing DOJ Announces New Voluntary Self-Disclosure Policy for U.S. Attorney Supreme Court: Salary, Not Daily Pay, Required for FLSA Overtime Time Is Money: A Quick Wage-Hour Tip on the Tip Credit, EDPB issues its Opinion on the EU-U.S. Data Privacy Framework, Hunton Andrews Kurths Privacy and Cybersecurity. How are the Superfund chemical excise taxes reported? A cloud-based tax The law imposes a tax on any taxable chemical sold by the manufacturer, producer, or importer. July 1, 2022. 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. Exceptional organizations are led by a purpose. Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. Manufacturers, producers, or importers that sell or use any of these chemicals must pay a tax of $0.22 to $4.87 per ton, depending on the chemical. management, More for accounting Along with the quarterly reporting requirements, taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the Superfund Excise Taxes. Sec. Analyzing Superfund Excise Tax calculations and reporting requirements based on a companys unique business scenario. Form 6627 must be led alongside Form 720 on a quarterly basis. 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. It is critical for companies to engage in discussions with their IT departments early to prepare for the new reporting requirements. Yes. Boston | Federally Recognized Holidays, Employer Considerations for DOLs New AEWR Rule. Accordingly, the procedural rules in26 C.F.R. 23I.R.C. 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. Due to the complicated nature of the tax assessments, and the detailed information required, gaps in existing systems and processes may exist. What is the purpose of the Superfund Chemical Excise Taxes? The Final CCPA Regulations: What You Need To Know, Are College Athletes Students or Employees? 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. 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. 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. View Full Firm Disclosure. White House Reviewing Proposed Regulations on Reinstated Superfund You Dont Need a Machine to Predict What the FTC Might Do About Is It Compensable? 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. A third excise tax on crude oil and petroleum products was reinstated in the Inflation Reduction Act . Companies opting for the latter run the risk, however, of incurring penalties, should the IRS adopt a different view. L. 99-499, approved Oct. 17, 1986. US Executive Branch Update February 28, 2023. Rep. No. 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. However, since the IRS ruled that these substances met the definition of taxable substance, these new substances were also subject to the tax if imported by taxpayers, thereby effectively increasing the list of taxable substances of IRC section 4672. Part 40regarding filing, deposits, and related procedural issues apply to companies subject to the reinstated Superfund excise taxes. When enacted, the Superfund was financed by environmental excise taxes on certain commonly used chemicals often found at Superfund sites. Various exemptions exist for taxable chemicals. 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 list of 42 chemicals and their respective excise tax rates is found in Internal Revenue Code (IRC) 4661(b). The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. Cherry Bekaert Advisory LLC and its subsidiary entities are not licensed CPA firms. 117-58 (2021). Technology/systems impacts The exemptions identify taxable chemicals that are exempt due to their specific use. Telephone and Texting Compliance News: Regulatory Update February 2023. Notice 2021-66. A taxable substance is any substance that, at the time of sale or use by the importer of the substance, is listed as a taxable substance. Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. Nota Bene Episode 160: European Update: Oliver Heinisch and Scott Federal Communications Commission to Consider Rules and Proposals to Whats the Standard? The excise taxes are effective July 1, 2022. Report and deposit these taxes quarterly with both: You must pay the Superfund chemical excise tax twice a month. The term " Superfund " refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. Section 4671(a) imposes an excise tax on the sale or use of a taxable substance by the importer of the taxable substance. The Superfund tax is assessed on the manufacturer or importer of these chemicals. The Superfund Amendments and Reauthorization Act of 1986 was enacted as Pub. When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. Taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the tax. There are two separate Superfund chemical excise taxes: a tax imposed on the sale or use by the manufacturer or importer of "taxable chemicals" listed in section 4661, and a tax on the sale or use by the importer of "taxable substances" listed in section 4672 and IRS Notice 2021-66. 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. Assisting with development and implementation of technology solutions to enable identification of taxable chemicals and substances, as well as exemptions. A3. media, Press 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. research, news, insight, productivity tools, and more. I am an importer of taxable substances. 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. For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. Otherwise, companies risk finding out about this tax when they are audited and risk becoming liable for penalties. 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. 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. A5. What are the Superfund chemical excise taxes? How does a company report the Superfund Chemical Excise Tax? 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. Internal Revenue Code (IRC) section 4671 thereby imposed the same tax on imported substances as was already included in the cost of domestically purchased 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. IRS announces Superfund chemical excise tax rates June 24, 2022 Download pdf (363.6 KB) The IRS today announced the prescribed tax rates for 121 taxable substances that are subject to the Superfund chemical excise tax imposed by section 4671 (a). CERCLA (and therefore the Superfund Excise Taxes) expired in 1985 but was extended for another five-year period through the Superfund Amendments and Reauthorization Act of 1986 (SARA), effective January 1, 1987.7 SARA expanded the Superfund Excise Tax on chemicals to include an additional tax on imported substances derived from taxable chemicals, effective January 1, 1989.8 This additional tax on taxable substances was structured to ensure that the amount of the tax correlated to the composition of the chemicals within the taxable substances.9 In other words, had the substance been purchased domestically, the Superfund Excise Tax on chemicals would have been included as part of the overall price of the substance. Social login not available on Microsoft Edge browser at this time. When the owner or operator was not identified, or the site cleanups needed to be expedited, financing for the cleanup was to be provided by the Superfund. The Superfund Chemicals tax previously expired in 1995. Service. November 24, 2021. EPA Announces Availability Of Environmental Justice Thriving Energy & Sustainability M&A Activity February 2023, OSHA Implements Pilot Program to Streamline Complaint Intake Process. Taxpayers should be proactive and carefully analyze and consider the potential tax liabilities, tax reporting requirements, and systems impacts as a result. consulting, Infrastructure Investment and Jobs Act (IIJA), passed last November, the Internal Revenue Service (IRS) has reinstated the. Labor Board Flip-Flops Again on Severance FRB Governor Bowman Speaks on Bank Regulation and Supervision. Tax Senior Manager 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. Certain non-fuel and agricultural uses of some of these chemicals were exempted from the excise tax. 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. 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. Arizona Gets to Keep Its State-Operated Workplace Safety and Health Manufacturers Legal Considerations for Staffing Reductions, PCAOB Enforcement Activity Up Sharply in 2022. 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. Inferences, however, can be made from the absence of any mention in the law. Reg. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. The IIJA reinstates the two taxes with several modifications. 48839 (Oct. 21, 1983). Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. 901, for the initial list of substances that the Secretary has added to the list of taxable substances. 3S. The National Law Review is not a law firm nor is www.NatLawReview.com intended to be a referral service for attorneys and/or other professionals. Among the many provisions in that legislation . Superfund tax on chemicals. A Review of the Developing Legal Landscape Surrounding the "Student-Athlete" Debate. Matt Levin Jul 2, 2021. Tax Principal In November 2021, President Biden signed the Infrastructure Investment and Jobs Act. A substance may be removed from the list of taxable substances if the Secretary determines that taxable chemicals constitute 20 percent or less of the weight and 20 percent or less of the value of the materials used to produce the substance . 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. California Law May Limit Hospitals Ability to Adopt The Joint Ankura CTIX FLASH Update - February 28, 2023, Ankura Cyber Threat Investigations and Expert Services. shipping, and returns, Cookie When people refer to Superfund taxes, they're generally referring to excise taxes that are imposed on taxable chemicals listed under section 4661 and then taxable substances that are. Alternatively, a taxpayer may base the rate for taxable substances on 10% of the value of the import.20. Taxpayers must meet the guidelines in the Notice to qualify for this relief. Deloitte Tax 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. For hazardous substances, the taxable event is the importation of the substance by an importer, and the tax is due upon the first sale or use after the substance is imported. . (added June 24, 2022), Q15. Unlike the static list of 42 taxable chemicals, the taxable substance list is subject to change. 429. 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. Amendments. 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. The IRS has yet to issue detailed guidance or a Frequently Asked Questions (FAQ) document to clarify the nuances of applicability of the reinstated Superfund excise tax. 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 taxes apply only to imported chemicals or substances, not those for export. 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. Congress directed the Department of Treasury to publish an additional list of the taxable substances by January 1, 2022. 4672(a)(2)(B)(1995). The Superfund is a federal excise tax on various hazardous chemicals. Sitemap Fast forward to today. More for This assessment should include a review of the transaction life cycle, master data setup, cost computation and recognition, and general entry posting. Substances. Section 80201 of the bill would revive long-expired Superfund excise taxes at twice their previous level. Your comprehensive guide to the Act's many changes to the Internal Revenue Code, and their implications for businesses and individuals.
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