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. | 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. The Superfund is a federal excise tax on various hazardous chemicals. When are the new Superfund Chemical Excise taxes due? (added June 24, 2022), Q13. 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. 16I.R.C. chrigong@deloitte.com. IRC section 4672 additionally directed importers and exporters to request a determination from the IRS as to whether a specific unlisted chemical substance should be included in the list of taxable substances. FAQs The first return, for the. technology solutions for global tax compliance and decision 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. See Section 4671(b)(2). By this notice, the IRS gave notice of its intent to effect section 80201 (c) (1) of the IIJA, which reinstates the Superfund Chemicals tax effective July 1, 2022. Assisting with filing refund claims and reporting requirements around exemption certificates. 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. 6Id. 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. Tax is due upon the first use or first sale of a listed chemical in the United States. 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. 4671. (added June 24, 2022), Q15. (added June 24, 2022), Q3. Draft the To Each Their Own: Agency Must Consider Experience of Each Partner in CMS Updates List of Telehealth Services for CY 2023, What You Need to Know About the New Tariffs on Imports from Russia. The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. Accordingly, these FAQs may not address any particular taxpayer's specific facts and circumstances, and they may be updated or modified upon further review. 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. In brief. The Superfund chemical excise taxes previously expired on December 31, 1995. (added June 24, 2022), Q6. A cloud-based tax How do I calculate the section 4671 tax? The Superfund Excise Taxes will be reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. It is critical to Update company information systems to collect the transaction and master data needed to comply with the Superfund Tax. Everyone loves infrastructure, but it pays to read the fine print. 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." Effective July 1, 2022, as required by the Infrastructure Investment and Jobs Act (IIJA)passed last November, the Internal Revenue Service (IRS) has reinstated the Superfund Chemical Excise Tax on a wide range of chemicals and substances. Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. 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. Notice 2021-66. 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. At the time of publication of these FAQs, 151 substances are listed as taxable 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. media, Press Taxpayers may petition the IRS to determine whether a substance falls within the taxable substances list. Each chemical has a specified rate of tax, imposed on a per-ton basis, as identified in Exhibit A. 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. In Notice 2021-66 (released December 14, 2021), the IRS provided guidance on Superfund excise taxes, which are reinstated as of July 1, 2022, under the Infrastructure Investment and Jobs Act (IIJA) (see Tax Alert 2021-2059).. Notice 2021-66 does the following: Updates the list of taxable substances under IRC Section 4672(a), which had expired on December 31, 1995 This would be for the periodJuly 1-September 30, 2022. (added June 24, 2022), Q9. A2. 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. accounting, Firm & workflow California Law May Limit Hospitals Ability to Adopt The Joint Ankura CTIX FLASH Update - February 28, 2023, Ankura Cyber Threat Investigations and Expert Services. Labor Board Flip-Flops Again on Severance FRB Governor Bowman Speaks on Bank Regulation and Supervision. 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. Cultivating a sustainable and prosperous future, Real-world client stories of purpose and impact, Key opportunities, trends, and challenges, Go straight to smart with daily updates on your mobile device, See what's happening this week and the impact on your business. Complete Analysis of the Tax Cuts and Jobs Act, The future of Indirect Tax (IDT): How to take charge of change, How to overcome the most common challenges of tax engine implementation, The Tax Technology Transformation: Getting Started. Under the rules, a late fee of 5% may be applied on the amount due for each month the form remains delinquent up to a total penalty of 25%. No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. 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. Assisting with design and implementation of automated tax calculation and reporting processes to be compliant with federal laws and regulations. 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 rationale for the fee collection point was so that the fee would be equally distributed among all hazardous waste generators and suppliers.6. Rep. No. 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. 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. 9See I.R.C. Form 6627 must be led alongside Form 720 on a quarterly basis. Substances. A8. Notice 2021-66 suspended the procedure in Notice 89-61 because the IRS plans to issue a more current guidance on this matter. Please enable JavaScript to view the site. Atlanta | environment open to Thomson Reuters customers only. These FAQs were announced in IR-2022-131. The Superfund tax is assessed on the manufacturer or importer of these chemicals. Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. (All oil and almost all hazardous substances are products of the oil industry, chemical and allied industries, and heavy metals industries. 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. The Petroleum Superfund Tax is proposed to be indexed for inflation beginning in calendar year 2023. Prior to their expiration in 1995, the Superfund excise taxes were used to fund theHazardous Substance Superfund, established by theComprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). The IIJA reinstates the two taxes with several modifications. US Executive Branch Update February 27, 2023. Charlotte | 4671. 15I.R.C. 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. In these cases, the other person would be liable for paying the excise tax, not the initial importer. 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). Social login not available on Microsoft Edge browser at this time. The Infrastructure Bill lowered this threshold to 20%. The IRS has release additional information on the Superfund Excise Taxes on Chemicals. The Superfund Excise Tax is not permanent and . The applicable tax for a hazardous substance depends on its chemical composition. This button displays the currently selected search type. Providence | Chemicals. 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. The taxes, which should go in effect on 1 July 2022, are estimated to raise approximately $14.45bn over a 10-year period Fullwidth SCC. Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). 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. 4661 imposes tax on the sale or use by the manufacturer, producer, or importer of 42 listed chemicals. 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. 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. Thomson Reuters/Tax & Accounting. They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. Its also important to understand the tax calculation and reporting requirements and to align with other business functions to implement a process to meet data, process, and system requirements. What is a taxable chemical? 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 two most significant excise tax provisions of HR 3684 are (1) reinstatement of the Section 4661 taxes on sales by a taxpayer that manufactures, produces, or imports certain chemicals and (2) reinstatement of Section 4671 taxes on an importer's sale or use of specified substances. Under what circumstances is registration required? Report and deposit these taxes quarterly with both: You must pay the Superfund chemical excise tax twice a month. 17Prop. 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. Your online resource to get answers to your product and The tax directly . 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. The tax law is included in the Infrastructure Investment and Jobs Act that was signed into law on November 15, 2021. (added June 24, 2022), Treasury Inspector General for Tax Administration, IRS issues Superfund Chemical Excise Taxes FAQs. Superfund tax on chemicals. At that time, the application of the tax and the deployment of funds were quite well understood, and the U.S. Internal Revenue Service (IRS) developed a relatively robust series of guidance documents to explain how the tax operated and who was subject to the tax. A5. The rates will be included in the instructions to Form 6627, Environmental Taxes, and under Recent Developments for Form 6627, Environmental Taxes. I am an importer of taxable substances. A6. The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. Statement in compliance with Texas Rules of Professional Conduct. Yes. See section 4672(a)(1). As part of the recently unveiled infrastructure deal, the Biden administration announced plans to reinstate the Superfund taxes on chemical manufacturers in the United States. shipping, and returns, Cookie _____________________________________________________________________________________________. After more than 25 years, two excise taxes on chemicals and imported hazardous substances were reinstated in the Infrastructure Investment and Jobs Act (Pub. The Final CCPA Regulations: What You Need To Know, Are College Athletes Students or Employees? Form 6627 must be filed alongside Form 720 on a quarterly basis. 52.4661-1 4662-4, 48 Fed. 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. The Leaking Underground Storage Tank (LUST) Fund adds an additional $0.001/gal federal fee. It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. See Notice 2021-66, 2021-52 I.R.B. 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. A15. There are three ways to arrive at a tax determination for the Superfund Tax: 2. Raleigh | How are substances added to or removed from the list of taxable substances? Hydrocarbon streams containing mixtures of organic taxable chemicals. November 24, 2021. 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. 7Superfund Amendments and Reauthorization Act of 1986, Pub. Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. The following is an FAQ to help companies get up to speed on what the Superfund Chemical Excise Taxes will require of them. They were reinstated by section 80201(c)(3) of the Infrastructure Investment and Jobs Act (Public Law 117-58, 135 Stat. For taxable substances, the importer of the taxable substance is responsible for reporting and paying the section 4671 tax to the IRS. Many entities are struggling with its application. The Superfund tax is assessed on the manufacturer or importer of these chemicals. 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. No such update has been issued to date, however. For further chemical conversion a tax determination for the fee collection point so! The other person would be equally distributed among all hazardous substances are products of oil. 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