Funds collected will be added to the Hazardous Substance Superfund Trust. Managing Director, Excise Tax Practice, KPMG US, Senior Manager, Tax | WNT - SALT Income & Incentives, KPMG US, Partner, Tax, Accounting Methods & Credits, KPMG US. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten Since the Superfund excise tax expired almost three decades ago, the industrial chemical communitys familiarity with their application is attenuated at best. The Brazilian government on December 29, 2022, published draft legislation to align Brazils transfer pricing rules with the Organization for Economic Cooperation and Development (OECD) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. 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. The first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). 3/17/2022. The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. Pending further guidance, the previously published tax rates, adjusted for the IIJA increases, and the examples outlined in Notice 89-61 could be helpful in calculating the tax on taxable substances and the potential tax exposure if a substance is subsequently added to the list. SECURE 2.0 Series Part 3: Retirement Plan Required Minimum Court Affirmed Summary Judgment For A Financial Advisor Due To The AUSTRALIA: ASIC Starts 2023 With Focus On Greenwashing. The taxes had previously expired on Dec. 31, 1995, but were reinstated as part of the infrastructure legislation signed by President Biden in November 2021. Permit & License. Requesting additions and/or deletions to the taxable substances list pursuant to updated IRS guidance and procedure. The Aerojet General Corp. Superfund site covers about 5,900 acres near Rancho Cordova. If you are not responsible for paying and reporting the excise tax to the IRS but purchase any of the listed chemicals or substances from your suppliers, review the potential economic impact of the reinstated excise tax on your company. Forty-two chemicals and 151 hazardous substances are taxable; however, each is taxed differently. Applicants for registration may call 859-320-4091 and select menu option #1. For taxable chemicals, the manufacturer, producer, or importer of the taxable chemical is responsible for reporting and paying the section 4661 tax to the IRS. For purposes of this code section the term importer means the person for which the taxable chemical is brought to the U.S. for consumption, use or warehousing. Permit & License. (added June 24, 2022), Q6. In 2022, IRS received petitions to add polyoxymethylene and polyphenylene sulfide to the list of Richmond | Companies might receive a refund of the tax paid if they export products made with specific chemicals and substances if they paid before manufacturing. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. The applicable rates of tax and related By continuing to use this site, you are giving consent to cookies being used. Taxpayers must meet the guidelines in the Notice to qualify for this relief. Nursing Homes Brace for Reforms and Heightened Government Scrutiny. - 2023 PwC. Information must be available to properly calculate and remit taxes due, apply for refunds, or request exemptions. 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. The taxes had previously expired on Dec. 31, 1995, but were reinstated as part of the infrastructure legislation signed by President Biden in November 2021. Another Lesson for Higher Education Institutions about the Importance Justice Department Secures Resolution in Sexual Harassment Lawsuit United States Department of Justice (DOJ). Second, an importer or exporter of a substance (or other interested person) can petition the Secretary to add the substance to or remove the substance from the list of taxable substances. As a result, large and small companies alike who produce or import these chemicals or substances are about to be slammed with additional costs. The Superfund excise tax is currently set to expire on December 31, 2031. Please reach out to our team if you have any questions about the implications of the infrastructure bill. Houston | As part of this Act, superfund excise taxes imposed on chemicals and imported taxable products are set to be reinstated July 1, 2022 through Dec. 31, 2031. published tax rates for 121 of the 151 taxable substances. (added June 24, 2022), Q5. 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. Section 80201(c)(1) of the IIJA modified the method for determining whether a substance is a taxable substance by lowering the required percentage of taxable chemicals used to produce the substance from 50 percent to 20 percent of the weight (or the value) of the materials used to produce such substance. 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. In Philadelphia, Economy Struggles to Keep Up with New Influx of First Major Overhaul of Cosmetics Regulation Since FDR Administration, Governor Kathy Hochul Proposes New York State Housing Compact. The Time Is Now: Comment Period Open For The Federal Trade Commission Canadas Foreign Buyers Ban: What You Should Know About the Ban on CMS Proposed Rule for Refunding Overpayments Would Align With False EPAs Proposal to Tighten the Fine Particulate NAAQS: Whats Proposed Commonwealth Court Strikes Down 2021 Accessibility Regulations as Is Texas Getting Ready to Expand Its Compassionate Use Program? Ascend Performance Materials is the premium provider of high quality chemicals, fibers and plastics. This is the first person/company at which the taxable chemical lands in the U.S. for the preceding reasons. Taxpayers must make semimonthly deposits of the Superfund chemical excise taxes. In order to pay for the provisions in The Infrastructure Investment and Jobs Act (also referred to as the Bipartisan Infrastructure Bill), Superfund was reinstated with double the tax rate on chemicals and a vast expansion of substances. Learn how tax plays a key role in your business while the stakes continue to be high in regards to managing potential changes to US and global tax policy. The Superfund chemical excise tax can affect a company even if it is not directly liable for the tax, because non-liable companies could still bear the economic cost of the tax passed on by suppliers. What is a taxable substance? After a more than 26 year hiatus, on July 1, 2022, the Superfund chemical excise tax (the Superfund Chemical Tax) will again become effective. To obtain certainty prior to IRS issuing guidance on this matter, companies that import taxable substances as part of articles can seek clarification from the IRS. Statement in compliance with Texas Rules of Professional Conduct. Additionally, Notice 2022-15 provides that the IRS will not exercise its authority to revoke the right to use the safe-harbor deposit method during the first three quarters of 2023, provided the requirements of Notice 2022-15 are met. At the time of publication of these FAQs, 151 substances are listed as taxable substances. State Green and Sustainability Claims: A Roundtable Discussion. on The Reinstated Superfund Excise Tax for Chemicals and Imported Substances, How Finance and Accounting Outsourcing Helps Companies Grow, How Sage Intacct Real Estate Simplifies Property Management and Reporting. Ethylene and propylene may also be exempt, but only when used in the production of fuel (motor fuel, diesel fuel, aviation fuel, or jet fuel). Substances. Augusta | Its tax re-imagined. 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%. The per-ton rate of tax varies depending on the taxable chemical being sold or imported, so the amount of Superfund Tax will vary by product. 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. In Philadelphia, Economy Struggles to Keep Up with New Influx of Immigrants. These credits are accrued when a taxable chemical or taxable substance is exported. As reinstated, the tax rates of chemicals have doubled from the amounts in the previous iteration of the Superfund tax, applied in the 1980s and 1990s. The Inflation Reduction Act (IRA) enacted on August 16, 2022, created a new corporate alternative minimum tax (AMT) for taxable years beginning after December 31, 2022. How are substances added to or removed from the list of taxable substances? 429, Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). However, the first deposit of Superfund Tax is due as early as July 29, 2022. Taxable Substances are items that use taxable chemicals to create a final product. 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 Section 4661(b) lists the almost three and a half dozen chemicals that this Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. (added June 24, 2022), Q13. More information about reliance is available. These FAQs were announced in IR-2022-131. Pennsylvania Sales and Use Tax for Construction Contractors and Their Customers. (added June 24, 2022), Q3. This field is for validation purposes and should be left unchanged. The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. But under the Biden plan, those taxes would be reinstated. Yes. If the importer does not calculate the section 4671 tax for a taxable substance and the IRS has not prescribed a tax rate for the taxable substance, then the amount of tax is 10 percent of the appraised value of the taxable substance as of the time the taxable substance was entered into the United States for consumption, use, or warehousing. IRC section 4661(b) lists 42 chemicals that are once again subject to the Superfund Excise Tax effective July 1, 2022. 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. Raleigh | BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. As a background, when these taxes were reinstated through the Infrastructure Investment and Texas Unclaimed Property, a Division of the Texas Comptroller of Public Accounts (Texas Comptroller), is increasing compliance efforts through outreach. The excise tax collection expired in 1995 but resumed on July 1, 2022. Excise Tax on Corporate Stock Repurchases Under the Inflation Getting Healthcare in 2023 and BeyondVirtuallyand Securely. Webrate and the $0.164 per barrel petroleum Superfund tax rate. These Superfund tax credits can be taken by either the importer, the manufacturer, or the exporter, depending on the commercial agreements that have been established among those parties. 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. Even companies that have been on the market for decades may not have many employees who were around when the previous excise tax applied. Substances treated as taxable will significantly increase over the pre-1996 levels, when the threshold determination only applied when more than 50% of the substances weight or value consisted of taxable chemicals. Legal Disclaimer|Privacy Policy | Copyright 2022 IGenFuels LLC. A2. Consider the action items above, particularly the last one, making sure the information systems are in place to capture the data needed to comply with this tax. The IRS noted that the full list of taxable chemicals and substances could change over time. The IRS is working on calculating tax rates for taxable substances and will release them as they become available. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. Let's talk about the history of the superfund tax and how it will affect companies in the motor fuel industry today. The Inflation Reduction Act added excise tax on domestic crude oil and imported petroleum products starting on January 1,2023. If you would ike to contact us via email please click here. The tax on substances depends on their chemical composition and if it has 20% or more of a chemical on the taxable list. The first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). The information contained herein is not intended to be written advice concerning one or more Federal tax matters subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230. 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. These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. 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. 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). Below is the current list of taxable substances. The IIJA also reinstated the Superfund excise tax on the import for sale or use of any taxable substance underSection 4671of the Tax Code. Initially, the Superfund program called for taxes by manufacturers of crude oil and certain chemicals to fund a trust to pay for environmental cleanup activities. Built by tax professionals for tax professionals. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. To put this in context, tax rates for taxable chemicals range from $0.44 to $9.74 per short ton. 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. Heres more on what is included in the Superfund Excise Tax and what to keep an eye out for. Relief provided for Superfund chemical excise tax semimonthly deposits April 2022 In brief 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 Do Not Sell My Personal Information as to BDO Investigative Due Diligence. Follow these steps to assess applicability and prepare for compliance: The sooner these steps are completed, the more seamless this new reporting and filing will be. The new tax doubles the previous tax rate on Taxable Chemicals and Taxable Substances. Manufacturers, laboratories and other businesses may begin to see these excise taxes passed along to them on invoices from their suppliers. This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. Proc. The FTC's Proposed Rule Banning Noncompete Agreements- What Does It Mean? FS-2022-31 (Issued 6/24/2022), IRS issues Superfund Chemical Excise Taxes FAQs ( Link) Rev. The Superfund Chemical Excise Tax is set to expire in 2031 and is expected to bring in an estimated $14 billion that will go to assisting the clean-up of hazardous waste disposal sites. Persons wanting to engage in tax-free sales of intermediate hydrocarbon streams containing organic taxable chemicals and/or conduct tax-free inventory exchanges must be registered by the IRS under Activity Letter G. Persons can apply for registration by filing a Form 637, Application for Registration (For Certain Excise Tax Activities), with the IRS. A15. This current iteration is set to expire on December 31, 2031. Chemicals will be taxed based on how they're sold, used, or stored and can range from $0.44 to $9.74 and will be charged on a per-ton basis. $225 plus $0.073 per each acre-foot greater than 10 acre-feet. Elizabeth supports clients with sales and use tax nexus studies, tax registration, voluntary disclosure agreements, audit representation, item taxability, overpayment recovery, and exposure audits. 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). In order to pay for See also section 4661(b) for the tax rate for taxable chemicals. Aerojet and its subsidiaries have Nearly three decades after expiring, the Superfund chemical excise tax is back. The list of 42 chemicals and their respective excise tax rates is found in Internal Revenue Code (IRC) 4661(b). Section 704.3. See Section 4671(b)(2). Superfund Tax Chemicals List According to the IRS, 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. Below is the current list of taxable chemicals. 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. The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. All rights reserved. Unless your company is a manufacturer or importer of chemicals and substances, there is no additional reporting required regarding the superfund excise tax. The term Superfund refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. Section 4661 imposes tax on the sale by the manufacturer, producer or importer of taxable chemicals. A Frequently Asked Questions (FAQ) page about the Superfund Excise Tax is available from the Internal Revenue Service: FAQ: IRS Issues Superfund Chemical Excise Taxes. Otherwise, companies risk finding out about this tax when they are audited and risk becoming liable for penalties. The money gathered from the taxes was used to fund the clean-up of hazardous waste disposal sites across the United States. The applicable tax ranges from $.48 to $9.47 per ton. The Superfund taxes are expected to generate approximately $14.5 billion over a 10-year period. A11. A1. Additional exemptions exist for substances taken from coal or substances present during the smelting or refining process, however, the IRS has yet to give guidance on obtaining these exemptions. Proc. Read about their experiences and a few lessons learned along the way. For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. 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 new Superfund Chemical Tax, which is slated to expire on December 31, 2031, unless extended, is expected to yield $14.5 billion in fund revenue over the next decade or $1.44 billion each year on average. Identify exempt chemicals and substances under export rules. Aside from this quarterly filing, taxpayers with a quarterly liability of greater than $2,500 will be required to make semi-monthly tax deposits of at least 95 percent of the net tax liability incurred during the tax period (unless a safe harbor applies). In the meantime, reach out to your RKL advisor with questions or to discuss your companys specific circumstances. It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. Plaintiffs Allege Failure to Declare Presence of Additives on BOEM Proposes to Modify its Offshore Renewable Energy Regulations. Superfund Tax Chemicals List According to the IRS, A taxable chemical is a chemical that is (i) listed in section 4661 (b), and (ii) manufactured or produced in the United Tax on Imported Chemical Substances, IRS No. (added June 24, 2022), Q2. Many entities are struggling with its application. The IRS has release additional information on the Superfund Excise Taxes on Chemicals. Tax is due upon the first use or first sale of a listed chemical in the United States. It started with the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 19801986. Chicago | Inferences, however, can be made from the absence of any mention in the law. Tech trends in Statement By Secretary Walsh On the Telecommunications Workforce EPA Announces Appointments to Local Government Advisory Committee. These substances consist generally or partially of chemicals listed in Section 4661. This potential change in Brazilian transfer pricing policies could have significant consequences from a U.S. transfer pricing and international tax perspective. The Superfund Chemicals Excise Tax Makes a Comeback. Petitions to Add Polyoxymethylene and Polyphenylene Sulfide. The Anti-Money Laundering Act of 2020 Gets a Glow Up: Congress FINRA Files Amendments to Proposed Rule Change That Will Allow Remote Corporate Practice of Medicine Doctrine: Increased Enforcement on the Environmental Justice Update: EPA Announces $100 Million in EJ Grants Insurers Beware of Silent Crypto Exposure: PART III, Silent Crypto Court Rules that Brown Bread is Not Misleading, Whats Next in Washington? For example, methane or butane used as a fuel, or nitric acid, sulfuric acid, ammonia, or methane used in production of fertilizer are exempt. The consumer and political goals of reducing Americas dependence on foreign oil, enhancing national security, and greening the economy converge in biobased chemicals and advanced biofuels, the promising technology of producing commercial chemicals and fuels from renewable resources. Will the IRS prescribe tax rates for taxable substances? 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. In turn, the tax rate of imported substances was effectively doubled as well. The Superfund law (P.L. A Frequently Asked Questions (FAQ) page about the Superfund Excise Tax is available from the Internal Revenue Service: FAQ: IRS Issues Superfund Chemical Excise DOE Publishes Notice of Intent to Fund Clean Hydrogen Projects. Superfund is also imposed when a taxable substance is imported for consumption, use, or warehousing. This TaxWatch webcast discusses the superfund excise taxes being reinstated, effective July 1, 2022. The microbusiness also charges $5 for delivery. If your company is liable, this will require compliance with semi-monthly tax deposit rules and quarterly tax return reporting requirements along with IRS registrations for certain exemptions. System and Organization Control Reporting (SOC), GDPR General Data Protection Regulation. The original Superfund Chemical Excise Tax was enacted with the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) and expired on December 31, 1995. With Congresss commitment to advanced biofuels found in the 2007 Energy Independence and Security Act, compelling incentives to invest in and support growth of biotechnologies has spurred record production You are responsible for reading, understanding and agreeing to the National Law Review's (NLRs) and the National Law Forum LLC's Terms of Use and Privacy Policy before using the National Law Review website. Policy on Demand is a news platform that provides in-depth insights and analysis on policy developments that impact your business. 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. Helping tax leaders embrace disruption, seize new opportunities and drive greater value. 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), Fact Sheets for Frequently Asked Questions, Q1. Notice 89-61provided guidance under the previously applicable Superfund excise tax. The excise tax applies to companies that manufacture, produce, or import any of the 42 specific chemicals listed in Section 4661 of the Tax Code, including ammonia, butane, Her experience includes clients of all sizes from Fortune 500 firms to single location hospitals. 429 (2021)), effective July 1, 2022, with modifications to the applicable rates of tax and other provisions related to those taxes. A4. Class Action Year in Review: The Rise Of The Self-Tapping Website? Since its reinstatement, the excise tax has raised many questions and caused significant industry consternation. The IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. This would be for the periodJuly 1-September 30, 2022. Stephanie provides tax planning and compliance services to corporations, pass-through entities and individuals. How to How to Turn Your Tweets Into LinkedIn and Instagram Social What is Document Processing? South Florida | The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. The Inflation Reduction Act (Pub.L. IRS publishes initial Superfund chemical list January 11, 2022 The IRS recently released guidance ( Notice 2021-66 ,) providing key information on the excise taxes imposed on certain chemicals and substances under Sections 4661 and 4671often referred to as Superfund excise taxes. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. The site is 15 miles east of Sacramento, California. Nearly three decades after expiring, the Superfund chemical excise tax is back. Client Advisory Board, 1175 Lombardi Access Rd., Ste 500, Green Bay, WI 54304. NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. Superfund Excise Tax - What You Need to Know, This analysis is intended for informational purposes only and is not tax advice. The excise tax was not only brought back, but the IIJA doubled the prior tax rate on chemicals. According to the IRS, 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. The infrastructure bill imposes taxes on certain chemicals and imported substances under Internal Revenue Code sections 4661 through 4672. Go back five years for manufacturing drawback. The Infrastructure Investment and Jobs Act (Pub.L. Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. The section 4661 tax is imposed as a rate per ton of a taxable chemical. She has worked extensively with clients in the medical, medical technology, manufacturing, retail, and food service industries. How do I calculate the section 4661 tax? July 1, 2022. See the full disclaimer. The entities falling under the Cherry Bekaert brand are independently owned and are not liable for the services provided by any other entity providing services under the Cherry Bekaert brand.