The Superfund tax on chemicals is also a tax on the import of taxable substances. 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. Houston | A7. In November 2021, President Biden signed the Infrastructure Investment and Jobs Act. 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. What is a taxable substance? Hampton Roads | Please see www.deloitte.com/about to learn more about our global network of member firms. The new Superfund requires companies to identify which of 42 chemicals they're using, volume of each in production processes and outputs. 4672(a)(2)(B)(2021). Taxpayers must make semimonthly deposits of the Superfund chemical excise taxes. | Careers Nota Bene Episode 160: European Update: Oliver Heinisch and Scott Federal Communications Commission to Consider Rules and Proposals to Whats the Standard? The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. (added June 24, 2022), Q8. They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. 4672(b)(1). media, Press (added June 24, 2022), Q14. An official website of the United States Government. msulayman@deloitte.com, Stephane Lunan Raleigh | 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). slunan@deloitte.com, Christina Gong 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 . _____________________________________________________________________________________________. Reg. (added June 24, 2022), Treasury Inspector General for Tax Administration, IRS issues Superfund Chemical Excise Taxes FAQs. Nashville | BIPA ALERT: Illinois Supreme Court Opens the Door to Punitive, President Biden to Nominate Julie Su as New Secretary of Labor, The European Unitary Patent: Why Retailers Should Care, New York City Employers Prepare for AI Bias Law [VIDEO], Administration's WOTUS Rule Muddies Jurisdictional Waters. A15. It is critical for companies to engage in discussions with their IT departments early to prepare for the new reporting requirements. See how we connect, collaborate, and drive impact across various locations. 23I.R.C. Exceptional organizations are led by a purpose. 4671(b). Does the Supreme Court have the stomach to tackle the super fun SECs Pay vs. They were reinstated by section 80201(c)(3) of the Infrastructure Investment and Jobs Act (Public Law 117-58, 135 Stat. This law levies taxes on the manufacture, production, or importation of 42 specific chemicals and another 121 chemical substances. 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. 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 Superfund Excise Tax is not permanent and . Heavy metals, halogens, acids, and bases are significant raw materials for many toxic inorganics.) Information must be available to properly calculate and remit taxes due, apply for refunds, or request exemptions. The excise tax was applied to a list of 42 chemicals used predominantly in the oil, gas, and chemical industries. Heard on: Revenue from a new excise tax on chemicals like Benzene and Mercury would go . Effective July 1, the Infrastructure Investment and Jobs Act (IIJA) reinstated the excise taxes imposed on certain chemicals and imported chemical substances under IRC Sections 4661 through 4672 (Superfund excise taxes). 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). Yes. 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. Section 704.3. Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). L. 99-499, approved Oct. 17, 1986. Will the IRS prescribe tax rates for taxable substances? 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. 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. Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. 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. 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. 16I.R.C. 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. It is unclear whether and how the statute means to differentiate a substance from an article, and if so, whether the IRS would apply the definition of article under the Toxic Substances Control Act (TSCA). 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. . (added June 24, 2022), Q2. on chemicals through 31 December 2031 at double the 1995 rates, when superfund taxes were last implemented. Los Angeles | How are the Superfund chemical excise taxes reported? Thomson Reuters/Tax & Accounting. A13. (added June 24, 2022), Q7. 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. No. Yes. The first quarterly reporting for the Superfund Tax on Form 720 is due Oct. 31, 2022. If you would ike to contact us via email please click here. Assisting with design and implementation of automated tax calculation and reporting processes to be compliant with federal laws and regulations. Try our solution finder tool for a tailored set Strategies for Protecting Standard Essential Department Of Justice Introduces Voluntary Self-Disclosure Policy For Minnesota Supreme Court Clarifies State Law Standards for Severe or Gold Dome Report Legislative Day 25 (2023). 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. 96-125 at 14878 (1979). July 1, 2022. 18I.R.S. Friday Development: New Sanctions and Export Controls to Address Weekly IRS Roundup February 20 February 24, 2023, Everything to Know About Unbundled Legal Services. A14. The Superfund tax is assessed on the manufacturer or importer of these chemicals. Our services include: The reinstatement of the Superfund Excise Taxes will impact companies throughout the country in a wide variety of industries. Technology/systems impacts The tax rates of the listed chemicals were based on the percentage of the individual chemicals found in the hazardous waste sites. An importer of a taxable substance is subject to the section 4671 tax on the sale or use of the taxable substance on or after July 1, 2022. 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. Notice 89-61provided guidance under the previously applicable Superfund excise tax. Exporters environment open to Thomson Reuters customers only. Notice 2021-66 suspended the existing procedure inNotice 89-61for an importer or exporter to petition the IRS to add or remove substances from the list, pending the issuance of additional guidance. DTTL (also referred to as "Deloitte Global") does not provide services to clients. Reg. The Basics of Californias Outside Salesperson Exemption. The NLR does not wish, nor does it intend, to solicit the business of anyone or to refer anyone to an attorney or other professional. 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. What happens if an importer does not calculate the section 4671 tax? The Infrastructure Bill reinstated the Superfund Excise Taxes on chemicals and taxable substances, effective July 1, 2022.11 In addition to the reinstatement of the taxes, the Infrastructure Bill doubled the prior rate of tax on the 42 listed chemicals. When is the first return due? 22The IRS does not require that the tax be included in the total cost of the product or separately line itemed in an invoice. 429 (2021)), effective July 1, 2022, with modifications to the applicable rates of tax and other provisions related to those taxes. The rates are listed in IRS release IR-2022-133 (June 24, 2022). collaboration. 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. 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. This tax provided a federal fund to remediate toxic spill sites when a responsible party could not be identified. Otherwise, companies risk finding out about this tax when they are audited and risk becoming liable for penalties. industry questions. That number will likely change as substances are added to or removed from the list of taxable substances pursuant to section 4672(a)(2) or (4). 5Id. L. 117-58. 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. Tax Managing Director The Superfund excise taxes include two separate but interrelated excise taxes applicable to crude oil and petroleum products, chemicals, and hazardous substances, which fund the Hazardous Substance Superfund for the cleanup of hazardous waste sites and expired more than 25 years ago. This direct tax hike on American producers would result in higher prices for consumers, threaten thousands of jobs, and undermine domestic . A10. services, Comprehensive Environmental Response Compensation, and Liability Act of 1980 (CERCLA). IRS issues Superfund Chemical Excise Taxes FAQs FS-2022-31, June 2022 The Infrastructure Investment and Jobs Act (IIJA) reinstated the excise taxes imposed on certain chemicals and imported chemical substances under Internal Revenue Code sections 4661 through 4672 beginning July 1, 2022. 12I.R.S. 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. Notice 2021-66 suspended the procedure in Notice 89-61 because the IRS plans to issue a more current guidance on this matter. 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. 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