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, benzene and mercury. As we mentioned above, this tax is only for companies importing chemicals or hazardous substances on the list and filing an IRS Form 720. Review your business processes, entities and products to determine the effect on contracts, invoicing, cost recovery, technology and potential future audits. Identify exempt chemicals and substances under export rules. Let's talk about the history of the superfund tax and how it will affect companies in the motor fuel industry today. Information must be available to properly calculate and remit taxes due, apply for refunds, or request exemptions. Part III. Tax News & Views, our current events-focused tax podcast, can help provide clarity on the latest tax news and developments that could affect your business. For more information on cookies and how we use them, view our Cookie Policy. Any manufacturer, producer, or importer of a taxable chemical is subject to the superfund excise tax. 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. 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. 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). 117-169), which was signed into law on August 16, 2022, reinstated the Petroleum Superfund Tax at a rate of 16.4 cents per barrel. Under what circumstances is registration required? Expanded Employee Retention Credit (ERC) & how our professionals can assist you. 2017 In addition, exporters of chemicals and substances which were subject to the Superfund Tax can request a refund of the tax previously paid. It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. This is the first person/company at which the taxable chemical lands in the U.S. for the preceding reasons. Otherwise, companies risk finding out about this tax when they are audited and risk becoming liable for penalties. 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. See also section 4661(b) for the tax rate for taxable chemicals. State Green and Sustainability Claims: A Roundtable Discussion. Unless your company is a manufacturer or importer of chemicals and substances, there is no additional reporting required regarding the superfund excise tax. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. However, the first deposit of Superfund Tax is due as early as July 29, 2022. Chemicals. The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. 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. These credits are accrued when a taxable chemical or taxable substance is exported. The excise tax collection expired in 1995 but resumed on July 1, 2022. 117-169), which was signed into law on August 16, 2022, reinstated the Petroleum Superfund Tax at a rate of 16.4 cents per barrel. The Superfund chemical excise taxes previously expired on December 31, 1995. Section 704.3. An exporter who did not pay the initial assessment of the Superfund Tax may still be entitled to the refund if certain condition are met. What is a taxable substance? The microbusiness also charges $5 for delivery. (Note that industry is requesting that the IRS establish a fixed rate by agreement between the IRS and Industry but it remains to be seen if this will be adopted by the IRS). 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. Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. Notice IR-2022-132 focused on issuing tax rates for 121 taxable substances. The IRS has provided taxpayers temporary relief from penalties for failure to deposit superfund chemical taxes in the third and fourth calendar quarters of 2022 and the first quarter of 2023 through Notice 2022-15. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. Ascend Performance Materials is the premium provider of high quality chemicals, fibers and plastics. Implementing process improvements including potential technology solutions to efficiently monitor products subject to tax and possible exemptions. The revenues are intended to help pay for the approximately $550 billion in new spending on infrastructure that is part of the 2021 Infrastructure Investment and Jobs Act. The Superfund Excise Tax on chemical sales is back! If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. Tax on Imported Chemical Substances, IRS No. The IIJA also reinstated the Superfund excise tax on the import for sale or use of any taxable substance underSection 4671of the Tax Code. The Superfund excise taxes are part of Subtitle D, Chapter 38 of the Tax Code. As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. 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? 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, Part II of IRS Form 6627 has been updated to reflect these rates. It is important for companies to be aware of the existence of this tax, and to evaluate the chemicals and substances they import, to establish whether they owe any excise taxes. It started with the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 19801986. Are Your Companys Year-End Compensation Accruals Tax Deductible? The Aerojet General Corp. Superfund site covers about 5,900 acres near Rancho Cordova. During her free time Elizabeth enjoys going to concerts, traveling, hanging out with her pets, and caring for her succulent plants. As reinstated, the tax The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form When is the first return due? The section 4661 tax is imposed as a rate per ton of a taxable chemical. Tampa | The Infrastructure Bill reinstated the Superfund Excise Taxes on chemicals and taxable substances, effective July 1, 2022. What are the Superfund chemical excise taxes? See section 4671(b)(1). A6. 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). 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 content and links on www.NatLawReview.comare intended for general information purposes only. 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. 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. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. The Infrastructure Investment and Jobs Act (Pub.L. This effectively doubled the tax rate of the imported taxable substances as well, and the Infrastructure Bill further Tax credits abound. The manufacturer or importer pays the excise tax for chemicals, which is due on the first use or sale in the United States. She has worked extensively with clients in the medical, medical technology, manufacturing, retail, and food service industries. With over 10 years of experience, Sales Tax Manager Elizabeth Perez Gonzalez specializes in sales and use tax services. Deposits, if required, must be made electronically, often requiring submission before the actual due date to process timely. WebTax Podcast: The Superfund Excise Tax: Back in action President Bidens Infrastructure bill revitalized the long-expired Superfund Excise Tax on chemical sales, which goes into effect July 1. There are 42 listed taxable chemicals under IRC 4661, which imposes excise tax on the sale or use by a manufacturer, producer or importer of such chemicals. On November 15, 2021, President Biden signed into law theInfrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. The amount of the section 4671 tax with respect to any taxable substance is generally the amount of section 4661 tax that would have been imposed on the taxable chemicals used in the manufacture or production of the taxable substance if the taxable chemicals had been sold in the United States for use in the manufacture or production of the taxable substance. Sitemap If your organization believes it may be subject to the reinstated Superfund Excise taxes, be prepared to begin reporting on chemical use. The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. The reauthorization doubled the tax rates on taxable chemicals, vastly expanded listed taxable substances, and increased the cap size of the trust fund. Chicago | Helping businesses navigate financial due diligence engagements and domestic and cross-border transactions. Fast forward to today. Charter will compile all required documentation, submit summary details for credit to the appropriate entity, and maintain all the necessary documentation for credits, all while providing complete confidentiality in third-party situations. Copyright 2023 BDO USA LLP. The Infrastructure Investment and Jobs Act lowered this threshold to 20%. The calculation of the superfund excise taxes is complex, and accurate reporting data can help companies reduce their tax burden. The applicable rates of tax and related A1. Are semimonthly deposits required? The reinstated excise tax on chemicals and substances containing chemicals funds a portion of the Superfund Trust Fund. 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. Statement in compliance with Texas Rules of Professional Conduct. Companies must report the reinstated Superfund excise taxes onForm 6627, Environmental Taxes, attached toForm 720, Quarterly Federal Excise Tax Return. This new tax does not need to add additional costs to your products. 2022-19: Relief for S Corporation Owners, Financial Secrecy Under Attack in the United States: Final Regulations Issued for Beneficial Ownership Information Reporting, Cybersecurity Maturity Model Certification, Business Intelligence and Data Analytics Services, Digital Strategy & Transformation Services, Government Contractor Consulting Services, SBA 8(a) Business Development Program Consulting Services, Information Technology Audit & Consulting, Cybersecurity Maturity Model Certification (CMMC), Outsourced Sales Tax Compliance and Managed Services, IRS issues Superfund Chemical Excise Tax Rates, IRS issues Superfund Chemical Excise Taxes FAQs, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. This effectively doubled the tax rate for taxable chemicals or use of any taxable substance is.... Going to concerts, traveling, hanging out with her pets, and the Infrastructure Bill tax... 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