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. The unique considerations of butane and methane require taxpayers further down the supply chain to be aware of the procedural issues affecting chemicals. Instead, Section 4671(b) provides that the amount of tax imposed with respect to any taxable substance is equal to the amount of tax that would have been imposed by Section 4661 on the taxable chemicals used as materials in the manufacture of the taxable substance, if such taxable chemicals had been sold in the United States for use in the manufacture or production of the taxable substance. The Superfund excise taxes are part of Subtitle D, Chapter 38 of the Tax Code. Exceptional organizations are led by a purpose. No such update has been issued to date, however. 2023. Suite. Labor Board Flip-Flops Again on Severance FRB Governor Bowman Speaks on Bank Regulation and Supervision. Proposed Nursing Home Disclosure Requirements Target Private Equity Regulation in the Post-FTX Environment: SECs Proposed Enhanced Can a Child Decide Whom They Want to Live With in Michigan? 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. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. Activity letter G is reinstated for persons making inventory exchanges of taxable chemicals under section 4662(c)(2), or persons selling or buying intermediate . (added June 24, 2022), Q3. firms, CS Professional Analyzing and assisting in documenting available exemptions (e.g., certain taxable chemicals used in the production of fuel). Calculate the rate based on the percentage amount of each listed chemical included in the substance. Section 704.3. ffalvo@deloitte.com, Marshal Sulayman Statement in compliance with Texas Rules of Professional Conduct. What is a taxable chemical? 4672(a)(2)(B)(2021). Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661 (b). Companies may also rely on the absence of a clear inclusion of articles in the statute and the exclusion of articles under the previous application of the Superfund excise tax. Each chemical has a specified rate of tax, imposed on a per-ton basis, as identified in Exhibit A. (added June 24, 2022), Q15. 4671(b). IRC section 4662 directs the IRS to release guidance as to the appropriate manner of reporting exempt sales or claiming refunds. The Infrastructure Investment and Jobs Act, signed at the end of 2021, reinstates the Superfund chemical excise taxes under Sections 4661 and 4671 of the Internal Revenue Code. Hydrocarbon streams containing mixtures of organic taxable chemicals. SaraBeth Smith 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. Some deposit amount is still required by July 29 to satisfy the relief provisions set out in Notice 2022-15. Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. 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. 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. Helping businesses navigate financial due diligence engagements and domestic and cross-border transactions. To accomplish this, the current system capability should be assessed. The following is an FAQ to help companies get up to speed on what the Superfund Chemical Excise Taxes will require of them. The excise tax collection expired in 1995 but resumed on July 1, 2022. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. 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. This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. Friday Development: New Sanctions and Export Controls to Address Weekly IRS Roundup February 20 February 24, 2023, Everything to Know About Unbundled Legal Services. Section 4661 imposes a per-ton tax, ranging from $0.44 to $9.74 per ton on the following 42 chemicals: DOL Provides Snapshot of ERISA Enforcement Statistics for Fiscal Year 2022, TPA Escapes Liability for Sending COBRA Notice to Employees Former Address, but Claims Proceed Against Employer, For The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. Technology/systems impacts Biobased chemicals and biofuels have taken root thanks to both popular appeal and political support. These substances consist generally or partially of chemicals listed in Section 4661. L. 99-499, approved Oct. 17, 1986. This could create a potential liability for downstream users such that the rst company that uses the methane or butane in a manner other than as a fuel will have to report and remit the Superfund Tax. How Modern Manufacturing Plants Can Protect Against Ransomware, FTC Will Host May 23, 2023, Workshop on Recyclable Claims and the Appellate Court Affirmed An Order Denying A Beneficiarys Request For An Overview of Why Class Action Privacy Lawsuits May Have Just Gotten Gold Dome Report Legislative Day 26 (2023). A9. On Dec. 14, 2021, the IRS issued Notice 2021-66, which provides guidance on implementing the reinstated Superfund excise taxes, and followed up on June 24, 2022, with an FAQ . A cloud-based tax The Final CCPA Regulations: What You Need To Know, Are College Athletes Students or Employees? This assessment should include a review of the transaction life cycle, master data setup, cost computation and recognition, and general entry posting. accounting firms, For However, Notice 2022-15, 2022-18 I.R.B. See section 4671(b)(1). The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. 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. 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. 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. The rates are listed in IRS release IR-2022-133 (June 24, 2022). 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. 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. Part II of Form 6627, Environmental Taxes, will be updated to reflect the tax rate per ton of each taxable chemical. The IIJA also reinstated the Superfund excise tax on the import for sale or use of any taxable substance underSection 4671of the Tax Code. (added June 24, 2022), Q14. 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. 3684 (Aug. 2, 2021). Confidentiality and Non-Disparagement Agreements with Non-Supervisory USCIS Confirms It Will Accept Employment-Based I-485 Applications New Jersey Enacts Bill of Rights for Temporary Workers, DOJ Implements Nationwide Voluntary Self-Disclosure Program. 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 Superfund tax is assessed on the manufacturer or importer of these chemicals. Creditor Stung By Academy Of Motion Picture Arts And Sciences Bylaws. 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. 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 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. From 1987 through 1995, an excise tax also applied to the sale by the manufacturer, producer or importer of 42 specified chemicals. To apply to participate in tax-free sales of intermediate hydrocarbon streams containing organic taxable chemicals or tax-free inventory exchanges of taxable chemicals, file Form 637, Application for Registration (For Certain Excise Tax Activities) with activity letter G. Page Last Reviewed or Updated: 04-Jan-2023, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), Self-Employment Tax (Social Security and Medicare Taxes), Form 720, Quarterly Federal Excise Tax Return, Form 637, Application for Registration (For Certain Excise Tax Activities), Treasury Inspector General for Tax Administration. Strictly Confidential? The excise taxes are effective July 1, 2022. automatically and accurately calculating the amount of excise tax owed. 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The term " Superfund " refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. Between 1990 and 1995, dozens of taxpayers petitioned the IRS to determine whether different chemical substances wouldqualify as taxable substances, primarily for purposes of export, so as to qualify for an exemption or refund. Abusive Arbitrage Devices Its Time to Get Reacquainted (Episode 2 B&C Biobased and Sustainable Chemicals Practice Group Bergeson & Campbell, P.C. media, Press How are substances added to or removed from the list of taxable substances? See also I.R.C. Federal excise tax rates remain at $0.183/gal for gasoline and $0.243/gal for diesel fuel. and services for tax and accounting professionals. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. The Petroleum Superfund Tax is proposed to be indexed for inflation beginning in calendar year 2023. 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. 4671(b)(2). Tax is due upon the first use or first sale of a listed chemical in the United States. Taxpayers must make semimonthly deposits of the Superfund chemical excise taxes. Tax Implications and Financial Business Guidance Regarding the Coronavirus. The "Superfund Tax" is comprised of two separate taxesone covering the sale or use of taxable chemicals "by the manufacturer, producer, or importer thereof" pursuant to 26 U.S.C. Due to the complicated nature of the Superfund Excise Tax and the granularity of the tax rate structure, gaps in existing systems and processes may exist. Taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the tax. Fullwidth SCC. This box/component contains JavaScript that is needed on this page. Due to the complicated nature of the tax assessments, and the detailed information required, gaps in existing systems and processes may exist. The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. Rep. No. Tax Partner healthcare, More for statement, 2019 We provide an overview of the origins of the Superfund Excise Tax and take a closer look at the revitalized tax (effective July 1, 2022), as included within the Infrastructure Investment and Jobs Act (the The Infrastructure Bill), signed into law on November 15, 2021.1 Through this lens, we highlight issues to consider in evaluating the Superfund tax on chemicals and chemical substances. Butane and methane users Reg. financial reporting, Global trade & White House Reviewing Proposed Regulations on Reinstated Superfund You Dont Need a Machine to Predict What the FTC Might Do About Is It Compensable? The tax expired under its terms in the mid-1990s but has now been reinstated. Assisting with filing the federal excise tax returns and semi-monthly deposit reporting. When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. The taxes, which should go in effect on 1 July 2022, are estimated to raise approximately $14.45bn over a 10-year period Tax is due upon the first use or first sale of a listed chemical in the United States. (All oil and almost all hazardous substances are products of the oil industry, chemical and allied industries, and heavy metals industries. 17Prop. Will the IRS prescribe tax rates for taxable substances? collaboration. 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