While the majority of the 42 listed chemicals are taxable by the manufacturer or importer upon the first sale or use, butane and methane only become taxable upon the first use other than as a fuel.23 This creates a potential liability for downstream product sales such that the first company that uses the methane or butane in a manner other than as a fuel will have to report and remit the Superfund Excise Tax. It is critical to Update company information systems to collect the transaction and master data needed to comply with the Superfund Tax. A10. Reinstatement of Superfund excise taxes. SaraBeth Smith Federal excise tax rates remain at $0.183/gal for gasoline and $0.243/gal for diesel fuel. Tax Partner management, Document Cherry Bekaert: Tax, Audit and Advisory Services, Superfund Excise Taxes on Chemicals and Substances: How to Prepare, Maximize the Supply Chain Revolution Panel Discussion, 2023 Legislative Landscape: Expanding Opportunities for Manufacturers, The U.S. and Global Economic Manufacturing Outlook for 2023, Private Equity Industry Report: 2022 Trends and 2023 Outlook, 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. Waters of the United States and Winston Churchill. It is important for companies to engage in early conversations with procurement, contracting, IT, and other internal departments to identify and assess their exposure and potential gaps in data gathering. Activity letter G is reinstated for persons making inventory exchanges of taxable chemicals under section 4662(c)(2), or persons selling or buying intermediate . July 1, 2022. Breaking the Link New Developments on U.S. Applicants for registration may call 859-320-4091 and select menu option #1. Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). 16I.R.C. The taxes, which should go in effect on 1 July 2022, are estimated to raise approximately $14.45bn over a 10-year period While the majority of the listed chemicals are taxable by the manufacturer or importer upon the rst sale or use, butane and methane only become taxable upon the rst use other than as a fuel. 11001 (2021). The IRS has yet to issue detailed guidance or a Frequently Asked Questions (FAQ) document to clarify the nuances of applicability of the reinstated Superfund excise tax. 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. The Superfund chemical excise taxes previously expired on December 31, 1995. of products and services. This current iteration is set to expire on December 31, 2031. The 2022 law revived a tax that previously expired in 1995, the Hazardous Substance Superfund tax rate. 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 4661 imposes tax on the sale or use by the manufacturer, producer, or importer of 42 listed chemicals. What do companies need to do in order to prepare for these taxes? 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. . 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. Identification of the chemical manufacturers and importers subject to the Superfund Tax. 7Superfund Amendments and Reauthorization Act of 1986, Pub. The Basics of Californias Outside Salesperson Exemption. For instance, necessary data elements may not be available to properly identify the taxable chemicals and components. The chemicals selected to be subject to the fee were based on two categories: petrochemical feedstocks and inorganic raw materials. Exporters releases, Your Friday Development: New Sanctions and Export Controls to Address Weekly IRS Roundup February 20 February 24, 2023, Everything to Know About Unbundled Legal Services. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. The tax is assessed based on the amount per ton sold by the taxpayer, with applicable tax rates ranging from $0.44 per ton to $9.74 per ton. 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. IT and tax departments in particular will need to collect transactional data all along the supply chain, as well any applicable master data. 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. Do not delete! In Notice 2021-66 the IRS published a list of 100 additional substances subject to the Superfund Tax. There are two separate Superfund chemical excise taxes: a tax imposed on the sale or use by the manufacturer or importer of "taxable chemicals" listed in section 4661, and a tax on the sale or use by the importer of "taxable substances" listed in section 4672 and IRS Notice 2021-66. The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. (added June 24, 2022), Q15. Chemicals. | 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. (added June 24, 2022), Q6. Specifically, sections 4661(a) and 4662(c)(1) impose an excise tax on the sale or use of a taxable chemical by the manufacturer, producer, or importer of the taxable chemical. 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. This Week in 340B: February 21 27, 2023. The applicable tax for a hazardous substance depends on its chemical composition. Since its reinstatement, the excise tax has raised many questions and caused significant industry consternation. Congress directed the Department of Treasury to publish an additional list of the taxable substances by January 1, 2022. Exceptional organizations are led by a purpose. . The first return, for the. The Revenue Reconciliation Act of 1990 further extended the Superfund Excise Taxes through December 31, 1995, after which point the Superfund Excise Taxes expired. Taxable substances include substances where taxable chemicals constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce such substance (as determined based on the predominant method of production). 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. Technology/systems impacts Now, according to Section 4661, the tax rate for chemicals ranges from $0.44 to $9.74 per ton, depending on how the chemical is being sold, used, or stored. See Notice 2021-66, 2021-52 I.R.B. consulting, Infrastructure Investment and Jobs Act (IIJA), passed last November, the Internal Revenue Service (IRS) has reinstated the. Will Changes to the Option To Tax Regime Impact UK Insolvency Sales? The IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. The Superfund tax on chemicals is also a tax on the import of taxable substances. 4671(b)(2). It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. When are the new Superfund Chemical Excise taxes due? 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. The specified. The National Law Review - National Law Forum LLC 3 Grant Square #141 Hinsdale, IL 60521 Telephone (708) 357-3317 ortollfree(877)357-3317. The Superfund tax is assessed on the manufacturer or importer of these chemicals. Service. 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). Section 40.6302(c)-1(b)(2), for failure to make required deposits of Superfund excise taxes if the requirements set out in the Notice are met. Assisting with risk analyses and internal processes (design or documentation). 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. Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. 2Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), Pub. The IRS has release additional information on the Superfund Excise Taxes on Chemicals. The Superfund was to be financed through environmental excise taxes, including: (1) excise tax imposed on domestic crude oil; (2) excise tax imposed on imported crude oil and petroleum products; and (3) domestically produced and imported petrochemicals and inorganic chemicals. The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. Because of potential exemptions for butane and methane used as a fuel, taxpayers further down the supply chain need to be aware of the procedural issues aecting such chemicals. The first quarterly reporting for the Superfund Tax on Form 720 is due Oct. 31, 2022. Fast forward to today. Due to the complicated nature of the tax assessments, and the detailed information required, gaps in existing systems and processes may exist. Companies opting for the latter run the risk, however, of incurring penalties, should the IRS adopt a different view. industry questions. The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. How are the Superfund chemical excise taxes reported? Often collectively referred to as the superfund taxes, Congress imposed excise taxes on domestic crude oil, imported petroleum products and identified chemicals, as well as imported substances comprised of such chemicals. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. 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. Similarly, if an FAQ turns out to be an inaccurate statement of the law as applied to a particular taxpayer's case, the law will control the taxpayer's tax liability. msulayman@deloitte.com, Stephane Lunan 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. 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. They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. The notice also addresses registration requirements to exempt certain sales and uses of taxable chemicals from tax. 52.4661-1 4662-4, 48 Fed. This assessment should include a review of the transaction life cycle, master data setup, cost computation and recognition, and general entry posting. It's codified in IRC Sections 4671 and 4672, both of which were added by the Superfund Amendments and Reauthorization Act of 1986. This message will not be visible when page is activated. 15I.R.C. This memorandum explains why. Tax Principal Substances. 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 Taxpayers may petition the IRS to determine whether a substance falls within the taxable substances list. Hampton Roads | 901, for the initial list of substances that the Secretary has added to the list of taxable substances. 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 Superfund was to be financed through environmental excise taxes, including: (1) excise tax imposed on domestic crude oil; (2) excise tax imposed on imported crude oil and petroleum products; and (3) domestically produced and imported petrochemicals and inorganic chemicals. Words With Friends, Part 1: Insurance Requirements and Contracts, Legislator Proposes To Expand CFL To Encompass "Commercial CERCLA PFAS Scope May Broaden To Many More PFAS, AI Avatar App is the Latest Target of BIPA Class Action Litigation. The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. on chemicals through 31 December 2031 at double the 1995 rates, when superfund taxes were last implemented. In response to pointed public comment, on April 15, 2022, the IRS released an advance version ofNotice 2022-15, providing relief for thethirdandfourth calendar quarters of 2022, and the first calendar quarter of2023, regarding the failure to deposit penalties imposed bySection 6656of the Tax Code, as those penalties relate to the Superfund excise taxes. How do I calculate the section 4671 tax? The tax may be passed along to customers. Who is responsible for reporting and paying Superfund chemical excise taxes? Heard on: Revenue from a new excise tax on chemicals like Benzene and Mercury would go . 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. $ 0.183/gal for gasoline and $ 0.243/gal for diesel fuel initial list 100... 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