WebEarlier Superfund excise taxes were 9.7 cents per barrel of crude oil or refined oil products, and a variety of excise taxes, ranging from $0.22 to $4.87 per ton on some 42 chemicals and metal compounds. A13. The IRS has release additional information on the Superfund Excise Taxes on Chemicals. Are semimonthly deposits required? PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Key considerations for dealings with the reinstated Superfund Tax include: For producers, importers, exporters, and customers of businesses making and distributing identified chemicals and substances, action is needed quickly. 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. Go back five years for manufacturing drawback. The Reinstated Superfund Excise Taxes. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. Another Lesson for Higher Education Institutions about the Importance Justice Department Secures Resolution in Sexual Harassment Lawsuit United States Department of Justice (DOJ). Any taxable chemical or substance also qualifies for a Superfund Tax Credit. These credits are accrued when a taxable chemical or taxable substance is exported. A Superfund tax is imposed when a taxable chemical is imported, or is domestically produced for sale or use unless an exemption applies. 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. 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. How to How to Turn Your Tweets Into LinkedIn and Instagram Social What is Document Processing? What are the Superfund chemical excise taxes? All Rights Reserved. Any manufacturer, producer, or importer of a taxable chemical is subject to the superfund excise tax. A9. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten Certain non-fuel and agricultural uses of some of these chemicals were exempted from the excise tax. Is there a way to check the status of an application for Activity Letter G registration? 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. Permit & License. If you are a manufacturer or importer, it is essential that your organization be prepared to report and remit the excise tax. Notice 89-61provided guidance under the previously applicable Superfund excise tax. Since the Superfund excise tax expired almost three decades ago, the industrial chemical communitys familiarity with their application is attenuated at best. 177-58) and was signed on November 15, 2021. The frequent and sizeable requirements of the reinstated superfund excise tax reporting can be burdensomeespecially for resource-constrained tax departments or those unfamiliar with the requirements. 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. 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. The list of 42 chemicals and their respective excise tax rates is found in Internal Revenue Code (IRC) 4661(b). Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. Texas Unclaimed Property, a Division of the Texas Comptroller of Public Accounts (Texas Comptroller), is increasing compliance efforts through outreach. Find out what KPMG can do for your business. As a result, Notice 2022-15 provides welcome relief and affords SCET taxpayers additional time to perfect their SCET deposit process. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. Read about their experiences and a few lessons learned along the way. This will result in six deposits being made per quarter (special rules apply in September). How are the Superfund chemical excise taxes reported? Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. WebEffective July 1, 2022, Congress has revived the Superfund Excise tax on Taxable Chemicals and Taxable Substances that previously existed from 1980 through 1995. Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. You Meta Believe the GDPR Penalties Are No Joke! Cherry Bekaert: Tax, Audit and Advisory Services, Superfund Excise Taxes on Chemicals and Substances: How to Prepare, Starting a New Business & Launching Successfully: Tax and Business Planning Tips, IRS Rev. Statement By Secretary Walsh On the Telecommunications Workforce EPA Announces Appointments to Local Government Advisory Committee. The first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). Aerojets previous disposal and operating practices led to soil and groundwater contamination. A Frequently Asked Questions (FAQ) page about the Superfund Excise Tax is available from the Internal Revenue Service: FAQ: IRS Issues Superfund Chemical Excise The Superfund taxes are expected to generate approximately $14.5 billion over a 10-year period. Exporters will not be taxed. These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. Even companies that have been on the market for decades may not have many employees who were around when the previous excise tax applied. 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. Washington DC |, Copyright 2023 Cherry Bekaert. . As is the case with many excise taxes, the cost to businesses is expected to be passed down the supply chain, and ultimately to the end consumer in the form of increased prices and fees. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. 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. 2017 First, a substance can be added to the list of taxable substances by the Secretary, in consultation with the Administrator of the Environmental Protection Agency and the Commissioner of U.S. Customs and Border Protection, if the Secretary determines that taxable chemicals constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce the substance (determined on the basis of the predominant method of production). July 1 is fast approaching and the window to prepare for compliance with the reinstated Superfund Tax is brief. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. $300 plus $0.085 per each acre-foot greater than 10 acre-feet. AllRightsReserved. Companies opting for the latter run the risk, however, of incurring penalties, should the IRS adopt a different view. 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 The excise tax collection expired in 1995 but resumed on July 1, 2022. 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. Home Guidance Article Superfund Excise Taxes on Chemicals and Substances: How to Prepare. Section 4671(a) imposes an excise tax on the sale or use of a taxable substance by the importer of the taxable substance. This law levies taxes on the manufacture, production, or importation of 42 specific chemicals and another 121 chemical Kti Chemicals Inc is a superfund site located at 1170 Sonora Ct, Sunnyvale, CA 94086. Aerojet and its subsidiaries have researched, designed and made rocket engines and chemicals on site since 1953. This ABA Tax Times article provides an illustration of the challenges faced by the oil and gas industry in applying one of these special rules related to two products derived from natural gas: methane and butane. During her free time Elizabeth enjoys going to concerts, traveling, hanging out with her pets, and caring for her succulent plants. A6. | Careers 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. 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. (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). The IRS is working on calculating tax rates for taxable substances and will release them as they become available. 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. 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. 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 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. Ascend Performance Materials is the premium provider of high quality chemicals, fibers and plastics. Unlike many filings, due dates for deposits are accelerated if the typical due date falls on a Saturday, Sunday, or a legal holiday in the District of Columbia. Form 6627, Environmental Taxes, previously used to report the Superfund Tax, will likely be used again to report the tax owed. In the meantime, reach out to your RKL advisor with questions or to discuss your companys specific circumstances. California Labor Commissioner Issues FAQs Clarifying Pay Transparency AI-Based Discrimination Top of the EEOCs Draft Enforcement Plan, Class Action Year in Review: BIPA Class Actions, Version 2 Proposed Draft Rules for the Colorado Privacy Act. For tax advice, consult your tax adviser. Otherwise, companies risk finding out about this tax when they are audited and risk becoming liable for penalties. What happens if an importer does not calculate the section 4671 tax? Accordingly, a manufacturer, producer, or importer of a taxable chemical is subject to the section 4661 tax on the sale or use of the taxable chemical on or after July 1, 2022. (added June 24, 2022), Q6. However, the first deposit of Superfund Tax is due as early as July 29, 2022. A2. Additional substances may be added if the weight or value of the substances is greater than 20% of the contained taxable chemical. Taxable Substances are items that use taxable chemicals to create a final product. 901, for the initial list of substances that the Secretary has added to the list of taxable substances. When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. Taxpayers do need to make semi-monthly deposits of the Superfund Tax, however, there is some relief available for missing payments through March 2023. The term Superfund refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. The taxes are effective July 1, 2022. Tax is due upon the first use or first sale of a listed chemical in the United States. WebClaims for refund of excise taxes. How are substances added to or removed from the list of taxable substances? | Agreed Terms of Use Los Angeles | 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. More information on the procedures for petitioning the Secretary to add or remove substances from the list of taxable substances will be released in advance of July 1, 2022. Expanded Employee Retention Credit (ERC) & how our professionals can assist you. See question 3 for more information on taxable chemicals and question 6 for more information on calculating the tax imposed by section 4661 (section 4661 tax). Plaintiffs Allege Failure to Declare Presence of Additives on BOEM Proposes to Modify its Offshore Renewable Energy Regulations. No such update has been issued to date, however. Florida Woman Sentenced to Prison for False Statement to Investigator Idaho Man Indicted for Federal Hate Crime Against LGBTQ Residents of EPA Proposes Cleanup Plan for Sulphur Bank Mercury Mine Superfund B&C Biobased and Sustainable Chemicals Practice Group Bergeson & Campbell, P.C. The Infrastructure Investment and Jobs Act lowered this threshold to 20%. If these deposits are missing, there is temporary relief until March 2023, which includes the third and fourth quarters of 2022 and the first quarter of 2023. 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. The full list of taxed chemicals and substances can be viewed here. (added June 24, 2022), Q14. The information contained herein is of a general nature and based on authorities that are subject to change. Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. There is some ambiguity in the calculation of the tax on substances, but IRS Notice 2021-66 suggests that the default tax calculation will be 10 percent of the assessed import value. 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. 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 In addition, our guarantee ensures that we will even defend such claims under audit. 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). 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. Among the requirements mentioned (briefly) in Notice 2021-66, SCET taxpayers with a net quarterly liability in excess of $2,500 must make deposits of tax for each semimonthly period in which the tax liability is incurred. How does ESG fit into business strategy? What is a taxable chemical? Any later updates or modifications to these FAQs will be dated to enable taxpayers to confirm the date on which any changes to the FAQs were made. Form 6627 must be led alongside Form 720 on a quarterly basis. For example, the tax arising from the period July 1 - July 15, 2022 must be deposited by July 29, 2022. Excise taxes are reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. When do the Superfund chemical excise taxes go into effect? Applicants for registration may call 859-320-4091 and select menu option #1. 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. Are Your Companys Year-End Compensation Accruals Tax Deductible? For this example, the sales tax rate is 8.5 percent, the cannabis excise tax is 15 percent, and there is a 10 percent local business tax. The original excise tax expired on December 31, 1995. Identify and educate key stakeholders impacted by the excise tax within the organization (supply chain, tax, EPA regulatory, IT, finance), Identify taxable chemicals, hazardous substances, and crude oil/ imported petroleum products, Identify and document exceptions to the excise tax, Forecast excise tax liability based on applicable rates, Consider filing petition with IRS to request modifications to the list of taxable substances and rate of tax on taxable substances, Assess supplier and consumer invoicing issues, Assess internal and external communications regarding excise tax information, Identify data sources required to track the lifecycle of affected chemicals and products, assess potential issues, and evaluate process and configuration changes to resolve issues, Prepare for all aspects of compliance, including filing registrations on Form 637 and filing returns on Form 720 and Form 6627. 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. The revived A substance is listed as a taxable substance if it is listed 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). Client Advisory Board, 1175 Lombardi Access Rd., Ste 500, Green Bay, WI 54304. 11 In addition to the reinstatement of the taxes, the Infrastructure Bill doubled the prior rate of tax on the 42 listed chemicals. 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. 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. During the first, second, and third calendar quarters of2023, the IRS will not withdraw a taxpayers right to use the deposit safe harbor rules of the Excise Tax Procedural Regulations at 26 C.F.R. COPYRIGHT 2023 RKL. Section 4661(b) lists the almost three and a half dozen chemicals that this Retailer's Wholesale Cost ($1,000 + $200) $1,200.00. Yes. $225 plus $0.073 per each acre-foot greater than 10 acre-feet. 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. For this example, the sales tax rate is 8.5 percent, the cannabis excise tax is 15 percent, and there is a 10 percent local business tax. The Inflation Reduction Act (Pub.L. 429 (2021)), effective July 1, 2022, with modifications to the applicable rates of tax and other provisions related to those taxes. The tax law is included in the Infrastructure Investment and Jobs Act that was signed into law on November 15, 2021. See the full disclaimer. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. Additional clarification and guidance are expected in the upcoming months. This memorandum explains why. The Superfund tax is assessed on the manufacturer or importer of these chemicals. Petitions to Add Polyoxymethylene and Polyphenylene Sulfide. 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. After a more than 26 year hiatus, on July 1, 2022, the Superfund chemical excise tax (the Superfund Chemical Tax) will again become effective. Augusta | Accordingly, these FAQs may not address any particular taxpayer's specific facts and circumstances, and they may be updated or modified upon further review. The new tax doubles the previous tax rate on Taxable Chemicals and Taxable Substances. (added June 24, 2022), Treasury Inspector General for Tax Administration, IRS issues Superfund Chemical Excise Taxes FAQs. That penalty can be avoided if the taxpayer demonstrates that the failure was due to reasonable cause and not due to wilful neglect. See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. 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. Fast forward to today. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. Biobased chemicals and biofuels have taken root thanks to both popular appeal and political support. The Infrastructure Investment and Jobs Act (Pub.L. Nashville | (added June 24, 2022), Q4. The Superfund Excise Taxes are currently set to expire on December 31, 2031. In order to pay for Nursing Homes Brace for Reforms and Heightened Government Scrutiny. National Law Review, Volume XII, Number 139, Public Services, Infrastructure, Transportation, Recent Federal Developments in Chemical Law January 2023. But under the Biden plan, those taxes would be reinstated. Tax on Imported Chemical Substances, IRS No. The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. WebWork with outside vendor on Superfund Excise tax compliance; Ascend Performance Materials is the premium provider of high quality chemicals, fibers and plastics. 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. Tax Implications and Financial Business Guidance Regarding the Coronavirus. Deposits, if required, must be made electronically, often requiring submission before the actual due date to process timely. How do I calculate the section 4671 tax? 17. (added June 24, 2022), Q13. Who should lead the charge? Until then, companies may take the IRS previous position as an indication of how it is likely to view articles and fabricated products under the current Superfund excise tax. July 1, 2022. There are actually two types of Superfund excise taxes: a tax on the sale or use of chemicals by the manufacturer, producer or importer of those chemicals and a tax on the sale or use of imported substances comprised of more than 20 percent in weight or value of taxable chemicals. Cherry Bekaert LLP is a licensed independent CPA firm that provides attest services to its clients, and Cherry Bekaert Advisory LLC and its subsidiary entities provide tax and business advisory services to their clients. Helping businesses navigate financial due diligence engagements and domestic and cross-border transactions. 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. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. By continuing to use this site, you are giving consent to cookies being used. Accordingly, the procedural rules in26 C.F.R. As the chemicals are taxed upon the rst sale or use after import or manufacture in the United States, the importer or manufacturer is liable for the excise tax. Section 80201 of the IIJA reinstates the Superfund excise tax on certain chemical substances under Sections4661and4671of the Internal Revenue Code (Tax Code), effectiveJuly 1, 2022. 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. Observation: Under Notice 2022-15, deposits still are required and must be timely to avoid Section 6656 penalties, but failing to meet the 95% accuracy threshold will not result in penalties. See the full preliminary list in Internal Revenue Code 4661, 4671, 4672; Notice 2021-66. 429. Part III. 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. This webcast discusses the three Superfund Excise Taxes that are now in place, recent trends, and hot topics to be aware of as organizations solidify processes and procedures to ensure compliance by October 31, 2022. IRC section 4661(b) lists 42 chemicals that are once again subject to the Superfund Excise Tax effective July 1, 2022. | Privacy Policy Cherry Bekaert Advisory LLC and its subsidiary entities are not licensed CPA firms. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form In turn, the tax rate of imported substances was effectively doubled as well. 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. 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. It's important to note that the tax only applies to imported chemicals and hazardous substances. Cannabis Excise Tax Calculation. This excise tax, which is imposed on certain chemicals and imported chemical substances, was reinstated effective July 1, 2022, as part of the Infrastructure Investment and Jobs Act of November 2021. 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? On Form 720, quarterly Federal excise tax collection expired in 1995 but resumed on July 1, 2022,. 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