Try our solution finder tool for a tailored set Are semimonthly deposits required? Therefore, a chemical substance could qualify as a taxable substance if taxable chemicals listed in IRC section 4662 constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce such substance.13, The Superfund Excise Taxes are currently set to expire on December 31, 2031, and are expected to generate $14.4 billion of revenue (or approximately $1.2 billion annually).14, IRC section 4661(b) lists 42 chemicals, identified in Exhibit A. (added June 24, 2022), Q9. Customer Reviews: Five-Star Enforcement and the Expanding Regulations. See Notice 2021-66, 2021-52 I.R.B. slunan@deloitte.com, Christina Gong More information about reliance is available. The content and links on www.NatLawReview.comare intended for general information purposes only. L. 99-499, approved Oct. 17, 1986. Abusive Arbitrage Devices Its Time to Get Reacquainted (Episode 2 B&C Biobased and Sustainable Chemicals Practice Group Bergeson & Campbell, P.C. Temporary relief from the penalty for failure to deposit Superfund chemical taxes for 2022 (third and fourth calendar quarters) and the first calendar quarter of 2023 is inNotice 2022-15. 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. 429. There are several potential issues related to taxpayer liabilities, refund considerations, and other recordkeeping requirements to consider with regards to the Superfund Excise Taxes. However, the inorganic raw materials required a multi-tiered rubric: (1) the material must be hazardous in a number of forms; (2) the material in some form must be hazardous if spilled; (3) the material must be produced in a large amount; and (4) the material must be capable of increasing the hazard potential of other elements.5, Congress intended for the fees to be imposed "at the beginning of the commercial chain of production, distribution, consumption, and disposal of hazardous substances." 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. _____________________________________________________________________________________________. Heres how to analyze the implications and plan now for the revitalized Superfund Excise Tax. Deposit payments with the Electronic Federal Tax Payment System (EFTPS). 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. The National Law Review is a free to use, no-log in database of legal and business articles. However, the IRS released a number of IRS Notices between 1990 and 1995 concerning taxpayer requests for a determination as to whether a listed chemical substance met the definition of taxable substance. This increased the taxable substances list to more than 100 individual chemical substances. Boston | Some highlights on the petroleum products tax are as follows: Imposition of the Tax At the time of publication of these FAQs, 151 substances are listed as taxable substances. For example, methane or butane used as a fuel, or nitric acid, sulfuric acid, ammonia, or methane used in production of fertilizer are exempt. 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. (added June 24, 2022), Q3. Companies opting for the latter run the risk, however, of incurring penalties, should the IRS adopt a different view. | Agreed Terms of Use and accounting software suite that offers real-time The more you buy, the more you save with our quantity 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. An official website of the United States Government. The tax may be passed along to customers. 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. 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. (b) Amount of Tax The amount of tax imposed by subsection (a) shall be determined in accordance with the following table: (c) Termination No tax shall be imposed by this section after December 31, 2031. Labor Board Flip-Flops Again on Severance FRB Governor Bowman Speaks on Bank Regulation and Supervision. Los Angeles | The Superfund excise taxes are set to expire at the end of 2031. 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. Deloitte Tax Each chemical has a specified rate of tax, imposed on a per-ton basis, as identified in Exhibit A. on a wide range of chemicals and substances. 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. Do Issuers Fail To File Form Ds Because They Fear Trolls? The information here is by no means comprehensive, but it does provide a basic understanding of the law and its implications for affected companies. 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. What do companies need to do in order to prepare for these taxes? The excise tax was applied to a list of 42 chemicals used predominantly in the oil, gas, and chemical industries. The Superfund Excise Tax is not permanent and . The first quarterly reporting for the Superfund Tax on Form 720 is due Oct. 31, 2022. IRS issues Superfund chemical excise tax rates IR-2022-132, June 24, 2022 WASHINGTON The Internal Revenue Service announced today that it has prescribed tax rates for 121 taxable substances that are subject to the Superfund chemical excise tax imposed by section 4671 (a) of the Internal Revenue Code (Code). Will the U.S. Supreme Court Make Marijuana Legal? As noted above, importers are not required to use the IRS-prescribed tax rates for the section 4671 tax and may calculate their own rates. Richmond | 4671. A6. Excise Tax on Chemical Sales The Superfund excise tax on chemical sales is imposed on 42 listed taxable chemicals on a per-ton basis by taxpayers that manufacture or produce a listed chemical in the United States or import it for consumption, use, or warehousing in the United States. First Offshore Wind Energy Lease Sales in the Gulf of Mexico, Telephone and Texting Compliance News: Litigation Update February 2023. November 24, 2021. 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. msulayman@deloitte.com, Stephane Lunan Companies are likely to be caught off guard by this reinstated tax. A4. In brief. The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. The Superfund tax is assessed on the manufacturer or importer of these chemicals. ffalvo@deloitte.com, Marshal Sulayman 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. (added June 24, 2022), Q12. This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. The tax law is included in the Infrastructure Investment and Jobs Act that was signed into law on November 15, 2021. Form 6627 must be led alongside Form 720 on a quarterly basis. See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. Along with the quarterly reporting requirements, taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the Superfund Excise Taxes. More for 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. IT and tax departments in particular will need to collect transactional data all along the supply chain, as well any applicable master data. Explore Deloitte University like never before through a cinematic movie trailer and films of popular locations throughout Deloitte University. Nota Bene Episode 160: European Update: Oliver Heinisch and Scott Federal Communications Commission to Consider Rules and Proposals to Whats the Standard? They were reinstated by section 80201(c)(3) of the Infrastructure Investment and Jobs Act (Public Law 117-58, 135 Stat. Rep. No. Such exemptions include methane or butane used as a fuel, chemicals used in the production of fertilizer (including nitric acid, sulfuric acid, ammonia, or methane) and substances derived from coal. Effectively tracking necessary data through the supply chain may be a challenge as well. Creditor Stung By Academy Of Motion Picture Arts And Sciences Bylaws. 7Superfund Amendments and Reauthorization Act of 1986, Pub. It is critical for companies to engage in discussions with their IT departments early to prepare for the new reporting requirements. There are 42 chemicals listed in section 4661(b). Companies that import taxable chemicals or taxable substances will be liable for the excise tax. Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. 23I.R.C. California Law May Limit Hospitals Ability to Adopt The Joint Ankura CTIX FLASH Update - February 28, 2023, Ankura Cyber Threat Investigations and Expert Services. 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. Cherry Bekaert is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC provide professional services. firms, CS Professional 3. Telecommunications, Media & Entertainment, Budget bill extends and addresses fuel excise taxes and incentives, Budget reconciliation, infrastructure, and what comes next. 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 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. 19I.R.C. This memorandum explains why. Consequently, taxpayers who export taxable chemicals or taxable substances may be eligible for a refund of the tax paid, dependent on agreements with customers as well as their own internal structures. 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 . Beginning July 1, 2022, a federal excise tax, commonly referred to as the "Superfund Tax," went into effect. 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). 18I.R.S. Federal excise tax rates remain at $0.183/gal for gasoline and $0.243/gal for diesel fuel. Background 4661 imposes tax on the sale or use by the manufacturer, producer, or importer of 42 listed chemicals. sarsmith@deloitte.com, Frank Falvo 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. The Superfund Excise Tax becomes effective on July 1, 2022. The law imposes a tax on any taxable chemical sold by the manufacturer, producer, or importer. GT's The Performance Review Episode 19: Is the Fight Over AB 51 5 Reasons Community Associations Need an Attorney That Specializes in New York Proposes Regulatory Review and Approval of Material Health CMS Issues Long-Awaiting Medicare Advantage RADV Final Rule, Preventing the Use of Cryptocurrencies to Evade Sanctions. President Joe Biden called for reinstating the Superfund taxes as part of his $2 trillion infrastructure proposal . Reg. For example, if load of scrap metal contains 50% nickel (taxed at $8.90 per ton) and 20% chromite (taxed at $3.04 per ton), the tax rate would be calculated as: ($8.90 x .50 = $4.45) + ($3.04 x .20 = .61) = $5.06 per ton. 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. 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. Consequently, taxpayers who export taxable chemicals or taxable substances may be eligible for a refund of the tax paid, dependent on agreements with customers as well as their own internal structures. The statute provides an initial list of 50 taxable substances and instructs the IRS to add any substance in which taxable chemicals constitute more than 20% of the weight or value. 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. A3. Substances may be added or removed from the list of taxable substances at a later date. Section 4671(a) imposes an excise tax on the sale or use of a taxable substance by the importer of the taxable substance. Thomson Reuters/Tax & Accounting. (All oil and almost all hazardous substances are products of the oil industry, chemical and allied industries, and heavy metals industries. The Treasury Department and the IRS (collectively the IRS) have released Notice 2021-66, providing guidance on the reinstatement of the Superfund chemical excise taxes (SCET) under the Infrastructure Investment and Jobs Act (sometimes referred to as the Bipartisan Infrastructure Bill, or IIJA) enacted on November 15. (added June 24, 2022), Q5. The excise taxes are effective July 1, 2022. Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. The chemicals selected to be subject to the fee were based on two categories: petrochemical feedstocks and inorganic raw materials. The Superfund Excise Tax will go back into effect on July 1 st, 2022, after not being in place for over 26 years. The return of the chemical excise tax affects taxpayers that manufacture, produce, or import certain chemicals, as Superfund Chemical Taxes are imposed on the sale of 42 specific chemicals (Taxable Chemicals) listed in 4661 (Chemical Sales Excise Tax), including ammonia, butane, benzene, mercury, and other common chemicals. 429 (2021)), effective July 1, 2022, with modifications to the applicable rates of tax and other provisions related to those taxes. Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). Deloittte Tax What is a taxable substance? 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. 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