The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) established the Hazardous Substance Response Trust Fund (the Superfund), which was to be administered by the Environmental Protection Agency (EPA).2 CERCLA imposed liability for the cleanup of hazardous waste sites on the owners and operators of these sites. The first return, for the. Form 6627, Environmental Taxes, previously used to report the Superfund Tax, will likely be used again to report the tax owed. The JCT estimated that the proposal would increase revenues by approximately $38.4 billion over a 10-year period. A substance may be removed from the list of taxable substances if the Secretary determines that taxable chemicals constitute 20 percent or less of the weight and 20 percent or less of the value of the materials used to produce the substance . What is a taxable chemical? The list of 42 chemicals and their respective excise tax rates is found in Internal Revenue Code (IRC) 4661(b). (added June 24, 2022), Q13. Analyzing and assisting in documenting available exemptions (e.g., certain taxable chemicals used in the production of fuel). Technology/systems impacts The Act also doubles the tax rate on chemicals or chemical products and expands the reach of the tax. 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. Substances may be added or removed from the list of taxable substances at a later date. Section 704.3. Reminder: High-Earning Exempt Professionals Must Be Paid a "True Gold Dome Report Legislative Day 24 (2023). California Law May Limit Hospitals Ability to Adopt The Joint Ankura CTIX FLASH Update - February 28, 2023, Ankura Cyber Threat Investigations and Expert Services. Breaking the Link New Developments on U.S. See section 4671(b)(3). 14Joint Committee on Taxation, Estimated Revenue Effects of the Provisions in Division H of an Amendment in the Nature of a Substitute to H.R. US Executive Branch Update February 27, 2023. When people refer to Superfund taxes, they're generally referring to excise taxes that are imposed on taxable chemicals listed under section 4661 and then taxable substances that are. Background I am an importer of taxable substances. At the time of publication of these FAQs, 151 substances are listed as taxable substances. A10. 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. Assisting with design and implementation of automated tax calculation and reporting processes to be compliant with federal laws and regulations. These FAQs were announced in IR-2022-131. 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. 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. Heard on: Revenue from a new excise tax on chemicals like Benzene and Mercury would go . The Infrastructure Bill lowered this threshold to 20%. See section 4671(b)(1). How do you calculate the Superfund Excise Tax? In fact, companies that export products comprised of taxable chemicals or substances are entitled to a refund if they paid prior to manufacturing. Try our solution finder tool for a tailored set 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. 20I.R.C. The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. There are 42 chemicals listed in section 4661(b). See Notice 2021-66, 2021-52 I.R.B. Semi-monthly payments should be made by the 15 th and 30 th of each month, but the IRS is providing relief from penalties for non-payment up through the first quarter of 2023. A5. For purposes of claiming refunds under section 4662(e) for section 4661 tax paid on chemicals used in the production of an exported substance, in the case of a petition of an importer or exporter (i) that is filed and accepted by the Secretary before January 1, 2023, (ii) that seeks to add the substance to the list of taxable substances, and (iii) based on which the Secretary adds the substance to the list of taxable substances, both the filing date of the petition and the date the substance is added to the list of taxable substances will be deemed to be July 1, 2022. The reinstated Superfund Excise Tax is effective July 1, 2022, through December 31, 2031, absent extension. The original excise tax expired on December 31, 1995. The original Hazardous Substance Superfund trust was established to pay for the hazardous-substance cleanup program created by the Comprehensive Environmental Response Compensation, and Liability Act of 1980 (CERCLA) The IIJA reinstates the cleanup program until 2031, and the taxes collected are expected to total more than $14 billion over the next ten years. 5Id. When the owner or operator was not identified, or the site cleanups needed to be expedited, financing for the cleanup was to be provided by the Superfund. A14. Tax is due upon the first use or first sale of a listed chemical in the United States. accounts, Payment, Biobased chemicals and biofuels have taken root thanks to both popular appeal and political support. Get the insight and tools you need to fully understand and comply with changes resulting from this major tax reform. 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, most of them common in consumer products,. Will the IRS prescribe tax rates for taxable substances? Exceptional organizations are led by a purpose. accounting, Firm & workflow Home Guidance Superfund Excise Taxes on Chemicals and Substances: How to Prepare. Each chemical has a specified rate of tax, imposed on a per-ton basis, as identified in Exhibit A. 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. ONESOURCE Determination gives companies the ability to quickly comply with Superfund Excise and Hazardous Substance taxes by automatically and accurately calculating the amount of excise tax owed. Part of the Tax News & Views podcast series. 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. 901, for the initial list of substances that the Secretary has added to the list of taxable substances. 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. The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. The tax rates of the listed chemicals were based on the percentage of the individual chemicals found in the hazardous waste sites. Notice 2021-66. Yes. Tax is due upon the first use or first sale of a listed chemical in the United States. (added June 24, 2022), Q4. Page Last Reviewed or Updated: 24-Jun-2022, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), News Releases for Frequently Asked Questions, Recent Developments for Form 6627, Environmental Taxes, Treasury Inspector General for Tax Administration, synthetic linear fatty alcohol ethoxylates, IRS issues Superfund chemical excise tax rates. governments, Business valuation & Find the tax rates for 121 taxable substances. L. 117-58. Calculate the rate based on the percentage amount of each listed chemical included in the substance. This button displays the currently selected search type. accounting firms, For On November 15, 2021, President Biden signed into law the Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. The recent reinstatement of Superfund chemical excise taxes on certain taxable chemicals and specified taxable substances takes effect July 1, 2022, and will be imposed through 2031. Prior to their expiration in 1995, the Superfund excise taxes were used to fund theHazardous Substance Superfund, established by theComprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. 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. L. 99-499, approved Oct. 17, 1986. The taxes apply only to imported chemicals or substances, not those for export. In our experience, it generally takes at least three months to fully implement and test a new business process and system implementation. A third excise tax on crude oil and petroleum products was reinstated in the Inflation Reduction Act . Fast forward to today. financial reporting, Global trade & Houston | IRC section 4662 directs the IRS to release guidance as to the appropriate manner of reporting exempt sales or claiming refunds. Deposit payments with the Electronic Federal Tax Payment System (EFTPS). The New York City Council Sets its Sights on Non-Profit Housing DOJ Announces New Voluntary Self-Disclosure Policy for U.S. Attorney Supreme Court: Salary, Not Daily Pay, Required for FLSA Overtime Time Is Money: A Quick Wage-Hour Tip on the Tip Credit, EDPB issues its Opinion on the EU-U.S. Data Privacy Framework, Hunton Andrews Kurths Privacy and Cybersecurity. Accordingly, the procedural rules in26 C.F.R. 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. A7. 11Infrastructure Investment and Jobs Act, Pub. The IRS published IRS Notice 2021-66 on December 13, 2021, which included the list of approximately 100 taxable substances previously considered by the IRS in the early 1990s via individual IRS Notices, which will now be subject to the Superfund Excise Taxes (see Exhibit C).18, The tax is imposed on the importer of the taxable substances and becomes due upon the first sale or use after import. Cultivating a sustainable and prosperous future, Real-world client stories of purpose and impact, Key opportunities, trends, and challenges, Go straight to smart with daily updates on your mobile device, See what's happening this week and the impact on your business. The Superfund Excise Tax is not permanent and . Alternatively, a taxpayer may base the rate for taxable substances on 10% of the value of the import.20. Customer Reviews: Five-Star Enforcement and the Expanding Regulations. 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? Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. Deloitte Tax Reg. The IIJA reinstates the two taxes with several modifications. 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. 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. Draft the To Each Their Own: Agency Must Consider Experience of Each Partner in CMS Updates List of Telehealth Services for CY 2023, What You Need to Know About the New Tariffs on Imports from Russia. The Superfund chemical excise taxes previously expired on December 31, 1995. EC Appeals European General Court Decision Annulling the Harmonized Weekly Bankruptcy Alert February 28, 2023. Nota Bene Episode 160: European Update: Oliver Heinisch and Scott Federal Communications Commission to Consider Rules and Proposals to Whats the Standard? 4662(b)(1). The notice also addresses registration requirements to exempt certain sales and uses of taxable chemicals from tax. 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. 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. As this question is likely to arise in the near future when the Superfund excise tax applies, the IRS can be expected to address this aspect. Recent FTC Enforcement Action Merits Cyber Insurance Coverage Review, Two Ways to Redefine & Achieve CRM Success. 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. It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. Cherry Bekaert is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC provide professional services. Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. These FAQs detail what the Superfund chemical excise tax is, how the tax is computed, and who may be liable for the tax. Our services include: The reinstatement of the Superfund Excise Taxes will impact companies throughout the country in a wide variety of industries. What Is the Difference Between a Grandfathered and a Grandmothered Health Plan? The Superfund tax is assessed on the manufacturer or importer of these chemicals. Notice 2021-66. 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. The applicable tax for a hazardous substance depends on its chemical composition. 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. 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. What do companies need to do in order to prepare for these taxes? As part of the Infrastructure Investment and Jobs Act signed into law November 15, 2021, the Superfund Excise Taxes go into effect July 1, 2022. Even companies that have been on the market for decades may not have many employees who were around when the previous excise tax applied. 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. Notice 2021-66 suspended the procedure in Notice 89-61 because the IRS plans to issue a more current guidance on this matter. Expanded Employee Retention Credit (ERC) & how our professionals can assist you. (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. The Reinstated Superfund Excise Taxes. Arizona Gets to Keep Its State-Operated Workplace Safety and Health Manufacturers Legal Considerations for Staffing Reductions, PCAOB Enforcement Activity Up Sharply in 2022. A9. At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. Sitemap Attorney Advertising Notice: Prior results do not guarantee a similar outcome. 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. 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 law imposes a tax on any taxable chemical sold by the manufacturer, producer, or importer. (added June 24, 2022), Q10. slunan@deloitte.com, Christina Gong 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. The Basics of Californias Outside Salesperson Exemption. Inferences, however, can be made from the absence of any mention in the law. The tax directly . 4661 imposes tax on the sale or use by the manufacturer, producer, or importer of 42 listed chemicals. 3. This assessment should include a review of the transaction life cycle, master data setup, cost computation and recognition, and general entry posting. Good News for American Businesses: H1-B Denial Rates Plummet Under USCIS Extends Comment Period for Proposed Fee Increases, OFCCP Rescinds Trump-Era Religious Exemption Rule. 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. All organic chemicals are derived from petrochemical feedstocks. 23I.R.C. Austin | Exporters The Infrastructure Act essentially doubles these rates with taxes ranging from $0.44 per ton to $9.74 per ton. automatically and accurately calculating the amount of excise tax owed. The first quarterly reporting for the Superfund Tax on Form 720 is due Oct. 31, 2022. L. No. View Full Firm Disclosure. During 1979 Senate discussions, it was estimated that expenditures for hazardous waste disposal sites related to chemicals would be $200 million (versus $40 million for sites related to crude oil).3 During this congressional hearing, it was determined that the proposed system of fees would cover: (1) crude oil; (2) petrochemical feedstocks; and (3) certain highly toxic and/or high-volume inorganic materials including heavy metals, halogens, acids, bases, and ammonia.4. Reg. Additionally, Form 6627, Environmental Taxes, was previously used to report the Superfund Excise Taxes when the taxes were last in effect, and this form will be used again to report the taxes owed. Licenses for Exports to Are You Ready for the UPC? Assisting with filing refund claims and reporting requirements around exemption certificates. The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. technology solutions for global tax compliance and decision A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. In brief. These substances consist generally or partially of chemicals listed in Section 4661. Tax Partner L. 96- 510, 42 U.S.C. EPA Announces Availability Of Environmental Justice Thriving Energy & Sustainability M&A Activity February 2023, OSHA Implements Pilot Program to Streamline Complaint Intake Process. policy, Privacy 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. The inaugural reporting for companies required to report Superfund excise taxes is on their third-quarter 2022 Form 720, due to be submitted byOctober 21, 2022. An official website of the United States Government. All Rights Reserved. Yes. However, since the IRS ruled that these substances met the definition of taxable substance, these new substances were also subject to the tax if imported by taxpayers, thereby effectively increasing the list of taxable substances of IRC section 4672. Is the rate different for taxable substances? statement, 2019 Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. The IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. The $1.2 trillion infrastructure bill making its way through the Senate contains a $14.55 billion tax hike on American chemical and mineral producers. Read our analysis and reports on the landmark Supreme Court sales tax case, and learn how it impacts your clients and/or business. Companies that import taxable chemicals or taxable substances will be liable for the excise tax. and accounting software suite that offers real-time Again on Severance FRB Governor Bowman Speaks on Bank Regulation and Supervision, it generally takes least... That export products comprised of taxable substances on 10 % of the chemicals... A taxpayer may base the rate for taxable substances at a later.! Exhibit a calculating the amount of each listed chemical included in the production of fuel ) were based the! Than has already been given in Notice 2022-15 become available Grandmothered Health Plan initial list of chemicals! Any more relief to taxpayers than has already been given in Notice.! Their respective excise tax is the Difference Between a Grandfathered and a Grandmothered Health Plan our professionals can assist.... 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Statute or in Notice 89-61 because the IRS is working on calculating tax rates of the value of the chemicals!