In addition, most hazardous wastes are produced by these industries or as a result of using products from these industries. | Careers Notice 89-61provided guidance under the previously applicable Superfund excise tax. 3S. msulayman@deloitte.com, Stephane Lunan See Notice 2021-66, 2021-52 I.R.B. Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. Exporters Due to the complicated nature of the tax assessments, and the detailed information required, gaps in existing systems and processes may exist. 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 . When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. 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. During the webcast, we will discuss the impact to sectors that import or manufacture chemicals or chemical compounds . Since its reinstatement, the excise tax has raised many questions and caused significant industry consternation. It's codified in IRC Sections 4671 and 4672, both of which were added by the Superfund Amendments and Reauthorization Act of 1986. Semi-monthly deposits are required, however. slunan@deloitte.com, Christina Gong Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. A15. Companies that import taxable chemicals or taxable substances will be liable for the excise tax. | Agreed Terms of Use 2Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), Pub. 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. What Is the Difference Between a Grandfathered and a Grandmothered Health Plan? Social login not available on Microsoft Edge browser at this time. 20I.R.C. The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. 9See I.R.C. 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. For taxable substances, the importer of the taxable substance is responsible for reporting and paying the section 4671 tax to the IRS. No such update has been issued to date, however. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. The Revenue Reconciliation Act of 1990 further extended the Superfund Excise Taxes through December 31, 1995, after which point the Superfund Excise Taxes expired. The Reinstated Superfund Excise Taxes. Our use of the terms our Firm and we and us and terms of similar import, denote the alternative practice structure of Cherry Bekaert LLP and Cherry Bekaert Advisory LLC. The IIJA also reinstated the Superfund excise tax on the import for sale or use of any taxable substance underSection 4671of the Tax Code. The IIJA reinstates the two taxes with several modifications. of products and services. 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. 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. 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. The Superfund Excise Tax is imposed on the manufacturer or importer of the listed chemicals, and the tax becomes due upon the first use or sale in the United States.15. Chemical tax to clean up toxic sites gets new life as part of infrastructure deal. They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. Inferences, however, can be made from the absence of any mention in the law. brands, Social Specifically, taxable substances include the 50 substances on the initial list of taxable substances in Section 4672(a)(3) and 101 taxable substances added by the IRS in December 2021, throughIRS Notice 2021-66. Accordingly, the procedural rules in26 C.F.R. 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. 4671. 4671. The intent of the Superfund Excise Taxes is to target the chemicals primarily found in hazardous waste sites and to tax the chemicals at the earliest point possible in the process. 15I.R.C. Some companies did not yet exist when the previous excise tax applied and have no experience with the old tax and thus no internal processes for determining their liability for the Superfund excise tax. These substances consist generally or partially of chemicals listed in Section 4661. Please see www.deloitte.com/about to learn more about our global network of member firms. management, More for accounting 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. 5Id. L. 117-58), effective July 1, 2022. Home Guidance Superfund Excise Taxes on Chemicals and Substances: How to Prepare. Additionally, the Infrastructure Investment and Jobs Act ("IIJA") double the tax rate on chemicals or . The rate of excise tax per ton is based on the amount of each chemical included in the substance. 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). The Hazardous Substance Superfund financing rate was an excise tax of 9.7 cents per barrel of crude oil that applied from 1987 through 1995. . sarsmith@deloitte.com, Frank Falvo *Note: Self-assessing based on 10% of appraisal value will almost always yield a higher tax rate than either of the other methods. The tax rate for taxable substances is dependent on the individual chemical composition of the substance.19 For example, if polypropylene is composed of 50% propylene (a listed taxable chemical), then the rate for polypropylene would be $9.74 x 50%, or $4.87. 10I.R.C. The Superfund is a federal excise tax on various hazardous chemicals. 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. 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. The current list is published in IRC section 4672(a)(3) and attached as Exhibit B. 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. (added June 24, 2022), Q10. The Infrastructure Bill lowered this threshold to 20%. 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. (added June 24, 2022), Q4. Effective July 1, the Infrastructure Investment and Jobs Act (IIJA) reinstated the excise taxes imposed on certain chemicals and imported chemical substances under IRC Sections 4661 through 4672 (Superfund excise taxes). The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. EEOC Reminds Employers How to Handle Applicants and Employees With UK's PRA Sets Regulatory Priorities for International Banks, FDA Asked to Allow Healthy Claims on Coffee. Will Changes to the Option To Tax Regime Impact UK Insolvency Sales? DTTL (also referred to as "Deloitte Global") does not provide services to clients. This assessment should include a review of the transaction life cycle, master data setup, cost computation and recognition, and general entry posting. The consumer and political goals of reducing Americas dependence on foreign oil, enhancing national security, and greening the economy converge in biobased chemicals and advanced biofuels, the promising technology of producing commercial chemicals and fuels from renewable resources. They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. The Leaking Underground Storage Tank (LUST) Fund adds an additional $0.001/gal federal fee. Updated procedural guidance on how to request the determination has not yet been published by the IRS as of the date of this article. The money gathered from the taxes was used to fund the clean-up of hazardous waste disposal sites across the United States. These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. Tax Partner More information about reliance is available. Friday Development: New Sanctions and Export Controls to Address Weekly IRS Roundup February 20 February 24, 2023, Everything to Know About Unbundled Legal Services. They were reinstated by section 80201(c)(3) of the Infrastructure Investment and Jobs Act (Public Law 117-58, 135 Stat. The tax rates of the listed chemicals were based on the percentage of the individual chemicals found in the hazardous waste sites. Alternatively, a taxpayer may base the rate for taxable substances on 10% of the value of the import.20. services, Comprehensive Environmental Response Compensation, and Liability Act of 1980 (CERCLA). All organic chemicals are derived from petrochemical feedstocks. 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. Please enable JavaScript to view the site. Systems and processes will also need to be established in order to properly calculate and remit taxes that are due, as well as apply for refunds or exemptions. L. 99-499, approved Oct. 17, 1986. Unless otherwise noted, attorneys are not certified by the Texas Board of Legal Specialization, nor can NLR attest to the accuracy of any notation of Legal Specialization or other Professional Credentials. In November 2021, President Biden signed the Infrastructure Investment and Jobs Act. Companies with a large volume of transactions should consider automating their tax calculation and reporting processes to increase efficiency and accuracy. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. The notice also addresses registration requirements to exempt certain sales and uses of taxable chemicals from tax. The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. 4672(a)(2)(B)(2021). It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. IRS announces Superfund chemical excise tax rates June 24, 2022 Download pdf (363.6 KB) The IRS today announced the prescribed tax rates for 121 taxable substances that are subject to the Superfund chemical excise tax imposed by section 4671 (a). 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. Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. 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. (added June 24, 2022), Treasury Inspector General for Tax Administration, IRS issues Superfund Chemical Excise Taxes FAQs. 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). See section 4672(a)(1). 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? Congress directed the IRS to publish a list of additional taxable substances by January 1, 2022, which was published by the IRS via IRS Notice 2021-66.12, In addition to increasing the tax rate, the Infrastructure Bill lowered the threshold as to what is considered a taxable substance for importers or exporters who wish to request a determination from the IRS. Some highlights on the petroleum products tax are as follows: Imposition of the Tax Chicago | Audit & 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. 19I.R.C. 429. 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. 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. Expanded Employee Retention Credit (ERC) & how our professionals can assist you. The tax law is included in the Infrastructure Investment and Jobs Act that was signed into law on November 15, 2021. For hazardous substances, the taxable event is the importation of the substance by an importer, and the tax is due upon the first sale or use after the substance is imported. The Petroleum Superfund Tax is proposed to be indexed for inflation beginning in calendar year 2023. 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). 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. The taxes are set to be reinstated beginning on July 1, 2022. 6Id. Assisting with development and implementation of technology solutions to enable identification of taxable chemicals and substances, as well as exemptions. The term " Superfund " refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. A13. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten-year effective . The NLR does not wish, nor does it intend, to solicit the business of anyone or to refer anyone to an attorney or other professional. 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. Notice 2021-66 does not specify the tax rate for each taxable substance. In addition to having deep tax technical knowledge surrounding federal excise taxes, Deloitte leverages leading technology tools and processes. DTTL and each of its member firms are legally separate and independent entities. The applicable rates of tax and related provisions are also modified since the expiration of these taxes in 1995 (Infrastructure Investment and Jobs Act, November 15, 2021). 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), Fact Sheets for Frequently Asked Questions, Q1. The Superfund tax rate will now be adjusted annually to . Waters of the United States and Winston Churchill. 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. Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. Hampton Roads | However, the first deposit of Superfund Tax is due as early as July 29, 2022. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. Many in the industrial chemical community are unfamiliar with the Superfund excise tax legacy, and the IRS is seemingly unprepared for the learning curve challenge the reactivation of the tax has created. Substances. The latest reiteration of the excise tax will be comprised of two separate taxes on (1) chemical sales and (2) chemical importers. A1. Substances may be added or removed from the list of taxable substances at a later date. 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. (added June 24, 2022), Q3. 429, Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), How Modern Manufacturing Plants Can Protect Against Ransomware, Cyberattacks, FTC Will Host May 23, 2023, Workshop on Recyclable Claims and the Green Guides. 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). (added June 24, 2022), Q12. In addition, exporters of chemicals and substances which were subject to the Superfund Tax can request a refund of the tax previously paid. Accordingly, these FAQs may not address any particular taxpayer's specific facts and circumstances, and they may be updated or modified upon further review. 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. 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