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. A taxable substance is defined as a substance that contains 20% or more by weight or value of any one of the chemicals listed in Section 4661 (down from 50% in the previous iteration of the law). What Is the Difference Between a Grandfathered and a Grandmothered Health Plan? Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. 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. 5Id. media, Press The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. . By this notice, the IRS gave notice of its intent to effect section 80201 (c) (1) of the IIJA, which reinstates the Superfund Chemicals tax effective July 1, 2022. Richmond | 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. Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. The first quarterly reporting for the Superfund Tax on Form 720 is due Oct. 31, 2022. 6Id. This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. 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. 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. Section 80201(c)(1) of the IIJA modified the method for determining whether a substance is a taxable substance by lowering the required percentage of taxable chemicals used to produce the substance from 50 percent to 20 percent of the weight (or the value) of the materials used to produce such substance. 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. Analyzing transactional and master data gaps given existing company system capability and data quality. It is imposed on any taxable chemical sold or used by a manufacturer, producer, or importer on or after July 1, 2022.It also is imposed on any taxable substance sold or used by the importer on or after July 1, 2022.The Superfund Tax funds the Hazardous Substance Superfund Trust Fund . Integrated software The content and links on www.NatLawReview.comare intended for general information purposes only. The reinstated Superfund Excise Tax is effective July 1, 2022, through December 31, 2031, absent extension. tax, Accounting & Helping businesses navigate financial due diligence engagements and domestic and cross-border transactions. 17Prop. Deposit payments with the Electronic Federal Tax Payment System (EFTPS). Form 6627 must be led alongside Form 720 on a quarterly basis. The Superfund Amendments and Reauthorization Act of 1986 was enacted as Pub. Corporate 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. At the time of publication of these FAQs, 151 substances are listed as taxable substances. 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. (added June 24, 2022), Q10. Treas. The taxes are set to be reinstated beginning on July 1, 2022. 4661. The Superfund Excise Tax becomes effective on July 1, 2022. of products and services. Yes. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. The Infrastructure Investment and Jobs Act, which President Biden signed into law on November 15, 2021, reinstates Superfund excise taxes on the sale and import of certain chemicals as part of the law's revenue raising provisions. corporations. 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. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. 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. The IIJA reinstates the two taxes with several modifications. Will the IRS prescribe tax rates for taxable substances? Chicago | 4671. Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661 (b). 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. 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. Cherry Bekaert is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC provide professional services. 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 . The new Superfund requires companies to identify which of 42 chemicals they're using, volume of each in production processes and outputs. 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. See questions 4-5 for more information on taxable substances and questions 7-9 for more information on calculating the tax imposed by section 4671 (section 4671 tax). DTTL (also referred to as "Deloitte Global") does not provide services to clients. Otherwise, companies risk finding out about this tax when they are audited and risk becoming liable for penalties. Taxpayers may petition the IRS to determine whether a substance falls within the taxable substances list. (added June 24, 2022), Q13. At what point in a transaction do the new taxes kick in? Inferences, however, can be made from the absence of any mention in the law. Fast forward to today. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. For chemicals, the taxable event is the sale or use by the manufacturer, producer, or importer of the chemical, and the tax is due in the U.S. upon the first use or sale. In brief. 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. Suite. Criminal Referrals and OSHA Violations, Part III: Industry Standards Oregon House Revenue Committee Set to Hear More About Pro-Taxpayer Buying or Selling a Small Business Government Contractor? Analyzing Superfund Excise Tax calculations and reporting requirements based on a companys unique business scenario. sarsmith@deloitte.com, Frank Falvo Tax Principal accounts, Payment, It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. Butane and methane users Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). There are several potential issues related to taxpayer liabilities, refund considerations, and other recordkeeping requirements to consider with regards to the Superfund Excise Taxes. 15I.R.C. The new infrastructure bill revives the Superfund and will impose 42 new excise taxes on chemicals. 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. (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 Carter administration established the Superfund in 1980 to offset the high price tags associated with remediating uncontrolled or abandoned hazardous waste sites. 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. 4662(e). 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. 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 Superfund Excise Tax is not permanent and . Notice 2021-66. For example, methane or butane used as a fuel, or nitric acid, sulfuric acid, ammonia, or methane used in production of fertilizer are exempt. Nashville | Technology/systems impacts Service. Some deposit amount is still required by July 29 to satisfy the relief provisions set out in Notice 2022-15. services, Comprehensive Environmental Response Compensation, and Liability Act of 1980 (CERCLA). The tax may be passed along to customers. The notice also addresses registration requirements to exempt certain sales and uses of taxable chemicals from tax. From 1987 through 1995, an excise tax also applied to the sale by the manufacturer, producer or importer of 42 specified chemicals. 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. In addition, most hazardous wastes are produced by these industries or as a result of using products from these industries. 429 (2021)), effective July 1, 2022, with modifications to the applicable rates of tax and other provisions related to those taxes. The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. Please enable JavaScript to view the site. No such update has been issued to date, however. 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. 2023. Assisting with filing refund claims and reporting requirements around exemption certificates. 429. 4671(b). 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. Calculate the rate based on the percentage amount of each listed chemical included in the substance. (added June 24, 2022), Q3. Some highlights on the petroleum products tax are as follows: Imposition of the Tax The National Law Review - National Law Forum LLC 3 Grant Square #141 Hinsdale, IL 60521 Telephone (708) 357-3317 ortollfree(877)357-3317. (a) General rule There is hereby imposed a tax on any taxable chemical sold by the manufacturer, producer, or importer thereof. Get the insight and tools you need to fully understand and comply with changes resulting from this major tax reform. | Privacy Policy The tax rates of the listed chemicals were based on the percentage of the individual chemicals found in the hazardous waste sites. What do companies need to do in order to prepare for these taxes? chrigong@deloitte.com. Procedures to request an IRS determination to add or remove a substance from the list of taxable substances under Internal Revenue Code Section 4672(a) are in Revenue Procedure 2022-26PDF. 3S. Federal excise tax rates remain at $0.183/gal for gasoline and $0.243/gal for diesel fuel. Excise taxes are reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. Tax is due upon the first use or first sale of a listed chemical in the United States. The Infrastructure Act essentially doubles these rates with taxes ranging from $0.44 per ton to $9.74 per ton. Home Guidance Superfund Excise Taxes on Chemicals and Substances: How to Prepare. A cloud-based tax The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. Cherry Bekaert Advisory LLC and its subsidiary entities are not licensed CPA firms. Multiple Concussions Result in Greater Cognitive Deficits, DOL Issues Internal Guidance on Telework Under the FLSA & FMLA, USPTO Launches Cancer Moonshot Expedited Examination Pilot Program. Since its reinstatement, the excise tax has raised many questions and caused significant industry consternation. Find the tax rates for 121 taxable substances. This box/component contains JavaScript that is needed on this page. 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. See also section 4661(b) for the tax rate for taxable chemicals. 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. The relevance of this guidance to the new tax is unclear. Biobased chemicals and biofuels have taken root thanks to both popular appeal and political support. 12I.R.S. Under what circumstances is registration required? On November 15, 2021, President Biden signed into law the Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. See also I.R.C. How are the Superfund chemical excise taxes reported? Charlotte | The rates are listed in IRS release IR-2022-133 (June 24, 2022). collaboration. See Terms of Use for more information. 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. 9601-9675 (2021). The Superfund excise taxes are set to expire at the end of 2031. It is important for companies to be aware of the existence of this tax, and to evaluate the chemicals and substances they import, to establish whether they owe any excise taxes. 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. A list of taxable chemical substances and procedures for the reinstated Superfund chemical taxes are in Notice 2021-66. Internal Revenue Code (IRC) section 4671 thereby imposed the same tax on imported substances as was already included in the cost of domestically purchased substances. Companies with a large volume of transactions should consider automating their tax calculation and reporting processes to increase efficiency and accuracy. All organic chemicals are derived from petrochemical feedstocks. Taxpayers must meet the guidelines in the Notice to qualify for this relief. The chemicals selected to be subject to the fee were based on two categories: petrochemical feedstocks and inorganic raw materials. Substances may be added or removed from the list of taxable substances at a later date. Everyone loves infrastructure, but it pays to read the fine print. Tax Implications and Financial Business Guidance Regarding the Coronavirus. Notice 2021-66 does not specify the tax rate for each taxable substance. There are two ways a substance can be added to or removed from the list of taxable substances pursuant to section 4672(a)(2) and (4). 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