Permit & License. As a background, when these taxes were reinstated through the Infrastructure Investment and Operating now under a new set of rules, organizations manufacturing or importing certain chemicals now face new tax challenges. The new tax doubles the previous tax rate on Taxable Chemicals and Taxable Substances. 177-58) reauthorizes Superfund with expanded provisions of doubled rates on Taxable Chemicals, and a vast expansion of Taxable Substances. The Superfund chemical excise taxes previously expired on December 31, 1995. (added June 24, 2022), Q5. The table below outlines products that are impacted by this excise tax. Austin | Section 4662(c)(2) provides an additional exemption from tax liability where a company imports a taxable chemical and exchanges that chemical as part of an inventory exchange with another person. Tech trends in Helping tax leaders embrace disruption, seize new opportunities and drive greater value. Download list of 42 taxable chemicals and 151 taxable substances. The Superfund excise taxes include two separate but interrelated excise taxes applicable to crude oil and petroleum products, chemicals, and hazardous substances, which fund the Hazardous Substance Superfund for the cleanup of hazardous waste sites. For more information on cookies and how we use them, view our Cookie Policy. The Superfund Chemicals Excise Tax Makes a Comeback. The taxes are effective July 1, 2022. For taxable substances, the importer of the taxable substance is responsible for reporting and paying the section 4671 tax to the IRS. This law levies taxes on the manufacture, production, or importation of 42 specific chemicals and another 121 chemical Cannabis Excise Tax Calculation. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. 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. Charlotte | 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. Boston | The money gathered from the taxes 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. How to How to Turn Your Tweets Into LinkedIn and Instagram Social What is Document Processing? 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. Superfund is also imposed when a taxable substance is imported for consumption, use, or warehousing. How do I calculate the section 4661 tax? 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. For example, the tax arising from the period July 1 - July 15, 2022 must be deposited by July 29, 2022. All rights reserved. Some exported chemicals and hazardous substances used in different types of fertilizer, animal feed, and fuel are exempt from the superfund tax. The manufacturer or importer pays the excise tax for chemicals, which is due on the first use or sale in the United States. Each chemical has a specified rate of tax, imposed on a per-ton basis, which has now been doubled. With world scale integrated manufacturing facilities we are See section 4671(b)(3). For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. 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. Reinstating the tax on chemicals will unduly burden consumers. WebEffective July 1, 2022, Congress has revived the Superfund Excise tax on Taxable Chemicals and Taxable Substances that previously existed from 1980 through 1995. Applicability of the information to specific situations should be determined through consultation with your tax adviser. All rights reserved. A12. 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). 429. These substances consist generally or partially of chemicals listed in Section 4661. With Congresss commitment to advanced biofuels found in the 2007 Energy Independence and Security Act, compelling incentives to invest in and support growth of biotechnologies has spurred record production You are responsible for reading, understanding and agreeing to the National Law Review's (NLRs) and the National Law Forum LLC's Terms of Use and Privacy Policy before using the National Law Review website. These FAQs detail what the Superfund chemical excise tax is, how the tax is computed, and who may be liable for the tax. 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. 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. Tax credits abound. 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. This potential change in Brazilian transfer pricing policies could have significant consequences from a U.S. transfer pricing and international tax perspective. Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. 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. Chemicals will be taxed based on how they're sold, used, or stored and can range from $0.44 to $9.74 and will be charged on a per-ton basis. A7. The IRS has provided taxpayers temporary relief from penalties for failure to deposit superfund chemical taxes in the third and fourth calendar quarters of 2022 and the first quarter of 2023 through Notice 2022-15. 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. 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. The section 4661 tax is imposed as a rate per ton of a taxable chemical. The Texas Unclaimed Property, a Division of the Texas Comptroller of Public Accounts (Texas Comptroller), is increasing compliance efforts through outreach. The first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. The Superfund Chemical Excise Tax is set to expire in 2031 and is expected to bring in an estimated $14 billion that will go to assisting the clean-up of hazardous waste disposal sites. Charter Brokerage can help you mitigate the Superfund taxes paid on these taxable chemicals. The calculation of the superfund excise taxes is complex, and accurate reporting data can help companies reduce their tax burden. Sign up to receive the latest BDO news and insights. View Full Firm Disclosure. Fast forward to today. When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. The Superfund excise taxes are part of Subtitle D, Chapter 38 of the Tax Code. We recommend taking the following steps now to determine how this excise tax applies to your company and to help ensure compliance: In addition, it is important to identify your available resources for determining taxability, exemptions, making tax deposits, filing applicable IRS registrations (Form 637, Application for Registration For Certain Excise Tax Activities) and filing quarterly tax returns (Form 720, Quarterly Federal Excise Tax Return, and attachment Form 6627, Environmental Taxes). Identify exempt chemicals and substances under export rules. 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. Stephanie provides tax planning and compliance services to corporations, pass-through entities and individuals. Currently, there are 42 taxable chemicals, each with a specified tax rate imposed on a per-ton basis, and 151 taxable substances for which the tax rate is dependent on the substances unique chemical composition. Statement in compliance with Texas Rules of Professional Conduct. Class Action Year in Review: The Rise Of The Self-Tapping Website? Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. Nursing Homes Brace for Reforms and Heightened Government Scrutiny. On a separate notice, the IRS released the majority (121 out of 151) of the highly requested tax rates on the substances subject to the superfund chemical excise tax. Partner, Tax Controversy and Regulatory Services, PwC US. Sitemap 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. In order to pay for the provisions in The Infrastructure Investment and Jobs Act (also referred to as the Bipartisan Infrastructure Bill), Superfund was reinstated with double the tax rate on chemicals and a vast expansion of substances. Proc. Richmond | See the full disclaimer. 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. Nearly three decades after expiring, the Superfund chemical excise tax is back. 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. 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. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. Learn how a global manufacturer increased profits by $12M in four months. State Green and Sustainability Claims: A Roundtable Discussion. More information about reliance is available. These FAQs were announced in IR-2022-131. See also section 4661(b) for the tax rate for taxable chemicals. July 1, 2022. (added June 24, 2022), Q9. (added June 24, 2022), Q15. The initial list of 50 taxable substances is found in IRC 4672(a)(3). The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. 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 The per-ton rate of tax varies depending on the taxable chemical being sold or imported, so the amount of Superfund Tax will vary by product. The information contained herein is of a general nature and based on authorities that are subject to change. Are semimonthly deposits required? 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 (determined on the basis of the predominant method of production). It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. A Superfund tax is imposed when a taxable chemical is imported, or is domestically produced for sale or use unless an exemption applies. Initially, the Superfund program called for taxes by manufacturers of crude oil and certain chemicals to fund a trust to pay for environmental cleanup activities. Los Angeles | WebWork with outside vendor on Superfund Excise tax compliance; Help implement and maintain the Global Incentive tracker; Provide fixed asset information for property tax renditions. SECURE 2.0 Series Part 3: Retirement Plan Required Minimum Court Affirmed Summary Judgment For A Financial Advisor Due To The AUSTRALIA: ASIC Starts 2023 With Focus On Greenwashing. 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. $225 plus $0.073 per each acre-foot greater than 10 acre-feet. The excise tax was not only brought back, but the IIJA doubled the prior tax rate on chemicals. Duration: 00:12:55. The excise tax collection expired in 1995 but resumed on July 1, 2022. This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. If you are a manufacturer or importer, it is essential that your organization be prepared to report and remit the excise tax. The Superfund taxes are expected to generate approximately $14.5 billion over a 10-year period. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. Please see www.pwc.com/structure for further details. In Notice 2021-66 the IRS published a list of 100 additional substances subject to the Superfund Tax. 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. The new tax doubles the previous tax rate on Taxable Chemicals and Taxable Substances. This legislation provided a federal Superfund to clean up hazardous-waste sites and accidents, spills, or other emergency releases of pollutants and contaminants into the environment. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. Sale in the context of taxable substances, the taxable substance is,. Nearly three decades after expiring, the Superfund excise taxes previously expired December. 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