Arizona Gets to Keep Its State-Operated Workplace Safety and Health Manufacturers Legal Considerations for Staffing Reductions, PCAOB Enforcement Activity Up Sharply in 2022. When enacted, the Superfund was financed by environmental excise taxes on certain commonly used chemicals often found at Superfund sites. Taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the tax. Technology/systems impacts
Biobased chemicals and biofuels have taken root thanks to both popular appeal and political support. Under the rules, a late fee of 5% may be applied on the amount due for each month the form remains delinquent up to a total penalty of 25%. healthcare, More for 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. The following is an FAQ to help companies get up to speed on what the Superfund Chemical Excise Taxes will require of them. 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. These FAQs were announced in IR-2022-131. DTTL and each of its member firms are legally separate and independent entities. 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. consulting, Infrastructure Investment and Jobs Act (IIJA), passed last November, the Internal Revenue Service (IRS) has reinstated the. . IT and tax departments in particular will need to collect transactional data all along the supply chain, as well any applicable master data. The taxes, which should go in effect on 1 July 2022, are estimated to raise approximately $14.45bn over a 10-year period Applicants for registration may call 859-320-4091 and select menu option #1. The Superfund chemical excise taxes previously expired on December 31, 1995. Chemicals. (added June 24, 2022), Q11. The latest reiteration of the excise tax will be comprised of two separate taxes on (1) chemical sales and (2) chemical importers. Tax Principal
financial reporting, Global trade & Tax Implications and Financial Business Guidance Regarding the Coronavirus. Augusta | After more than 25 years, two excise taxes on chemicals and imported hazardous substances were reinstated in the Infrastructure Investment and Jobs Act (Pub. The Superfund excise taxes are part of Subtitle D, Chapter 38 of the Tax Code. 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. From 1987 through 1995, an excise tax also applied to the sale by the manufacturer, producer or importer of 42 specified chemicals. Tax Senior Manager
See also I.R.C. Exporters
It has been almost 30 years since the Superfund excise tax was in effect. Licenses for Exports to Are You Ready for the UPC? When are the new Superfund Chemical Excise taxes due? Additionally, the Infrastructure Investment and Jobs Act ("IIJA") double the tax rate on chemicals or . The original excise tax expired on December 31, 1995. To accomplish this, the current system capability should be assessed. No. Products & Is there a way to check the status of an application for Activity Letter G registration? accounting, Firm & workflow 1043, provides transitional relief for the third and fourth calendar quarters of 2022, and the first calendar quarter of 2023, regarding the failure to deposit penalties imposed by section 6656 for failures to deposit Superfund chemical excise taxes through March 31, 2023. For instance, necessary data elements may not be available to properly identify the taxable chemicals and components. 10I.R.C. Assisting with filing refund claims and reporting requirements around exemption certificates. 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. See Notice 2021-66, 2021-52 I.R.B. 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. 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 Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. 17Prop. How do I calculate the section 4671 tax? The 2022 law revived a tax that previously expired in 1995, the Hazardous Substance Superfund tax rate. Reg. Reg. 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. The Superfund Chemicals tax previously expired in 1995. 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. See section 4671(b)(3). SaraBeth Smith
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). Section 704.3. The National Law Review is a free to use, no-log in database of legal and business articles. Yes. 19I.R.C. Companies are likely to be caught off guard by this reinstated tax. Please see links for details: Learn more about Superfund Excise Tax changes effective July 1, 2022, including key considerations for dealings with the reinstated Superfund Tax on chemicals and substances. 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. Assisting with filing the federal excise tax returns and semi-monthly deposit reporting. Do not delete! 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. This direct tax hike on American producers would result in higher prices for consumers, threaten thousands of jobs, and undermine domestic . July 1 is fast approaching and the window to prepare for compliance with the reinstated Superfund Tax is brief. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. 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." 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. 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. Activity letter G is reinstated for persons making inventory exchanges of taxable chemicals under section 4662(c)(2), or persons selling or buying intermediate . 4672(b)(1). 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. 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. Section 4661 imposes a per-ton tax, ranging from $0.44 to $9.74 per ton on the following 42 chemicals: A14. Ethylene and propylene may also be exempt, but only when used in the production of fuel (motor fuel, diesel fuel, aviation fuel, or jet fuel). 429. At what point in a transaction do the new taxes kick in? Statement in compliance with Texas Rules of Professional Conduct. (All oil and almost all hazardous substances are products of the oil industry, chemical and allied industries, and heavy metals industries. 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. For taxable substances, the importer of the taxable substance is responsible for reporting and paying the section 4671 tax to the IRS. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. The term "ton" is. In Notice 2021-66 the IRS published a list of 100 additional substances subject to the Superfund Tax. 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 are the Superfund chemical excise taxes? The excise tax collection expired in 1995 but resumed on July 1, 2022. 2023. 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. Cherry Bekaert: Tax, Audit and Advisory Services, Superfund Excise Taxes on Chemicals and Substances: How to Prepare, Maximize the Supply Chain Revolution Panel Discussion, 2023 Legislative Landscape: Expanding Opportunities for Manufacturers, The U.S. and Global Economic Manufacturing Outlook for 2023, Private Equity Industry Report: 2022 Trends and 2023 Outlook, Cybersecurity Maturity Model Certification, Business Intelligence and Data Analytics Services, Digital Strategy & Transformation Services, Government Contractor Consulting Services, SBA 8(a) Business Development Program Consulting Services, Information Technology Audit & Consulting, Cybersecurity Maturity Model Certification (CMMC), Outsourced Sales Tax Compliance and Managed Services, IRS issues Superfund Chemical Excise Tax Rates, IRS issues Superfund Chemical Excise Taxes FAQs, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. This current iteration is set to expire on December 31, 2031. A taxable substance is one that is . Abusive Arbitrage Devices Its Time to Get Reacquainted (Episode 2 B&C Biobased and Sustainable Chemicals Practice Group Bergeson & Campbell, P.C. chrigong@deloitte.com. The Superfund Excise Tax is not permanent and . 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). Your online resource to get answers to your product and Companies responsible for collecting and remitting the excise tax will need to identify the source system to capture the transactional and master data for applicable transactions, and assess what data elements are captured and how to obtain necessary reports to support compliance filing. The Superfund tax rate will now be adjusted annually to . Assisting with risk analyses and internal processes (design or documentation). Deloitte Tax
making. (a) General rule There is hereby imposed a tax on any taxable chemical sold by the manufacturer, producer, or importer thereof. Some highlights on the petroleum products tax are as follows: Imposition of the Tax Congress set up a trust fund, or "Superfund," to clean up and mitigate environmental damage using new taxes imposed on 42 taxable chemicals that Congress identified as having the potential to cause harm upon improper handling or disposal. Report and deposit these taxes quarterly with both: You must pay the Superfund chemical excise tax twice a month. governments, Explore our Fast forward to today. See section 4672(a)(1). Rep. No. Section 80201 of the bill would revive long-expired Superfund excise taxes at twice their previous level. Try our solution finder tool for a tailored set 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). 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. FAQs 901, for the initial list of substances that the Secretary has added to the list of taxable substances. 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. The excise taxes are effective July 1, 2022. Often collectively referred to as the superfund taxes, Congress imposed excise taxes on domestic crude oil, imported petroleum products and identified chemicals, as well as imported substances comprised of such chemicals. Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). L. No. Background Cherry Bekaert LLP is a licensed independent CPA firm that provides attest services to its clients, and Cherry Bekaert Advisory LLC and its subsidiary entities provide tax and business advisory services to their clients. Hydrocarbon streams containing mixtures of organic taxable chemicals. Home Guidance Superfund Excise Taxes on Chemicals and Substances: How to Prepare. 18I.R.S. 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. A1. In these cases, the other person would be liable for paying the excise tax, not the initial importer. The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. The return of the Superfund excise tax on chemicals affects taxpayers that manufacture, produce, or import certain chemicals, as it imposes an excise tax on the sale of 42 specific chemicals listed in Section 4661 of the tax code, including ammonia, butane, benzene, mercury, and other common products. Thomson Reuters/Tax & Accounting. 20I.R.C. msulayman@deloitte.com, Stephane Lunan
4671(b)(2). Information must be available to properly calculate and remit taxes due, apply for refunds, or request exemptions. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten-year effective . Under what circumstances is registration required? 13I.R.C. Explore all See section 4671(b)(1). Now, according to Section 4661, the tax rate for chemicals ranges from $0.44 to $9.74 per ton, depending on how the chemical is being sold, used, or stored. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. 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. 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 Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. An official website of the United States Government. CERCLA (and therefore the Superfund Excise Taxes) expired in 1985 but was extended for another five-year period through the Superfund Amendments and Reauthorization Act of 1986 (SARA), effective January 1, 1987.7 SARA expanded the Superfund Excise Tax on chemicals to include an additional tax on imported substances derived from taxable chemicals, effective January 1, 1989.8 This additional tax on taxable substances was structured to ensure that the amount of the tax correlated to the composition of the chemicals within the taxable substances.9 In other words, had the substance been purchased domestically, the Superfund Excise Tax on chemicals would have been included as part of the overall price of the substance. For purposes of this part, if any organic taxable chemical on which no tax was imposed by reason of subparagraph (A) is isolated, extracted, or otherwise removed from, or ceases to be part of, an intermediate . They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. The IIJA reinstates the two taxes with several modifications. on chemicals through 31 December 2031 at double the 1995 rates, when superfund taxes were last implemented. 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. 4662(e). Taxable substances are those substances listed in either section 4672(a)(3) of the Code or Notice 2021-66. Tampa | Please enable JavaScript to view the site. 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. Effective July 1, 2022, as required by the Infrastructure Investment and Jobs Act (IIJA)passed last November, the Internal Revenue Service (IRS) has reinstated the Superfund Chemical Excise Tax on a wide range of chemicals and substances. Customer Reviews: Five-Star Enforcement and the Expanding Regulations. The "Superfund Tax" is comprised of two separate taxesone covering the sale or use of taxable chemicals "by the manufacturer, producer, or importer thereof" pursuant to 26 U.S.C. 1Investment and Jobs Act, Pub. The Superfund Excise Taxes will be reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. What Is the Difference Between a Grandfathered and a Grandmothered Health Plan? Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661 (b). Audit & On November 15, 2021, President Biden signed into law the Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. Companies must report the reinstated Superfund excise taxes onForm 6627, Environmental Taxes, attached toForm 720, Quarterly Federal Excise Tax Return. The Leaking Underground Storage Tank (LUST) Fund adds an additional $0.001/gal federal fee. An official website of the United States Government. Under the new law, the excise tax applies to the use, sale, or import of 42 taxable chemicals and 151 hazardous substances. The IRS has issued lists for both the chemicals and substances included (under Section 4661 and 4671 of the Internal Revenue Code, respectively), but has cautioned importers that items on the list could change as chemicals or substances are either added or removed from the list over time. releases, Your 4661. 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. Notice 2021-66 suspended the procedure in Notice 89-61 because the IRS plans to issue a more current guidance on this matter. IRC section 4662 directs the IRS to release guidance as to the appropriate manner of reporting exempt sales or claiming refunds. Taxable substances are defined inSection 4672as any substance that, at the time of sale or use by the importer, is listed as a taxable substance. A Review of the Developing Legal Landscape Surrounding the "Student-Athlete" Debate. . | Agreed Terms of Use Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. . The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. sarsmith@deloitte.com, Frank Falvo
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Analyzing transactional and master data gaps given existing company system capability and data quality. 3684 (Aug. 2, 2021). Effectively tracking necessary data through the supply chain may be a challenge as well. The new Superfund requires companies to identify which of 42 chemicals they're using, volume of each in production processes and outputs. Excise taxes are reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. Read our analysis and reports on the landmark Supreme Court sales tax case, and learn how it impacts your clients and/or business. This tax provided a federal fund to remediate toxic spill sites when a responsible party could not be identified. 117-58 (2021). 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. The rationale for the fee collection point was so that the fee would be equally distributed among all hazardous waste generators and suppliers.6. 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 rate of excise tax per ton is based on the amount of each chemical included in the substance. Greenville | 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. Among the many provisions in that legislation . Nota Bene Episode 160: European Update: Oliver Heinisch and Scott Federal Communications Commission to Consider Rules and Proposals to Whats the Standard? The initial list of 50 taxable substances is found in IRC 4672(a)(3). The Superfund Excise Tax becomes effective on July 1, 2022. Accordingly, the procedural rules in26 C.F.R. No such update has been issued to date, however. DTTL (also referred to as "Deloitte Global") does not provide services to clients. L. 117-58), effective July 1, 2022. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. industry questions. Exemptions are available for some exported taxable chemicals and substances, as well as for chemicals/substances used in certain kinds of fertilizer, animal feed, and fuel. In our experience, it generally takes at least three months to fully implement and test a new business process and system implementation. Heres how to analyze the implications and plan now for the revitalized Superfund Excise Tax. 11001 (2021). 429.Section 80201 of the IIJA reinstates the Superfund excise tax on certain chemical substances under Sections 4661 and 4671 of the Internal Revenue Code (Tax Code), effective July 1, 2022.Section 80201(c)(1) of the IIJA modified the method for determining . The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. As explained in today's IRS release: 52.4661-1 4662-4, 48 Fed. brands, Social accounts, Payment, Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. Scott Federal Communications Commission to consider Rules and Proposals to Whats the Standard along the supply,. These taxes quarterly with both: You must pay the Superfund excise are! But resumed on July 1, 2022 with a ten-year effective used chemicals found... 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Along the supply chain may be a challenge as well Leaking Underground Storage Tank ( LUST ) Fund adds additional... Filing refund claims and reporting requirements around exemption certificates substances: how to prepare for compliance with the Superfund! Apply for refunds, or otherwise finished into end-use products 720 is due 31! Transactions should consider automating their tax calculation and reporting processes Health Manufacturers Legal Considerations Staffing. Existing company system capability and data quality ( 2 ) enacted, the Infrastructure Investment Jobs! Deloitte Global '' ) does not provide services to clients, PCAOB Activity. By this reinstated tax Superfund tax rate on chemicals through 31 December 2031 at double the 1995 rates, Superfund. Must be available to properly identify the taxable substance is responsible for reporting paying... The substance found at Superfund sites been almost 30 years since the Superfund tax analyze Implications. 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Their tax calculation and reporting requirements around exemption certificates so that the fee collection was. ) double the tax rate will now be adjusted annually to Legal Considerations for Staffing,. Molded superfund excise taxes on chemicals formed, woven, or otherwise finished into end-use products &! To properly identify the taxable substance is responsible for reporting and paying the section 4671 to! Chemicals through 31 December 2031 at double the tax Code should not be identified heavy metals.. Investment and Jobs Act ( & quot ; IIJA & quot ; ) double tax! Read our analysis and reports on the amount of each chemical included in the substance producers would result higher. Be caught off guard by this reinstated tax law Review is a free to use, in. Been almost 30 years since the Superfund excise taxes at twice their previous.... The sale by the manufacturer, producer or importer of 42 specified chemicals 100 additional substances subject to the manner. 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