Companies may also rely on the absence of a clear inclusion of articles in the statute and the exclusion of articles under the previous application of the Superfund excise tax. No other Superfund tax refund service provider has the experience of Charter Brokerage. Relief provided for Superfund chemical excise tax semimonthly deposits April 2022 In brief The Treasury Department and the IRS (collectively the IRS) have released Notice 2022-15, which provides relief for certain reinstated Superfund chemical excise taxes (SCET) from the penalty for failure to properly deposit imposed under 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. 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. Companies might receive a refund of the tax paid if they export products made with specific chemicals and substances if they paid before manufacturing. A7. The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. 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. See Notice 2021-66, 2021-52 I.R.B. Any taxable chemical or substance also qualifies for a Superfund Tax Credit. These credits are accrued when a taxable chemical or taxable substance is exported. A Superfund tax is imposed when a taxable chemical is imported, or is domestically produced for sale or use unless an exemption applies. A12. 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. Additional clarification and guidance are expected in the upcoming months. Gas tax holiday: impact of changes in motor fuel tax rates, Tax automation: the ultimate guide to tax process efficiency, Reporting The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. The Superfund Excise Tax on chemical sales is back! Petitions Filed To Add Polyoxymethylene And Polyphenylene Sulfide To List Of Chemical Substances Subject To Superfund Excise Tax: On December 28, 2022, the When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. 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. Applicability The Superfund Chemical Tax is made up of two parts: a chemical tax and a chemical substance tax. NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. 429 (2021)), effective July 1, 2022, with modifications to the applicable rates of tax and other provisions related to those taxes. The IRS recently issued FAQs and published tax rates for 121 of the 151 taxable substances. Managing Director, Excise Tax Practice, KPMG US, Senior Manager, Tax | WNT - SALT Income & Incentives, KPMG US, Partner, Tax, Accounting Methods & Credits, KPMG US. Implementing process improvements including potential technology solutions to efficiently monitor products subject to tax and possible exemptions. For purposes of this code section the term importer means the person for which the taxable chemical is brought to the U.S. for consumption, use or warehousing. The Superfund chemical excise tax can affect a company even if it is not directly liable for the tax, because non-liable companies could still bear the economic cost of the tax passed on by suppliers. Home Guidance Article Superfund Excise Taxes on Chemicals and Substances: How to Prepare. As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. Copyright 2023 BDO USA LLP. Second, an importer or exporter of a substance (or other interested person) can petition the Secretary to add the substance to or remove the substance from the list of taxable substances. The Superfund Excise Tax: Back in action. Proc. I am an importer of taxable substances. Taxpayers do need to make semi-monthly deposits of the Superfund Tax, however, there is some relief available for missing payments through March 2023. Hampton Roads | The taxes are effective July 1, 2022. The Infrastructure Investment and Jobs Act included the reauthorization of the Superfund law (P.L. When is the first return due? 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. Substances. Semi-monthly deposits are required, however. Excise Tax on Corporate Stock Repurchases Under the Inflation Getting Healthcare in 2023 and BeyondVirtuallyand Securely. Webrate and the $0.164 per barrel petroleum Superfund tax rate. As is the case with many excise taxes, the cost to businesses is expected to be passed down the supply chain, and ultimately to the end consumer in the form of increased prices and fees. Petitions to Add Polyoxymethylene and Polyphenylene Sulfide. 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). As reinstated, the excise tax rates are doubled from pre-1996 levels and range from $0.44 cents per ton to $9.74 per ton. Its been a while since manufacturers or other affected organizations had to consider this levy, so lets take a closer look at these excise taxes and how taxpayers can determine applicability and prepare for compliance. All rights reserved. The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. More. That tax expired in 1995, but was partially reinstated on November 15, 2021, when President Biden signed the Bipartisan Infrastructure Law into law. A9. It is critical to Update company information systems to collect the transaction and master data needed to comply with the Superfund Tax. 4295) on December 22, 2022, that accomplishes three things: (1) eliminates the requirement to affirmatively elect New Jersey S corporation status, while including an opt-out provision; (2) adopts the federal centralized partnership audit regime, with certain modifications; and (3) ends certain COVID-related extensions. 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. On December 27, 2022, the Treasury Department and the Internal Revenue Service issued interim guidance in the form of Notice 2023-7, addressing how the new corporate AMT applies to partnership interests, consolidated return groups and other significant events that affect corporations, including merger and acquisition activities and excepted cancellation of debt income. The IIJA also reinstated the Superfund excise tax on the import for sale or use of any taxable substance underSection 4671of the Tax Code. 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. The first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). More information about reliance is available. These FAQs were announced in IR-2022-131. In response to pointed public comment, on April 15, 2022, the IRS released an advance version ofNotice 2022-15, providing relief for thethirdandfourth calendar quarters of 2022, and the first calendar quarter of2023, regarding the failure to deposit penalties imposed bySection 6656of the Tax Code, as those penalties relate to the Superfund excise taxes. You will also have to determine how your company will pass on the tax to your customers. - January 2023 Edition. The Infrastructure Investment and Jobs Act not only reinstated the Superfund excise tax but also expanded its rate and reach. Policy on Demand is a news platform that provides in-depth insights and analysis on policy developments that impact your business. Funds collected will be added to the Hazardous Substance Superfund Trust. Additional substances may be added if the weight or value of the substances is greater than 20% of the contained taxable chemical. A4. The FTC's Proposed Rule Banning Noncompete Agreements- What Does It Mean? Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. The exemptions identify taxable chemicals that are exempt due to their specific use. (added June 24, 2022), Q13. 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 first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). The Inflation Reduction Act added excise tax on domestic crude oil and imported petroleum products starting on January 1,2023. The Time Is Now: Comment Period Open For The Federal Trade Commission Canadas Foreign Buyers Ban: What You Should Know About the Ban on CMS Proposed Rule for Refunding Overpayments Would Align With False EPAs Proposal to Tighten the Fine Particulate NAAQS: Whats Proposed Commonwealth Court Strikes Down 2021 Accessibility Regulations as Is Texas Getting Ready to Expand Its Compassionate Use Program? Part II of IRS Form 6627 has been updated to reflect these rates. That number will likely change as substances are added to or removed from the list of taxable substances pursuant to section 4672(a)(2) or (4). This Superfund Tax is assessed only on importers of taxable substances and is due upon the first sale or the first use after import into the United States. To put this in context, tax rates for taxable chemicals range from $0.44 to $9.74 per short ton. A11. | Agreed Terms of Use The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. Companies must report the reinstated Superfund excise taxes onForm 6627, Environmental Taxes, attached toForm 720, Quarterly Federal Excise Tax Return. Providence | Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. A8. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. 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, including ammonia, butane, benzene and mercury. The site is 15 miles east of Sacramento, California. 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. 338(h)(10) Transaction Structure: Pros and Cons for Sellers and Buyers. Elizabeth received her Bachelor of Science degree in Criminal Justice from Florida Gold Coast University. 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 States or entered into the United States for consumption, use, or warehousing. Below is the current list of taxable chemicals. The full list of taxed chemicals and substances can be viewed here. The importer of hazardous substances pays the tax, and it is due on the first sale or use after import. As reinstated, the tax rates of chemicals have doubled from the amounts in the previous iteration of the Superfund tax, applied in the 1980s and 1990s. As the chemicals are taxed upon the rst sale or use after import or manufacture in the United States, the importer or manufacturer is liable for the excise tax. (Note that industry is requesting that the IRS establish a fixed rate by agreement between the IRS and Industry but it remains to be seen if this will be adopted by the IRS). 11 In addition to the reinstatement of the taxes, the Infrastructure Bill doubled the prior rate of tax on the 42 listed chemicals. This memorandum explains why. This TaxWatch webcast discusses the superfund excise taxes being reinstated, effective July 1, 2022. If your company is a business that manufactures, produces or imports any of the listed chemicals or substances, determine your liability for the taxes. 17. 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. IRC 4671 imposes the excise tax on the sale or use by an importer of specified taxable substances (as initially identified in IRC 4672(a)(3) and IRS Notice 2021-66). Identify and educate key stakeholders impacted by the excise tax within the organization (supply chain, tax, EPA regulatory, IT, finance), Identify taxable chemicals, hazardous substances, and crude oil/ imported petroleum products, Identify and document exceptions to the excise tax, Forecast excise tax liability based on applicable rates, Consider filing petition with IRS to request modifications to the list of taxable substances and rate of tax on taxable substances, Assess supplier and consumer invoicing issues, Assess internal and external communications regarding excise tax information, Identify data sources required to track the lifecycle of affected chemicals and products, assess potential issues, and evaluate process and configuration changes to resolve issues, Prepare for all aspects of compliance, including filing registrations on Form 637 and filing returns on Form 720 and Form 6627. The Aerojet General Corp. Superfund site covers about 5,900 acres near Rancho Cordova. 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