Notice 2021-66 does not specify the tax rate for each taxable substance. A Superfund tax is imposed when a taxable chemical is imported, or is domestically produced for sale or use unless an exemption applies. 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 As of July 1, 2022, The Infrastructure Investment and Jobs Act (IIJA) has reinstated excise taxes imposed on certain chemicals and imported chemical substances. See the full preliminary list in Internal Revenue Code 4661, 4671, 4672; Notice 2021-66. Funds collected will be added to the Hazardous Substance Superfund Trust. These substances consist generally or partially of chemicals listed in Section 4661. (added June 24, 2022), Q2. The Superfund Chemicals Excise Tax Makes a Comeback. An official website of the United States Government. Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. Acetylene Benzene Butane Butylene Butadiene A Frequently Asked Questions (FAQ) page about the Superfund Excise Tax is available from the Internal Revenue Service: FAQ: IRS Issues Superfund Chemical Excise Taxes. Permit & License. Permit & License. More substances are expected to be added in the future, but the list as it stands is available below. 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. IRC section 4661(b) lists 42 chemicals that are once again subject to the Superfund Excise Tax effective July 1, 2022. 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. The Infrastructure Investment and Jobs Act (Pub.L. This is the first person/company at which the taxable chemical lands in the U.S. for the preceding reasons. Elizabeth received her Bachelor of Science degree in Criminal Justice from Florida Gold Coast University. 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. Does Your Cyber Insurance Policy Cover a Ransomware Attack? The Joint Managing Director, Excise Tax Practice, KPMG US, Senior Manager, Tax | WNT - SALT Income & Incentives, KPMG US, Partner, Tax, Accounting Methods & Credits, KPMG US. See also section 4661(b) for the tax rate for taxable chemicals. 2017 Nursing Homes Brace for Reforms and Heightened Government Scrutiny. 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. WebEarlier Superfund excise taxes were 9.7 cents per barrel of crude oil or refined oil products, and a variety of excise taxes, ranging from $0.22 to $4.87 per ton on some 42 chemicals and metal compounds. 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. Read about their experiences and a few lessons learned along the way. FS-2022-31 (Issued 6/24/2022), IRS issues Superfund Chemical Excise Taxes FAQs ( Link) Rev. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. If these deposits are missing, there is temporary relief until March 2023, which includes the third and fourth quarters of 2022 and the first quarter of 2023. Taxable Chemicals. Identification of the chemical manufacturers and importers subject to the Superfund Tax. If your organization believes it may be subject to the reinstated Superfund Excise taxes, be prepared to begin reporting on chemical use. NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. Excise taxes are reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. Various exemptions exist for taxable chemicals. Key considerations for dealings with the reinstated Superfund Tax include: For producers, importers, exporters, and customers of businesses making and distributing identified chemicals and substances, action is needed quickly. 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. on The Reinstated Superfund Excise Tax for Chemicals and Imported Substances, How Finance and Accounting Outsourcing Helps Companies Grow, How Sage Intacct Real Estate Simplifies Property Management and Reporting. A9. Otherwise, companies risk finding out about this tax when they are audited and risk becoming liable for penalties. 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. Raleigh | During her free time Elizabeth enjoys going to concerts, traveling, hanging out with her pets, and caring for her succulent plants. A taxable substance is any substance that, at the time of sale or use by the importer of the substance, is listed as a taxable substance. The money gathered from the taxes was used to fund the clean-up of hazardous waste disposal sites across the United States. Cherry Bekaert Advisory LLC and its subsidiary entities are not licensed CPA firms. Ascend Performance Materials is the premium provider of high quality chemicals, fibers and plastics. Reconciling The Joint Committee on Taxation estimates these excise taxes combined would increase revenues by over $52 billion over a 10-year period How KPMG can help Attorney Advertising Notice: Prior results do not guarantee a similar outcome. The applicable rates of tax and related 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. 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. Washington DC |, Copyright 2023 Cherry Bekaert. 11 In addition to the reinstatement of the taxes, the Infrastructure Bill doubled the prior rate of tax on the 42 listed chemicals. That authority expired in 1995. Expanded Employee Retention Credit (ERC) & how our professionals can assist you. Partner, Tax Controversy and Regulatory Services, PwC US. A10. At the time of publication of these FAQs, 151 substances are listed as taxable substances. How do I calculate the section 4661 tax? 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. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. This law levies taxes on the manufacture, production, or importation of 42 specific chemicals and another 121 chemical Navigating the complex terrain of excise taxation and uncovering opportunities, Stay informed on excise tax-related news with ourKPMG TaxNewsFlasharchive. Petitions to Add Polyoxymethylene and Polyphenylene Sulfide. The applicable tax ranges from $.48 to $9.47 per ton. The Brazilian government on December 29, 2022, published draft legislation to align Brazils transfer pricing rules with the Organization for Economic Cooperation and Development (OECD) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. How do I calculate the section 4671 tax? 11 In addition to the reinstatement of the taxes, Managing Director, Excise Tax Practice National Leader, State and Local Tax Partner, Sales & Use Tax National Leader, Business Restructuring & Turnaround Services, Management Advisory & Performance Improvement, Total Tax Transparency & ESG Tax Strategy, Financial Institutions & Specialty Finance. Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. The Superfund tax is assessed on the manufacturer or importer of these chemicals. The first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). Client Advisory Board, 1175 Lombardi Access Rd., Ste 500, Green Bay, WI 54304. Review your business processes, entities and products to determine the effect on contracts, invoicing, cost recovery, technology and potential future audits. How are substances added to or removed from the list of taxable substances? Nearly three decades after expiring, the Superfund chemical excise tax is back. under section 4672(a)(3), or if the Secretary of the Treasury or her delegate (Secretary) has added it to the list of taxable substances pursuant to section 4672(a)(2) or (4). Below is the current list of taxable substances. For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. That penalty can be avoided if the taxpayer demonstrates that the failure was due to reasonable cause and not due to wilful neglect. 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. 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. Inferences, however, can be made from the absence of any mention in the law. Semi-monthly deposits are required, however. South Florida | This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. It's important to note that the tax only applies to imported chemicals and hazardous substances. Section 4671(a) imposes an excise tax on the sale or use of a taxable substance by the importer of the taxable substance. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. More information about reliance is available. These FAQs were announced in IR-2022-131. Augusta | A15. Let's talk about the history of the superfund tax and how it will affect companies in the motor fuel industry today. The National Law Review - National Law Forum LLC 3 Grant Square #141 Hinsdale, IL 60521 Telephone (708) 357-3317 ortollfree(877)357-3317. The microbusiness also charges $5 for delivery. This would be for the periodJuly 1-September 30, 2022. Even companies that have been on the market for decades may not have many employees who were around when the previous excise tax applied. It has been almost 30 years since the Superfund excise tax was in effect. A4. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten Statement in compliance with Texas Rules of Professional Conduct. 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. Read more about the three reinstated excise taxes. The new tax doubles the previous tax rate on Taxable Chemicals and Taxable Substances. Hampton Roads | Taxable substances include substances where taxable chemicals constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce such substance (as determined based on the predominant method of production). When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. The section 4661 tax is imposed as a rate per ton of a taxable chemical. While the majority of the listed chemicals are taxable by the manufacturer or importer upon the rst sale or use, butane and methane only become taxable upon the rst use other than as a fuel. Helping businesses navigate financial due diligence engagements and domestic and cross-border transactions. The revenues are intended to help pay for the approximately $550 billion in new spending on infrastructure that is part of the 2021 Infrastructure Investment and Jobs Act. If you are not responsible for paying and reporting the excise tax to the IRS but purchase any of the listed chemicals or substances from your suppliers, review the potential economic impact of the reinstated excise tax on your company. 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. Relief provided for Superfund chemical excise tax semimonthly deposits. 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. This potential change in Brazilian transfer pricing policies could have significant consequences from a U.S. transfer pricing and international tax perspective. (added June 24, 2022), Q14. No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. 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, The Environmental Protection Agency (EPA) identifies sites such as Kti Chemicals Inc because they pose or had once posed a potential risk to human health and/or the environment due to contamination by one or more hazardous wastes. 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. (added June 24, 2022), Q5. Under what circumstances is registration required? (added June 24, 2022), Q3. (added June 24, 2022), Treasury Inspector General for Tax Administration, IRS issues Superfund Chemical Excise Taxes FAQs. 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. 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 substances depends on their chemical composition and if it has 20% or more of a chemical on the taxable list. A12. The tax 3/17/2022. This approach includes: Let us help you address the compliance issues associated with reinstatement of Superfund chemical excise taxes. AllRightsReserved. The Inflation Reduction Act added excise tax on domestic crude oil and imported petroleum products starting on January 1,2023. 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