This initiative came to be commonly known as the Superfund Excise Tax on Chemicals. Charter Brokerage is the only company that will work with the client through the entire process of maximizing your credits. Helping tax leaders embrace disruption, seize new opportunities and drive greater value. Raleigh | (added June 24, 2022), Q10. Additionally the new legislation also decreased the threshold amount from 50% to 20% of Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. 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. Are semimonthly deposits required? This new tax does not need to add additional costs to your products. 117-169), which was signed into law on August 16, 2022, reinstated the Petroleum Superfund Tax at a rate of 16.4 cents per barrel. For example, methane or butane used as a fuel, or nitric acid, sulfuric acid, ammonia, or methane used in production of fertilizer are exempt. | All Locations, Cherry Bekaert is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC, independently owned entities, provide professional services in an alternative practice structure in accordance with applicable professional standards. These taxes expired more than 25 years ago. While the final taxable substance list and exact rates have yet to be finalized, costs will be calculated by weight or value of the contained taxable chemical. However, the first Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. These Superfund tax credits can be taken by either the importer, the manufacturer, or the exporter, depending on the commercial agreements that have been established among those parties. 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. 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. Read about the challenges and opportunities that could lie ahead. Part II of IRS Form 6627 has been updated to reflect these rates. An alternative liability is a 10% tariff of the import value. 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. The taxes had previously expired on Dec. 31, 1995, but were reinstated as part of the infrastructure legislation signed by President Biden in November 2021. Semimonthly periods are the first through 15th of the month and 16th through the end of the month, with the deposit being due the 14th day following the end of the semimonthly period. 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). Beginning Your Sustainability Journey? 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. With world scale integrated manufacturing facilities we are This TaxWatch webcast discusses the superfund excise taxes being reinstated, effective July 1, 2022. 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). Implementing process improvements including potential technology solutions to efficiently monitor products subject to tax and possible exemptions. 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. Client Advisory Board, 1175 Lombardi Access Rd., Ste 500, Green Bay, WI 54304. Many entities are struggling with its application. 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. COPYRIGHT 2023 RKL. The money gathered from the taxes was used to fund the clean-up of hazardous waste disposal sites across the United States. The original excise tax expired on December 31, 1995. WebEffective July 1, 2022, Congress has revived the Superfund Excise tax on Taxable Chemicals and Taxable Substances that previously existed from 1980 through 1995. 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. BDOs excise tax professionals can help affected companies by performing a phased approach to determining the impact of the Superfund chemical excise taxes on your business. Legal Disclaimer|Privacy Policy | Copyright 2022 IGenFuels LLC. 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. Petitions to Add Polyoxymethylene and Polyphenylene Sulfide. Accordingly, the procedural rules in26 C.F.R. Inferences, however, can be made from the absence of any mention in the law. Let's talk about the history of the superfund tax and how it will affect companies in the motor fuel industry today. $300 plus $0.085 per each acre-foot greater than 10 acre-feet. 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. Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. Final Regulations Governing Illinois Equal Pay Acts Certification Weekly Bankruptcy Alert: January 17, 2023 (For the week ending Bankruptcy Court Allows Service of a Subpoena Via Twitter. (added June 24, 2022), Q4. Managing Director, Excise Tax Practice, KPMG US, Senior Manager, Tax | WNT - SALT Income & Incentives, KPMG US, Partner, Tax, Accounting Methods & Credits, KPMG US. 2022 Global Digital Trust Insights Survey, Application Security and Controls Monitoring Managed Services, Controls Testing and Monitoring Managed Services, Financial Crimes Compliance Managed Services, Virtual Business Office services for healthcare. 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 infrastructure bill imposes taxes on certain chemicals and imported substances under Internal Revenue Code sections 4661 through 4672. In Philadelphia, Economy Struggles to Keep Up with New Influx of First Major Overhaul of Cosmetics Regulation Since FDR Administration, Governor Kathy Hochul Proposes New York State Housing Compact. 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. Aerojet and its subsidiaries have (added June 24, 2022), Q9. The initial list of 50 taxable substances is found in IRC 4672(a)(3). Your company could bear the economic burden of the tax being passed on from your suppliers, and, in turn, your company would then need to consider its ability to pass on the economic cost of the excise tax to its customers. The relief applies to the first three quarters of the SCET, i.e., the third and fourth quarters of 2022 and the first 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 excise tax is currently set to expire on December 31, 2031. 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. Who should lead the charge? The content and links on www.NatLawReview.comare intended for general information purposes only. The Joint Until then, companies may take the IRS previous position as an indication of how it is likely to view articles and fabricated products under the current Superfund excise tax. More substances are expected to be added in the future, but the list as it stands is available below. There are 42 listed taxable chemicals under IRC 4661, which imposes excise tax on the sale or use by a manufacturer, producer or importer of such chemicals. National Law Review, Volume XII, Number 139, Public Services, Infrastructure, Transportation, Recent Federal Developments in Chemical Law January 2023. Notice 2022-15 recognizes the burden on taxpayers, explicitly noting the short time frame between the reinstatement of the Superfund chemical taxes and the due date of the first deposit, the unavailability of the 40.6302(c)-1(b)(2) deposit safe harbor in 2022, the possible difficulties of computing the correct amount of tax during the third calendar quarter of 2022 (which is both the first calendar quarter the taxes are in effect and the look-back quarter for the first calendar quarter of 2023), and the number of new taxpayers owing Superfund chemical taxes that have not previously had to comply with the deposit requirements of section 6302.. The tax on substances depends on their chemical composition and if it has 20% or more of a chemical on the taxable list. That penalty can be avoided if the taxpayer demonstrates that the failure was due to reasonable cause and not due to wilful neglect. See Notice 2021-66, 2021-52 I.R.B. $225 plus $0.073 per each acre-foot greater than 10 acre-feet. 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. The imported substances tax is due upon the first sale or use after import. The money gathered from the taxes 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 first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. The Inflation Reduction Act (Pub.L. Some deposit amount is still required by July 29 to satisfy the relief provisions set out in Notice 2022-15. See section 4671(b)(1). There is some ambiguity in the calculation of the tax on substances, but IRS Notice 2021-66 suggests that the default tax calculation will be 10 percent of the assessed import value. 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. July 1 is fast approaching and the window to prepare for compliance with the reinstated Superfund Tax is brief. Partner, Tax Controversy and Regulatory Services, PwC US. All rights reserved. The Superfund Chemicals Excise Tax Makes a Comeback. Superfund Excise Tax - What You Need to Know, This analysis is intended for informational purposes only and is not tax advice. 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 Cherry Bekaert LLP and Cherry Bekaert Advisory LLC practice in an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations and professional standards. (added June 24, 2022), Q14. The National Law Review - National Law Forum LLC 3 Grant Square #141 Hinsdale, IL 60521 Telephone (708) 357-3317 ortollfree(877)357-3317. 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. As noted above, importers are not required to use the IRS-prescribed tax rates for the section 4671 tax and may calculate their own rates. 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. 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. The taxes are effective July 1, 2022. 2022-19: Relief for S Corporation Owners, Financial Secrecy Under Attack in the United States: Final Regulations Issued for Beneficial Ownership Information Reporting, 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. 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. Its tax re-imagined. 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. Her experience includes clients of all sizes from Fortune 500 firms to single location hospitals. 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 of July 1, 2022, The Infrastructure Investment and Jobs Act (IIJA) has reinstated excise taxes imposed on certain chemicals and imported chemical substances. 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 Section 6656. See section 4672(a)(1). For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. In the meantime, reach out to your RKL advisor with questions or to discuss your companys specific circumstances. Applicability of the information to specific situations should be determined through consultation with your tax adviser. The IRS previously released Notice 2021-66, providing guidance on the reinstatement of the SCET under the Infrastructure Investment and Jobs Act (sometimes referred to as the bipartisan infrastructure bill) enacted on November 15, 2021. Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. B ) ( 3 ) ( a ) ( 1 ) Superfund excise tax - What need. Taxable list 1, 2022 ), Q14 affect companies in the fuel. 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