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. The National Law Review - National Law Forum LLC 3 Grant Square #141 Hinsdale, IL 60521 Telephone (708) 357-3317 ortollfree(877)357-3317. NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. 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. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. Inferences, however, can be made from the absence of any mention in the law. Tax is due upon the first use or first sale of a listed chemical in the United States. 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. The taxes apply only to imported chemicals or substances, not those for export. Fullwidth SCC. slunan@deloitte.com, Christina Gong Telephone and Texting Compliance News: Regulatory Update February 2023. Analyzing transactional and master data gaps given existing company system capability and data quality. Importers See also I.R.C. 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. The rationale for the fee collection point was so that the fee would be equally distributed among all hazardous waste generators and suppliers.6. See section 4671(b)(3). 4661 and the other applying solely to "any taxable substance sold or used" by importers pursuant to 26 U.S.C. 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). Social login not available on Microsoft Edge browser at this time. For example, if load of scrap metal contains 50% nickel (taxed at $8.90 per ton) and 20% chromite (taxed at $3.04 per ton), the tax rate would be calculated as: ($8.90 x .50 = $4.45) + ($3.04 x .20 = .61) = $5.06 per ton. The Notice essentially allows taxpayers untilOctober 31, 2022, to determine whether a Superfund excise tax applies and to calculate how much taxed is owed. In Notice 2021-66 the IRS published a list of 100 additional substances subject to the Superfund Tax. Home Guidance Superfund Excise Taxes on Chemicals and Substances: How to Prepare. The NLR does not wish, nor does it intend, to solicit the business of anyone or to refer anyone to an attorney or other professional. Effectively tracking necessary data through the supply chain may be a challenge as well. The unique considerations of butane and methane require taxpayers further down the supply chain to be aware of the procedural issues affecting chemicals. Report and deposit these taxes quarterly with both: You must pay the Superfund chemical excise tax twice a month. 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. Chemical manufacturers and importers (added June 24, 2022), Q5. 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). Does the Supreme Court have the stomach to tackle the super fun SECs Pay vs. The National Law Review is not a law firm nor is www.NatLawReview.com intended to be a referral service for attorneys and/or other professionals. 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. 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. Reporting 22The IRS does not require that the tax be included in the total cost of the product or separately line itemed in an invoice. Semi-monthly payments should be made by the 15th and 30th of each month, but the IRS is providing relief from penalties for non-payment up through the first quarter of 2023. I am an importer of taxable substances. 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. What is a taxable substance? As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. 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. 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. Deloittte Tax A third excise tax on crude oil and petroleum products was reinstated in the Inflation Reduction Act . The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. 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 Infrastructure Bill reinstated the Superfund Excise Taxes on chemicals and taxable substances, effective July 1, 2022.11 In addition to the reinstatement of the taxes, the Infrastructure Bill doubled the prior rate of tax on the 42 listed chemicals. Deposit payments with the Electronic Federal Tax Payment System (EFTPS). collaboration. 18I.R.S. Assisting with filing the federal excise tax returns and semi-monthly deposit reporting. Your online resource to get answers to your product and How Modern Manufacturing Plants Can Protect Against Ransomware, FTC Will Host May 23, 2023, Workshop on Recyclable Claims and the Appellate Court Affirmed An Order Denying A Beneficiarys Request For An Overview of Why Class Action Privacy Lawsuits May Have Just Gotten Gold Dome Report Legislative Day 26 (2023). The Reinstated Superfund Excise Tax for Chemicals and Imported Substances As of July 1, 2022, The Infrastructure Investment and Jobs Act (IIJA) has reinstated excise taxes imposed on certain chemicals and imported chemical substances. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. The term " Superfund " refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. Recent FTC Enforcement Action Merits Cyber Insurance Coverage Review, Two Ways to Redefine & Achieve CRM Success. They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. The Basics of Californias Outside Salesperson Exemption. 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. Additionally, the Infrastructure Investment and Jobs Act ("IIJA") double the tax rate on chemicals or . Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). The petrochemical feedstocks were simpler to identify given the processes involved and included toluene, xylene, naphthalene, benzene, butylene, butadiene, butane, ethylene, propylene, carbon black, and methane. These taxes have not been in effect since 1995, so companies that havent had to deal with them for the past 27 years are now scrambling to understand the complexities and requirements of this new iteration of the law. The Leaking Underground Storage Tank (LUST) Fund adds an additional $0.001/gal federal fee. Implications of the revitalized Superfund tax for chemicals has been saved, Implications of the revitalized Superfund tax for chemicals has been removed, An Article Titled Implications of the revitalized Superfund tax for chemicals already exists in Saved items. DTTL and each of its member firms are legally separate and independent entities. Superfund tax on chemicals. Yes. DeloitteTax Audit & Information must be available to properly calculate and remit taxes due, apply for refunds, or request exemptions. 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. Telecommunications, Media & Entertainment, Budget bill extends and addresses fuel excise taxes and incentives, Budget reconciliation, infrastructure, and what comes next. DOL Provides Snapshot of ERISA Enforcement Statistics for Fiscal Year 2022, TPA Escapes Liability for Sending COBRA Notice to Employees Former Address, but Claims Proceed Against Employer, For 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. November 24, 2021. 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). Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. A10. Expanded Employee Retention Credit (ERC) & how our professionals can assist you. 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. Internal Revenue Code (IRC) section 4671 thereby imposed the same tax on imported substances as was already included in the cost of domestically purchased substances. Among the many provisions in that legislation . GT's The Performance Review Episode 19: Is the Fight Over AB 51 5 Reasons Community Associations Need an Attorney That Specializes in New York Proposes Regulatory Review and Approval of Material Health CMS Issues Long-Awaiting Medicare Advantage RADV Final Rule, Preventing the Use of Cryptocurrencies to Evade Sanctions. Good News for American Businesses: H1-B Denial Rates Plummet Under USCIS Extends Comment Period for Proposed Fee Increases, OFCCP Rescinds Trump-Era Religious Exemption Rule. Matt Levin Jul 2, 2021. . Everyone loves infrastructure, but it pays to read the fine print. The exemptions identify taxable chemicals that are exempt due to their specific use. 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. An official website of the United States Government. Companies that import taxable chemicals or taxable substances will be liable for the excise tax. 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 and expired more than 25 years ago. Accordingly, the chemicals are taxed upon the first sale or use after import or manufacture in the United States, and the importer or manufacturer is liable for the excise tax, which it may pass along to its customers.22. IT and tax departments in particular will need to collect transactional data all along the supply chain, as well any applicable master data. The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. Certain services may not be available to attest clients under the rules and regulations of public accounting. 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. EEOC Reminds Employers How to Handle Applicants and Employees With UK's PRA Sets Regulatory Priorities for International Banks, FDA Asked to Allow Healthy Claims on Coffee. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. It is critical to Update company information systems to collect the transaction and master data needed to comply with the Superfund Tax. 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. This effectively doubled the tax rate of the imported taxable substances as well, and the Infrastructure Bill further increased the alternative method of calculation of the taxable substances to 10% the value of import. tax, Accounting & (b) Amount of Tax The amount of tax imposed by subsection (a) shall be determined in accordance with the following table: (c) Termination No tax shall be imposed by this section after December 31, 2031. Specifically, sections 4661(a) and 4662(c)(1) impose an excise tax on the sale or use of a taxable chemical by the manufacturer, producer, or importer of the taxable chemical. See Section 4671(b)(2). For instance, necessary data elements may not be available to properly identify the taxable chemicals and components. 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. 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