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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. Notice 2021-66 does not specify the tax rate for each taxable substance. 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. US Executive Branch Update February 27, 2023. services, Comprehensive Environmental Response Compensation, and Liability Act of 1980 (CERCLA). 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. 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Prior to their expiration in 1995, the Superfund excise taxes were used to fund theHazardous Substance Superfund, established by theComprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). (a) General rule There is hereby imposed a tax on any taxable chemical sold by the manufacturer, producer, or importer thereof. The taxes are set to be reinstated beginning on July 1, 2022. The new Superfund requires companies to identify which of 42 chemicals they're using, volume of each in production processes and outputs. 2023. Heard on: Revenue from a new excise tax on chemicals like Benzene and Mercury would go . Yes. The Superfund Excise Taxes will be reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten-year effective . Integrated software 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. National Law Review, Volume XII, Number 139, Public Services, Infrastructure, Transportation, Mandatory Arbitration Agreements Remain Valid in California, Antitrust Practitioners Expect Activity With Climate Issues. 4672(a)(2)(B)(1995). Deloittte Tax However, the IRS released a number of IRS Notices between 1990 and 1995 concerning taxpayer requests for a determination as to whether a listed chemical substance met the definition of taxable substance. This increased the taxable substances list to more than 100 individual chemical substances. (added June 24, 2022), Q10. The section 4661 tax is imposed as a rate per ton of a taxable chemical. 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. 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. 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." Labor Board Flip-Flops Again on Severance FRB Governor Bowman Speaks on Bank Regulation and Supervision. 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. Yes. A9. The Treasury Department and the IRS (collectively the IRS) have released Notice 2021-66, providing guidance on the reinstatement of the Superfund chemical excise taxes (SCET) under the Infrastructure Investment and Jobs Act (sometimes referred to as the Bipartisan Infrastructure Bill, or IIJA) enacted on November 15. . Tax is due upon the first use or first sale of a listed chemical in the United States. Calculate the rate based on the percentage amount of each listed chemical included in the substance. 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. 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. Under what circumstances is registration required? As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. Helping businesses navigate financial due diligence engagements and domestic and cross-border transactions. Everyone loves infrastructure, but it pays to read the fine print. A11. Part II of Form 6627, Environmental Taxes, will be updated to reflect the tax rate per ton of each taxable chemical. Telecommunications, Media & Entertainment, Budget bill extends and addresses fuel excise taxes and incentives, Budget reconciliation, infrastructure, and what comes next. Washington DC |, Copyright 2023 Cherry Bekaert. 12I.R.S. The chemicals selected to be subject to the fee were based on two categories: petrochemical feedstocks and inorganic raw materials. South Florida | We provide an overview of the origins of the Superfund Excise Tax and take a closer look at the revitalized tax (effective July 1, 2022), as included within the Infrastructure Investment and Jobs Act (the The Infrastructure Bill), signed into law on November 15, 2021.1 Through this lens, we highlight issues to consider in evaluating the Superfund tax on chemicals and chemical substances. Chemicals. 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. . A list of taxable chemical substances and procedures for the reinstated Superfund chemical taxes are in Notice 2021-66. 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. Assisting with filing refund claims and reporting requirements around exemption certificates. 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. July 1, 2022. At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. However, since the IRS ruled that these substances met the definition of taxable substance, these new substances were also subject to the tax if imported by taxpayers, thereby effectively increasing the list of taxable substances of IRC section 4672. A10. This would be for the periodJuly 1-September 30, 2022. See how we connect, collaborate, and drive impact across various locations. To accomplish this, the current system capability should be assessed. DeloitteTax This button displays the currently selected search type. Companies must report the reinstated Superfund excise taxes onForm 6627, Environmental Taxes, attached toForm 720, Quarterly Federal Excise Tax Return. At what point in a transaction do the new taxes kick in? Section 4671(a) imposes an excise tax on the sale or use of a taxable substance by the importer of the taxable substance. It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. 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. July 1 is fast approaching and the window to prepare for compliance with the reinstated Superfund Tax is brief. The Superfund Excise Tax becomes effective on July 1, 2022. Products & 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. Alternatively, a taxpayer may base the rate for taxable substances on 10% of the value of the import.20. A third excise tax on crude oil and petroleum products was reinstated in the Inflation Reduction Act . Reminder: High-Earning Exempt Professionals Must Be Paid a "True Gold Dome Report Legislative Day 24 (2023). 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. 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. DTTL and each of its member firms are legally separate and independent entities. The law imposes a tax on any taxable chemical sold by the manufacturer, producer, or importer. | Careers View Full Firm Disclosure. Strategies for Protecting Standard Essential Department Of Justice Introduces Voluntary Self-Disclosure Policy For Minnesota Supreme Court Clarifies State Law Standards for Severe or Gold Dome Report Legislative Day 25 (2023). There are two separate Superfund chemical excise taxes: a tax imposed on the sale or use by the manufacturer or importer of "taxable chemicals" listed in section 4661, and a tax on the sale or use by the importer of "taxable substances" listed in section 4672 and IRS Notice 2021-66. 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), News Releases for Frequently Asked Questions, Recent Developments for Form 6627, Environmental Taxes, Treasury Inspector General for Tax Administration, synthetic linear fatty alcohol ethoxylates, IRS issues Superfund chemical excise tax rates. Was Congress intent that taxable substances list to more than 100 individual chemical.... As an article according to40 C.F.R tax and the window to prepare for compliance with the Superfund... Tax and the Hazardous substances tax took effect on July 1,.... 4672 ( a ) ( 2 ) ( 2 ) ( B ) ( 1995 ) each of Its firms... Report the Superfund tax is brief 24 ( 2023 ) is imposed as a rate per ton of taxable! Sold by the manufacturer, producer, or importer fee were based on the percentage of. 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