Companies with a large volume of transactions should consider automating their tax calculation and reporting processes to increase efficiency and accuracy. The Basics of Californias Outside Salesperson Exemption. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. Deloitte Tax (added June 24, 2022), Q3. (added June 24, 2022), Treasury Inspector General for Tax Administration, IRS issues Superfund Chemical Excise Taxes FAQs. California Law May Limit Hospitals Ability to Adopt The Joint Ankura CTIX FLASH Update - February 28, 2023, Ankura Cyber Threat Investigations and Expert Services. Greenville | In addition to the reinstatement of the federal superfund excise tax on chemicals and substances that went into effect on July 1, 2022, the Hazardous Substance Superfund excise tax went into effect on January 1, 2023 as part of the Inflation Reduction Act of 2022. Do Issuers Fail To File Form Ds Because They Fear Trolls? Background Tax Implications and Financial Business Guidance Regarding the Coronavirus. A3. (added June 24, 2022), Q9. Boston | 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, most of them common in consumer products,. Part of the Tax News & Views podcast series. 6Id. The current list is published in IRC section 4672(a)(3) and attached as Exhibit B. Unlike the static list of 42 taxable chemicals, the taxable substance list is subject to change. 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. 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. How does a company report the Superfund Chemical Excise Tax? The Final CCPA Regulations: What You Need To Know, Are College Athletes Students or Employees? The Reinstated Superfund Excise Taxes. The rates are listed in IRS release IR-2022-133 (June 24, 2022). For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. 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. discount pricing. The IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. Excise Tax on Chemical Sales The Superfund excise tax on chemical sales is imposed on 42 listed taxable chemicals on a per-ton basis by taxpayers that manufacture or produce a listed chemical in the United States or import it for consumption, use, or warehousing in the United States. Companies must report the reinstated Superfund excise taxes onForm 6627, Environmental Taxes, attached toForm 720, Quarterly Federal Excise Tax Return. IRC section 4662 directs the IRS to release guidance as to the appropriate manner of reporting exempt sales or claiming refunds. . See Terms of Use for more information. Activity letter G is reinstated for persons making inventory exchanges of taxable chemicals under section 4662(c)(2), or persons selling or buying intermediate . To stay logged in, change your functional cookie settings. Exemptions are available for some exported taxable chemicals and substances, as well as for chemicals/substances used in certain kinds of fertilizer, animal feed, and fuel. It is imposed on any taxable chemical sold or used by a manufacturer, producer, or importer on or after July 1, 2022.It also is imposed on any taxable substance sold or used by the importer on or after July 1, 2022.The Superfund Tax funds the Hazardous Substance Superfund Trust Fund . The first quarterly reporting for the Superfund Tax on Form 720 is due Oct. 31, 2022. The taxes apply only to imported chemicals or substances, not those for export. For example, butane and methane are exempt if they are being used as fuel, but NOT if they are being used for some other purpose. The National Law Review - National Law Forum LLC 3 Grant Square #141 Hinsdale, IL 60521 Telephone (708) 357-3317 ortollfree(877)357-3317. WASHINGTON The Internal Revenue Service announced today that it has prescribed tax rates for 121 taxable substances that are subject to the Superfund chemical excise tax imposed by section 4671(a) of the Internal Revenue Code (Code). Confidentiality and Non-Disparagement Agreements with Non-Supervisory USCIS Confirms It Will Accept Employment-Based I-485 Applications New Jersey Enacts Bill of Rights for Temporary Workers, DOJ Implements Nationwide Voluntary Self-Disclosure Program. Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. What is a taxable substance? L. 117-58), effective July 1, 2022. In brief. Companies responsible for collecting and remitting the excise tax will need to identify the source system to capture the transactional and master data for applicable transactions, and assess what data elements are captured and how to obtain necessary reports to support compliance filing. The chemicals selected to be subject to the fee were based on two categories: petrochemical feedstocks and inorganic raw materials. 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. 8Id. 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. Congress set up a trust fund, or "Superfund," to clean up and mitigate environmental damage using new taxes imposed on 42 taxable chemicals that Congress identified as having the potential to cause harm upon improper handling or disposal. Unless otherwise noted, attorneys are not certified by the Texas Board of Legal Specialization, nor can NLR attest to the accuracy of any notation of Legal Specialization or other Professional Credentials. Since the Superfund excise tax expired almost three decades ago, the industrial chemical communitys familiarity with their application is attenuated at best. Atlanta | Social login not available on Microsoft Edge browser at this time. 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). During the webcast, we will discuss the impact to sectors that import or manufacture chemicals or chemical compounds . Helping businesses navigate financial due diligence engagements and domestic and cross-border transactions. | Agreed Terms of Use 12I.R.S. Identification of the chemical manufacturers and importers subject to the Superfund Tax. Substances. Exceptional organizations are led by a purpose. 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. Form 6627, Environmental Taxes, previously used to report the Superfund Tax, will likely be used again to report the tax owed. The reinstated Superfund Excise Tax is effective July 1, 2022, through December 31, 2031, absent extension. chrigong@deloitte.com. Section 80201 of the bill would revive long-expired Superfund excise taxes at twice their previous level. Tax Principal DTTL and each of its member firms are legally separate and independent entities. The Revenue Reconciliation Act of 1990 further extended the Superfund Excise Taxes through December 31, 1995, after which point the Superfund Excise Taxes expired. To apply to participate in tax-free sales of intermediate hydrocarbon streams containing organic taxable chemicals or tax-free inventory exchanges of taxable chemicals, file Form 637, Application for Registration (For Certain Excise Tax Activities) with activity letter G. Page Last Reviewed or Updated: 04-Jan-2023, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), Self-Employment Tax (Social Security and Medicare Taxes), Form 720, Quarterly Federal Excise Tax Return, Form 637, Application for Registration (For Certain Excise Tax Activities), Treasury Inspector General for Tax Administration. A cloud-based tax It's codified in IRC Sections 4671 and 4672, both of which were added by the Superfund Amendments and Reauthorization Act of 1986. Chemicals. President Joe Biden called for reinstating the Superfund taxes as part of his $2 trillion infrastructure proposal . DTTL (also referred to as "Deloitte Global") does not provide services to clients. Integrated software The entities falling under the Cherry Bekaert brand are independently owned and are not liable for the services provided by any other entity providing services under the Cherry Bekaert brand. The Superfund Excise Tax is not permanent and . governments, Business valuation & (added June 24, 2022), Q8. Desperate Times, Desperate Measuring Cups FTC Brings Enforcement Trending in Telehealth: February 20 26, 2023, IRS Sets Deadline For Using 401(K) Plan Forfeitures, How Generative AI Generates Legal Issues in the Games Industry, DOJ Announces New Nationwide Voluntary Self-Disclosure Policy. The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. Its also important to understand the tax calculation and reporting requirements and to align with other business functions to implement a process to meet data, process, and system requirements. 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. At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. of products and services. An official website of the United States Government. Technology/systems impacts 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. Draft the To Each Their Own: Agency Must Consider Experience of Each Partner in CMS Updates List of Telehealth Services for CY 2023, What You Need to Know About the New Tariffs on Imports from Russia. 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. Nashville | The Superfund chemical excise taxes previously expired on December 31, 1995. The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. Consider the action items above, particularly the last one, making sure the information systems are in place to capture the data needed to comply with this tax. firms, CS Professional The first return, for the. 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. Houston | The new infrastructure bill revives the Superfund and will impose 42 new excise taxes on chemicals. IRS announces Superfund chemical excise tax rates June 24, 2022 Download pdf (363.6 KB) The IRS today announced the prescribed tax rates for 121 taxable substances that are subject to the Superfund chemical excise tax imposed by section 4671 (a). At the time of publication of these FAQs, 151 substances are listed as taxable substances. Yes. Consequently, taxpayers who export taxable chemicals or taxable substances may be eligible for a refund of the tax paid, dependent on agreements with customers as well as their own internal structures. governments, Explore our 10I.R.C. 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. Systems and processes will also need to be established in order to properly calculate and remit taxes that are due, as well as apply for refunds or exemptions. On November 15, 2021, President Biden signed into law theInfrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. Customer Reviews: Five-Star Enforcement and the Expanding Regulations. South Florida | In addition, most hazardous wastes are produced by these industries or as a result of using products from these industries. The Superfund Chemicals tax previously expired in 1995. Get the insight and tools you need to fully understand and comply with changes resulting from this major tax reform. Deloitte Tax A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. The Petroleum Superfund Tax is proposed to be indexed for inflation beginning in calendar year 2023. Find the tax rates for 121 taxable substances. EPA Announces Availability Of Environmental Justice Thriving Energy & Sustainability M&A Activity February 2023, OSHA Implements Pilot Program to Streamline Complaint Intake Process. When the IIJA reinstated these two taxes, it doubled the previous rates. The intent of the Superfund Excise Taxes is to target the chemicals primarily found in hazardous waste sites and to tax the chemicals at the earliest point possible in the process. A list of taxable chemical substances and procedures for the reinstated Superfund chemical taxes are in Notice 2021-66. Companies opting for the latter run the risk, however, of incurring penalties, should the IRS adopt a different view. The IRS has yet to issue detailed guidance or a Frequently Asked Questions (FAQ) document to clarify the nuances of applicability of the reinstated Superfund excise tax. The superfund excise taxes will affect taxpayers that manufacture, produce, or import certain chemicals found in fuels and industrial products. The $1.2 trillion infrastructure bill making its way through the Senate contains a $14.55 billion tax hike on American chemical and mineral producers. (added June 24, 2022), Q4. Additionally, the Infrastructure Investment and Jobs Act ("IIJA") double the tax rate on chemicals or . As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. 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. (added June 24, 2022), Q5. A third excise tax on crude oil and petroleum products was reinstated in the Inflation Reduction Act . 20I.R.C. 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). It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. 4Id. Taxpayers may petition the IRS to determine whether a substance falls within the taxable substances list. 1Investment and Jobs Act, Pub. As reinstated, the Superfund excise tax will apply to a list of taxable chemicals and taxable substances, as ofJuly 1, 2022,throughDecember 31, 2031, if not extended. 4672(a)(2)(B)(2021). | 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. 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. Specifically, taxable substances include the 50 substances on the initial list of taxable substances in Section 4672(a)(3) and 101 taxable substances added by the IRS in December 2021, throughIRS Notice 2021-66. Strictly Confidential? 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. Tax Senior Manager 117-58 (2021). Additionally, Form 6627, Environmental Taxes, was previously used to report the Superfund Excise Taxes when the taxes were last in effect, and this form will be used again to report the taxes owed. The Hazardous Substance Superfund financing rate was an excise tax of 9.7 cents per barrel of crude oil that applied from 1987 through 1995. . The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. Section 4671 imposes tax on the sales or use of imported "taxable substances" made from those taxable chemicals. Some deposit amount is still required by July 29 to satisfy the relief provisions set out in Notice 2022-15. See how we connect, collaborate, and drive impact across various locations. accounting firms, For Tax is due upon the first use or first sale of a listed chemical in the United States. The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. The Infrastructure Act essentially doubles these rates with taxes ranging from $0.44 per ton to $9.74 per ton. What Is the Difference Between a Grandfathered and a Grandmothered Health Plan? The chemicals Superfund tax was initially enacted in 1980 as a response to high-profile environmental disasters relating to hazardous waste. Reporting Notice 2021-66 suspended the existing procedure inNotice 89-61for an importer or exporter to petition the IRS to add or remove substances from the list, pending the issuance of additional guidance. Do not delete! 11Infrastructure Investment and Jobs Act, Pub. 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. A14. The Superfund Excise Tax will go back into effect on July 1 st, 2022, after not being in place for over 26 years. Due to the complicated nature of the Superfund Excise Tax and the granularity of the tax rate structure, gaps in existing systems and processes may exist. Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. More information on the procedures for petitioning the Secretary to add or remove substances from the list of taxable substances will be released in advance of July 1, 2022. Updated procedural guidance on how to request the determination has not yet been published by the IRS as of the date of this article. Effectively tracking necessary data through the supply chain may be a challenge as well. 23I.R.C. . (a) General rule There is hereby imposed a tax on any taxable chemical sold by the manufacturer, producer, or importer thereof. The more you buy, the more you save with our quantity Deloitte Tax It is critical for companies to engage in discussions with their IT departments early to prepare for the new reporting requirements. 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. There are three ways to arrive at a tax determination for the Superfund Tax: 2. Taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the tax. 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 The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. Assisting with risk analyses and internal processes (design or documentation). When the owner or operator was not identified, or the site cleanups needed to be expedited, financing for the cleanup was to be provided by the Superfund. How are substances added to or removed from the list of taxable substances? Explore Deloitte University like never before through a cinematic movie trailer and films of popular locations throughout Deloitte University. Tax Senior Manager Assisting with development and implementation of technology solutions to enable identification of taxable chemicals and substances, as well as exemptions. Criminal Referrals and OSHA Violations, Part III: Industry Standards Oregon House Revenue Committee Set to Hear More About Pro-Taxpayer Buying or Selling a Small Business Government Contractor? The excise tax collection expired in 1995 but resumed on July 1, 2022. (added June 24, 2022), Q6. November 24, 2021. Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. Try our solution finder tool for a tailored set In these cases, the other person would be liable for paying the excise tax, not the initial importer. Home Guidance Superfund Excise Taxes on Chemicals and Substances: How to Prepare. Raleigh | Challenges to the No Surprises Act Continue: The Latest includes a Navigating Permissive State Laws in Light of the Federal Information FDA Publishes List of 2023 Priority Guidance Topics. A15. (added June 24, 2022), Q10. The Leaking Underground Storage Tank (LUST) Fund adds an additional $0.001/gal federal fee. When expanded it provides a list of search options that will switch the search inputs to match the current selection. accounting, Firm & workflow msulayman@deloitte.com, Stephane Lunan 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 excise tax was applied to a list of 42 chemicals used predominantly in the oil, gas, and chemical industries. technology solutions for global tax compliance and decision Service. The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. Proposed Nursing Home Disclosure Requirements Target Private Equity Regulation in the Post-FTX Environment: SECs Proposed Enhanced Can a Child Decide Whom They Want to Live With in Michigan? This box/component contains JavaScript that is needed on this page. View Full Firm Disclosure. The law imposes a tax on any taxable chemical sold by the manufacturer, producer, or importer. research, news, insight, productivity tools, and more. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten-year effective . The Infrastructure Investment and Jobs Act, signed at the end of 2021, reinstates the Superfund chemical excise taxes under Sections 4661 and 4671 of the Internal Revenue Code. ONESOURCE Determination gives companies the ability to quickly comply with Superfund Excise and Hazardous Substance taxes by automatically and accurately calculating the amount of excise tax owed. The excise taxes are effective July 1, 2022. The Superfund excise taxes are part of Subtitle D, Chapter 38 of the Tax Code. However, importers with estimated tax totals of more than $2,500 per year are required to start making bi-weekly deposits to the Superfund Tax as early as July 29, 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). Sec. Yes. 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. 4671(b)(2). A10. 4661. Semi-monthly deposits are required, however. 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. IRC section 4672 additionally directed importers and exporters to request a determination from the IRS as to whether a specific unlisted chemical substance should be included in the list of taxable substances. In fact, companies that export products comprised of taxable chemicals or substances are entitled to a refund if they paid prior to manufacturing. 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. 4671(b). By this notice, the IRS gave notice of its intent to effect section 80201 (c) (1) of the IIJA, which reinstates the Superfund Chemicals tax effective July 1, 2022. management, Document Notice 2021-66. Expanded Employee Retention Credit (ERC) & how our professionals can assist you. policy, Privacy Comprehensive Substances may be added or removed from the list of taxable substances at a later date. It has been almost 30 years since the Superfund excise tax was in effect. Hampton Roads | Who is responsible for reporting and paying Superfund chemical excise taxes? The Infrastructure Bill lowers the thresholdfor a chemical substance to meet the definition of taxable substance, thus more imports may be subject to this tax. During 1979 Senate discussions, it was estimated that expenditures for hazardous waste disposal sites related to chemicals would be $200 million (versus $40 million for sites related to crude oil).3 During this congressional hearing, it was determined that the proposed system of fees would cover: (1) crude oil; (2) petrochemical feedstocks; and (3) certain highly toxic and/or high-volume inorganic materials including heavy metals, halogens, acids, bases, and ammonia.4. Please see www.deloitte.com/about to learn more about our global network of member firms. A6. Pending further guidance, the previously published tax rates, adjusted for the IIJA increases, and the examples outlined in Notice 89-61 could be helpful in calculating the tax on taxable substances and the potential tax exposure if a substance is subsequently added to the list. Is there a way to check the status of an application for Activity Letter G registration? Effective July 1, 2022, as required by the Infrastructure Investment and Jobs Act (IIJA)passed last November, the Internal Revenue Service (IRS) has reinstated the Superfund Chemical Excise Tax on a wide range of chemicals and substances. Products & Additionally, similar to what happened between 1990 and 1995 when importers and exporters petitioned the IRS to determine whether various chemical substances would qualify as taxable substances, taxpayers may again request a written determination from the IRS as to whether a product they export or import qualifies as a taxable substance, if its chemical makeup includes at least 20% of a listed taxable chemical in IRC section 4661.21 However, IRS Notice 2021-66 suspended prior guidance (IRS Notice 89-61) as to how to request this determination, and taxpayers await additional guidance from the IRS as to the procedure to do so. Under Section 4661, an excise tax is imposed on the sale by manufacturers, producers, and importers of 42 taxable chemicals (see table below for a list of those chemicals). The Superfund was to be financed through environmental excise taxes, including: (1) excise tax imposed on domestic crude oil; (2) excise tax imposed on imported crude oil and petroleum products; and (3) domestically produced and imported petrochemicals and inorganic chemicals. Substances. No. Certain services may not be available to attest clients under the rules and regulations of public accounting. The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. Guidance on how to request the determination has not yet been published by superfund excise taxes on chemicals manufacturer producer... Like never before through a cinematic movie trailer and films of popular locations throughout University! And will impose 42 new excise taxes at twice their previous level beginning in calendar year 2023 increase. Chemical in the United States a listed chemical in the inflation Reduction Act the Petroleum Superfund tax on sales... 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