The taxes apply only to imported chemicals or substances, not those for export. Taxpayers must meet the guidelines in the Notice to qualify for this relief. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. 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. Persons wanting to engage in tax-free sales of intermediate hydrocarbon streams containing organic taxable chemicals and/or conduct tax-free inventory exchanges must be registered by the IRS under Activity Letter G. Persons can apply for registration by filing a Form 637, Application for Registration (For Certain Excise Tax Activities), with the IRS. Accordingly, the procedural rules in26 C.F.R. While the majority of the 42 listed chemicals are taxable by the manufacturer or importer upon the first sale or use, butane and methane only become taxable upon the first use other than as a fuel.23 This creates a potential liability for downstream product sales such that the first company that uses the methane or butane in a manner other than as a fuel will have to report and remit the Superfund Excise Tax. 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. 6Id. The chemicals selected to be subject to the fee were based on two categories: petrochemical feedstocks and inorganic raw materials. See section 4672(a)(1). Audit & See section 4671(b)(3). 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. Amendments. Explore all The Superfund tax is assessed on the manufacturer or importer of these chemicals. (All oil and almost all hazardous substances are products of the oil industry, chemical and allied industries, and heavy metals industries. NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. 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. 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. The exemptions identify taxable chemicals that are exempt due to their specific use. California Law May Limit Hospitals Ability to Adopt The Joint Ankura CTIX FLASH Update - February 28, 2023, Ankura Cyber Threat Investigations and Expert Services. 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. Specifically, the statute provides that to qualify as a taxable substance, taxable chemicals listed in IRC section 4662 must constitute more than 50 percent of the weight (or more than 50 percent of the value) of the materials used to produce such substance (determined on the basis of the predominant method of production).10. Such exemptions include methane or butane used as a fuel, chemicals used in the production of fertilizer (including nitric acid, sulfuric acid, ammonia, or methane) and substances derived from coal. 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. Exceptional organizations are led by a purpose. Find the tax rates for 121 taxable substances. Form 6627 must be filed alongside Form 720 on a quarterly basis. Under the rules, a late fee of 5% may be applied on the amount due for each month the form remains delinquent up to a total penalty of 25%. Licenses for Exports to Are You Ready for the UPC? Do not delete! (added June 24, 2022), Q13. | Careers Analyzing Superfund Excise Tax calculations and reporting requirements based on a companys unique business scenario. Certain services may not be available to attest clients under the rules and regulations of public accounting. The Basics of Californias Outside Salesperson Exemption. It has been almost 30 years since the Superfund excise tax was in effect. 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. 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. Service. 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. tax, Accounting & In fact, companies that export products comprised of taxable chemicals or substances are entitled to a refund if they paid prior to manufacturing. msulayman@deloitte.com, Stephane Lunan
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. 4661 and the other applying solely to "any taxable substance sold or used" by importers pursuant to 26 U.S.C. See Section 4671(b)(2). on chemicals through 31 December 2031 at double the 1995 rates, when superfund taxes were last implemented. The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. The National Law Review - National Law Forum LLC 3 Grant Square #141 Hinsdale, IL 60521 Telephone (708) 357-3317 ortollfree(877)357-3317. brands, Social Please enable JavaScript to view the site. These taxes were in place until 1995 to fund the Federal Hazardous Substance Superfund, but expired in 1995. governments, Business valuation & environment open to Thomson Reuters customers only. 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. The specified. The excise tax collection expired in 1995 but resumed on July 1, 2022. A8. The inaugural reporting for companies required to report Superfund excise taxes is on their third-quarter 2022 Form 720, due to be submitted byOctober 21, 2022. 2023. Cherry Bekaert: Tax, Audit and Advisory Services, Superfund Excise Taxes on Chemicals and Substances: How to Prepare, Maximize the Supply Chain Revolution Panel Discussion, 2023 Legislative Landscape: Expanding Opportunities for Manufacturers, The U.S. and Global Economic Manufacturing Outlook for 2023, Private Equity Industry Report: 2022 Trends and 2023 Outlook, 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. View Full Firm Disclosure. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. 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. Substances. It is important for companies to engage in early conversations with procurement, contracting, IT, and other internal departments to identify and assess their exposure and potential gaps in data gathering. Deloitte Tax
Yes. DTTL and each of its member firms are legally separate and independent entities. and services for tax and accounting professionals. discount pricing. This tax provided a federal fund to remediate toxic spill sites when a responsible party could not be identified. IT'S HAPPENING! 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 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. Section 80201 of the bill would revive long-expired Superfund excise taxes at twice their previous level. 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). A1. Your online resource to get answers to your product and Assisting with filing the federal excise tax returns and semi-monthly deposit reporting. Heard on: Revenue from a new excise tax on chemicals like Benzene and Mercury would go . 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. Since the Superfund excise tax expired almost three decades ago, the industrial chemical communitys familiarity with their application is attenuated at best. sarsmith@deloitte.com, Frank Falvo
The relevance of this guidance to the new tax is unclear. Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. Assisting with development and implementation of technology solutions to enable identification of taxable chemicals and substances, as well as exemptions. Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661(b). 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. When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. Chemical manufacturers and importers
Some highlights on the petroleum products tax are as follows: Imposition of the Tax (added June 24, 2022), Q9. Arizona Gets to Keep Its State-Operated Workplace Safety and Health Manufacturers Legal Considerations for Staffing Reductions, PCAOB Enforcement Activity Up Sharply in 2022. The content and links on www.NatLawReview.comare intended for general information purposes only. (a) General rule There is hereby imposed a tax on any taxable chemical sold by the manufacturer, producer, or importer thereof. 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. The Superfund tax is assessed on the manufacturer or importer of these chemicals. More for Reminder: High-Earning Exempt Professionals Must Be Paid a "True Gold Dome Report Legislative Day 24 (2023). Identification of the chemical manufacturers and importers subject to the Superfund Tax. Companies that import taxable chemicals or taxable substances will be liable for the excise tax. Analyzing and assisting in documenting available exemptions (e.g., certain taxable chemicals used in the production of fuel). 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. When enacted, the Superfund was financed by environmental excise taxes on certain commonly used chemicals often found at Superfund sites. 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 Home Guidance Superfund Excise Taxes on Chemicals and Substances: How to Prepare. Will the IRS prescribe tax rates for taxable substances? Nashville | As soon as possible, companies that import any of the taxable chemicals or substances on the IRSs list need to conduct a thorough assessment of their manufacturing processes to find out when, where, and how the Superfund Chemical Excise Tax might apply. 9See I.R.C. Assisting with risk analyses and internal processes (design or documentation). Section 80201(c)(1) of the IIJA modified the method for determining whether a substance is a taxable substance by lowering the required percentage of taxable chemicals used to produce the substance from 50 percent to 20 percent of the weight (or the value) of the materials used to produce such substance. Congress directed the IRS to publish a list of additional taxable substances by January 1, 2022, which was published by the IRS via IRS Notice 2021-66.12, In addition to increasing the tax rate, the Infrastructure Bill lowered the threshold as to what is considered a taxable substance for importers or exporters who wish to request a determination from the IRS. Does the Supreme Court have the stomach to tackle the super fun SECs Pay vs. Do Issuers Fail To File Form Ds Because They Fear Trolls? The Infrastructure Investment and Jobs Act lowered this threshold to 20%. 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. White House Reviewing Proposed Regulations on Reinstated Superfund You Dont Need a Machine to Predict What the FTC Might Do About Is It Compensable? | 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. The tax is assessed based on the amount per ton sold by the taxpayer, with applicable tax rates ranging from $0.44 per ton to $9.74 per ton. The notice also addresses registration requirements to exempt certain sales and uses of taxable chemicals from tax. Waters of the United States and Winston Churchill. If the importer does not calculate the section 4671 tax for a taxable substance and the IRS has not prescribed a tax rate for the taxable substance, then the amount of tax is 10 percent of the appraised value of the taxable substance as of the time the taxable substance was entered into the United States for consumption, use, or warehousing. The tax rates of the listed chemicals were based on the percentage of the individual chemicals found in the hazardous waste sites. 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. 12I.R.S. (added June 24, 2022), Q7. 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. 4662(e). 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. Sitemap They're expected to generate $14.4 billion of revenue in total, or about $1.2 billion annually, the report said. During the webcast, we will discuss the impact to sectors that import or manufacture chemicals or chemical compounds . EPA Announces Availability Of Environmental Justice Thriving Energy & Sustainability M&A Activity February 2023, OSHA Implements Pilot Program to Streamline Complaint Intake Process. 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. 1Investment and Jobs Act, Pub. Tax Principal
Calculate the rate based on the percentage amount of each listed chemical included in the substance. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. and accounting software suite that offers real-time The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. 7Superfund Amendments and Reauthorization Act of 1986, Pub. Atlanta | Therefore, a chemical substance could qualify as a taxable substance if taxable chemicals listed in IRC section 4662 constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce such substance.13, The Superfund Excise Taxes are currently set to expire on December 31, 2031, and are expected to generate $14.4 billion of revenue (or approximately $1.2 billion annually).14, IRC section 4661(b) lists 42 chemicals, identified in Exhibit A. This would be for the periodJuly 1-September 30, 2022. accounting, Firm & workflow Corporate The statute provides an initial list of 50 taxable substances and instructs the IRS to add any substance in which taxable chemicals constitute more than 20% of the weight or value. 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), Fact Sheets for Frequently Asked Questions, Q1. See also I.R.C. Yes. Form 6627 must be led alongside Form 720 on a quarterly basis. statement, 2019 Sec. 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. Abusive Arbitrage Devices Its Time to Get Reacquainted (Episode 2 B&C Biobased and Sustainable Chemicals Practice Group Bergeson & Campbell, P.C. 15I.R.C. Cherry Bekaert is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC provide professional services. Notice 89-61provided guidance under the previously applicable Superfund excise tax. 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. The Superfund Excise Tax is not permanent and . The new infrastructure bill revives the Superfund and will impose 42 new excise taxes on chemicals. 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. Technology/systems impacts
governments, Explore our Litigation Setback for Employers Under Illinois Biometric Information Senate Committee Holds Hearing on Future of Low Carbon Transportation North Carolina Senate Passes Compassionate Care Act at Exactly 4:20 States and Feds Signal Big Changes to Telehealth Prescribing. The initial list of 50 taxable substances is found in IRC 4672(a)(3). The Leaking Underground Storage Tank (LUST) Fund adds an additional $0.001/gal federal fee. 2Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), Pub. A semimonthly period is the first fifteen (15) days of a calendar month or the portion of a calendar month following the 15th day of the month. The Superfund Excise Tax becomes effective on July 1, 2022. 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. : Advanced Marketing Compels Trial on Arbitration in a TCPA Health Plans Gag Clause Attestations Due December 31, 2023. 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). *Note: Self-assessing based on 10% of appraisal value will almost always yield a higher tax rate than either of the other methods. The Superfund Excise Tax is imposed on the manufacturer or importer of the listed chemicals, and the tax becomes due upon the first use or sale in the United States.15. 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. management, More for accounting This memorandum explains why. The proposal would essentially create a new excise tax on the manufacture, production, or importation of 42 chemicals. 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. Attest clients under the rules and regulations of public accounting two categories petrochemical. Revives the Superfund tax is assessed on the percentage of the oil industry, chemical and allied industries, Liability! Or taxable substances is found in the context of taxable substances and uses of taxable chemicals substances! And each of its member firms are legally separate and independent entities nlr does not answer legal nor... 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