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. 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. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. Tune in to find out more. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. In these cases, the other person would be liable for paying the excise tax, not the initial importer. Charlotte | Notice 2021-66 does not specify the tax rate for each taxable substance. 429, Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). 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. (added June 24, 2022), Q10. Substances. What is a taxable substance? Information must be available to properly calculate and remit taxes due, apply for refunds, or request exemptions. The Superfund chemical excise tax can affect a company even if it is not directly liable for the tax, because non-liable companies could still bear the economic cost of the tax passed on by suppliers. Class Action Year in Review: The Rise Of The Self-Tapping Website? Who is responsible for reporting and paying Superfund chemical excise taxes? Reconciling 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). IRS publishes initial Superfund chemical list January 11, 2022 The IRS recently released guidance ( Notice 2021-66 ,) providing key information on the excise taxes imposed on certain chemicals and substances under Sections 4661 and 4671often referred to as Superfund excise taxes. The Joint Committee on Taxation estimates these excise taxes combined would increase revenues by over $52 billion over a 10-year period. 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. A5. WebWork with outside vendor on Superfund Excise tax compliance; Help implement and maintain the Global Incentive tracker; Provide fixed asset information for property tax renditions. SECURE 2.0 Series Part 3: Retirement Plan Required Minimum Court Affirmed Summary Judgment For A Financial Advisor Due To The AUSTRALIA: ASIC Starts 2023 With Focus On Greenwashing. Form 6627, Environmental Taxes, previously used to report the Superfund Tax, will likely be used again to report the tax owed. (added June 24, 2022), Q2. 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. Under certain state laws the following statements may be required on this website and we have included them in order to be in full compliance with these rules. Follow these steps to assess applicability and prepare for compliance: The sooner these steps are completed, the more seamless this new reporting and filing will be. 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. The Reinstated Superfund Excise Taxes. 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. These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. Instead, Section 4671(b) provides that the amount of tax imposed with respect to any taxable substance is equal to the amount of tax that would have been imposed by Section 4661 on the taxable chemicals used as materials in the manufacture of the taxable substance, if such taxable chemicals had been sold in the United States for use in the manufacture or production of the taxable substance. Notice IR-2022-132 focused on issuing tax rates for 121 taxable substances. Start Here. WebEarlier Superfund excise taxes were 9.7 cents per barrel of crude oil or refined oil products, and a variety of excise taxes, ranging from $0.22 to $4.87 per ton on some 42 chemicals and metal compounds. Because of potential exemptions for butane and methane used as a fuel, taxpayers further down the supply chain need to be aware of the procedural issues aecting such chemicals. A12. Corresponding with the IRS, including requests for determination and other guidance. The tax law is included in the Infrastructure Investment and Jobs Act that was signed into law on November 15, 2021. Substances treated as taxable will significantly increase over the pre-1996 levels, when the threshold determination only applied when more than 50% of the substances weight or value consisted of taxable chemicals. 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). 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. Data Security The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. July 1, 2021 thru June 30, 2022. On a separate notice, the IRS released the majority (121 out of 151) of the highly requested tax rates on the substances subject to the superfund chemical excise tax. The section 4661 tax is imposed as a rate per ton of a taxable chemical. If your organization believes it may be subject to the reinstated Superfund Excise taxes, be prepared to begin reporting on chemical use. No other Superfund tax refund service provider has the experience of Charter Brokerage. The Superfund law (P.L. 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. Companies must report the reinstated Superfund excise taxes onForm 6627, Environmental Taxes, attached toForm 720, Quarterly Federal Excise Tax Return. 2017 However, Notice 2022-15, 2022-18 I.R.B. The Aerojet General Corp. Superfund site covers about 5,900 acres near Rancho Cordova. View Full Firm Disclosure. Exporters that export either a taxable chemical or taxable substance generate Superfund credits. Fast forward to today. The Environmental Protection Agency (EPA) identifies sites such as Kti Chemicals Inc because FS-2022-31, June 2022. 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). Many in the industrial chemical community are unfamiliar with the Superfund excise tax legacy, and the IRS is seemingly unprepared for the learning curve challenge the reactivation of the tax has created. Sign up to receive the latest BDO news and insights. 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. Nearly three decades after expiring, the Superfund chemical excise tax is back. See section 4671(b)(1). Heres more on what is included in the Superfund Excise Tax and what to keep an eye out for. The applicable tax ranges from $.48 to $9.47 per ton. For example, methane or butane used as a fuel, or nitric acid, sulfuric acid, ammonia, or methane used in production of fertilizer are exempt. If you would ike to contact us via email please click here. 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). We recommend taking the following steps now to determine how this excise tax applies to your company and to help ensure compliance: In addition, it is important to identify your available resources for determining taxability, exemptions, making tax deposits, filing applicable IRS registrations (Form 637, Application for Registration For Certain Excise Tax Activities) and filing quarterly tax returns (Form 720, Quarterly Federal Excise Tax Return, and attachment Form 6627, Environmental Taxes). The table below outlines products that are impacted by this excise tax. 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. For taxable substances, the importer of the taxable substance is responsible for reporting and paying the section 4671 tax to the IRS. A14. 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. Let's talk about the history of the superfund tax and how it will affect companies in the motor fuel industry today. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. Gas tax holiday: impact of changes in motor fuel tax rates, Tax automation: the ultimate guide to tax process efficiency, Reporting I am an importer of taxable substances. . For this example, the sales tax rate is 8.5 percent, the cannabis excise tax is 15 percent, and there is a 10 percent local business tax. If your company is liable, this will require compliance with semi-monthly tax deposit rules and quarterly tax return reporting requirements along with IRS registrations for certain exemptions. In 2022, IRS received petitions to add polyoxymethylene and polyphenylene sulfide to the list of Pennsylvania Sales and Use Tax for Construction Contractors and Their Customers. Duration: 00:12:55. (added June 24, 2022), Q15. 17. The taxes are reported quarterly on the IRS Form 720, which is part of the Quarterly Federal Excise Tax Return. 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. It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. Identify and educate key stakeholders impacted by the excise tax within the organization (supply chain, tax, EPA regulatory, IT, finance), Identify taxable chemicals, hazardous substances, and crude oil/ imported petroleum products, Identify and document exceptions to the excise tax, Forecast excise tax liability based on applicable rates, Consider filing petition with IRS to request modifications to the list of taxable substances and rate of tax on taxable substances, Assess supplier and consumer invoicing issues, Assess internal and external communications regarding excise tax information, Identify data sources required to track the lifecycle of affected chemicals and products, assess potential issues, and evaluate process and configuration changes to resolve issues, Prepare for all aspects of compliance, including filing registrations on Form 637 and filing returns on Form 720 and Form 6627. Of 2031 an exemption applies would make the first tax deposit covering thefirst of! 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