A Review of the Developing Legal Landscape Surrounding the "Student-Athlete" Debate. 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. It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. Service. shipping, and returns, Cookie The exemptions identify taxable chemicals that are exempt due to their specific use. Temporary relief from the penalty for failure to deposit Superfund chemical taxes for 2022 (third and fourth calendar quarters) and the first calendar quarter of 2023 is inNotice 2022-15. The JCT estimated that the proposal would increase revenues by approximately $38.4 billion over a 10-year period. Accordingly, the procedural rules in26 C.F.R. Many entities are struggling with its application. Notice 2021-66. Prior to the expiration of the Superfund Excise Taxes, a chemical substance that was composed of at least 50% of chemicals listed in IRC section 4662 could be found to be a taxable substance. When expanded it provides a list of search options that will switch the search inputs to match the current selection. 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. 2022 Superfund excise taxes. Products & The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. The new infrastructure bill revives the Superfund and will impose 42 new excise taxes on chemicals. The taxes are set to be reinstated beginning on July 1, 2022. 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. After more than 25 years, two excise taxes on chemicals and imported hazardous substances were reinstated in the Infrastructure Investment and Jobs Act (Pub. 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. 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. 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. Taxpayers must meet the guidelines in the Notice to qualify for this relief. South Florida | Assisting with development and implementation of technology solutions to enable identification of taxable chemicals and substances, as well as exemptions. 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 Notice 2021-66, 2021-52 I.R.B. Explore Deloitte University like never before through a cinematic movie trailer and films of popular locations throughout Deloitte University. Augusta | Audit & The two most significant excise tax provisions of HR 3684 are (1) reinstatement of the Section 4661 taxes on sales by a taxpayer that manufactures, produces, or imports certain chemicals and (2) reinstatement of Section 4671 taxes on an importer's sale or use of specified substances. The taxes apply only to imported chemicals or substances, not those for export. 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). Abusive Arbitrage Devices Its Time to Get Reacquainted (Episode 2 B&C Biobased and Sustainable Chemicals Practice Group Bergeson & Campbell, P.C. 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. See section 4672(a)(1). Effective July 1, the Infrastructure Investment and Jobs Act (IIJA) reinstated the excise taxes imposed on certain chemicals and imported chemical substances under IRC Sections 4661 through 4672 (Superfund excise taxes). Cherry Bekaert LLP is a licensed CPA firm that provides attest services, and Cherry Bekaert Advisory LLC and its subsidiary entities provide tax and advisory services. Yes. 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). customs, Benefits & governments, Business valuation & Earlier 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. The relevance of this guidance to the new tax is unclear. 429. 4671(b)(2). The term " Superfund " refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. The Reinstated Superfund Excise Taxes. The section 4661 tax is imposed as a rate per ton of a taxable chemical. Due to the complicated nature of the tax assessments, and the detailed information required, gaps in existing systems and processes may exist. 48839 (Oct. 21, 1983). 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. L. No. The information here is by no means comprehensive, but it does provide a basic understanding of the law and its implications for affected companies. Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. The chemicals selected to be subject to the fee were based on two categories: petrochemical feedstocks and inorganic raw materials. The IIJA reinstates the two taxes with several modifications. Our use of the terms our Firm and we and us and terms of similar import, denote the alternative practice structure of Cherry Bekaert LLP and Cherry Bekaert Advisory LLC. What do companies need to do in order to prepare for these taxes? A13. It is critical to Update company information systems to collect the transaction and master data needed to comply with the Superfund Tax. 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 tax expired under its terms in the mid-1990s but has now been reinstated. 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. (added June 24, 2022), Q3. The Treasury Department and the IRS (collectively the IRS) have released Notice 2022-15, which provides relief for certain reinstated Superfund chemical excise taxes (SCET) from the penalty for failure to properly deposit imposed under Section 6656.The relief applies to the first three quarters of the SCET, i.e., the third and fourth quarters of 2022 and the first quarter of 2023. Comprehensive 2Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), Pub. 11001 (2021). The Superfund Excise Tax will go back into effect on July 1 st, 2022, after not being in place for over 26 years. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. 19I.R.C. In addition, exporters of chemicals and substances which were subject to the Superfund Tax can request a refund of the tax previously paid. It's codified in IRC Sections 4671 and 4672, both of which were added by the Superfund Amendments and Reauthorization Act of 1986. As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. The consumer and political goals of reducing Americas dependence on foreign oil, enhancing national security, and greening the economy converge in biobased chemicals and advanced biofuels, the promising technology of producing commercial chemicals and fuels from renewable resources. Amendments. Some deposit amount is still required by July 29 to satisfy the relief provisions set out in Notice 2022-15. accounting, Firm & workflow SaraBeth Smith Is there a way to check the status of an application for Activity Letter G registration? It has been almost 30 years since the Superfund excise tax was in effect. 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