The Superfund Amendments and Reauthorization Act (SARA) of 19861995 expanded the programs scope. The tax may be passed along to customers. 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. 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. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. All rights reserved. Superfund Tax Chemicals List According to the IRS, 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. Below is the current list of taxable chemicals. Permit & License. Notice IR-2022-132 focused on issuing tax rates for 121 taxable substances. The Anti-Money Laundering Act of 2020 Gets a Glow Up: Congress FINRA Files Amendments to Proposed Rule Change That Will Allow Remote Corporate Practice of Medicine Doctrine: Increased Enforcement on the Environmental Justice Update: EPA Announces $100 Million in EJ Grants Insurers Beware of Silent Crypto Exposure: PART III, Silent Crypto Court Rules that Brown Bread is Not Misleading, Whats Next in Washington? The Superfund taxes are expected to generate approximately $14.5 billion over a 10-year period. 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. The information contained herein is of a general nature and based on authorities that are subject to change. Since its reinstatement, the excise tax has raised many questions and caused significant industry consternation. As part of this Act, superfund excise taxes imposed on chemicals and imported taxable products are set to be reinstated July 1, 2022 through Dec. 31, 2031. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. . 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. The taxes will affect companies that manufacture, produce or import listed taxable chemicals or import specified taxable substances, as well as, indirectly, customers of such companies. The Superfund tax is assessed on the manufacturer or importer of these chemicals. Retailer's Wholesale Cost ($1,000 + $200) $1,200.00. Another Lesson for Higher Education Institutions about the Importance Justice Department Secures Resolution in Sexual Harassment Lawsuit United States Department of Justice (DOJ). 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). 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. Aerojets previous disposal and operating practices led to soil and groundwater contamination. The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. The revenues are intended to help pay for the approximately $550 billion in new spending on infrastructure that is part of the 2021 Infrastructure Investment and Jobs Act. Built by tax professionals for tax professionals. 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. FS-2022-31 (Issued 6/24/2022), IRS issues Superfund Chemical Excise Taxes FAQs ( Link) Rev. How Law Firms Can Leverage ChatGPT To Get More Cases, FTC Pursues Crackdown on Employee Noncompetes, Chapter 93A Litigation Newsletter | 4th Quarter 2022, Landmark NLRB Decision Expands Labor Violations, Weekly IRS Roundup January 9 January 13, 2023. Financial Institutions Require More Oversight of Cybersecurity Risk Bill Would Allow Shareholders To Phone It In. Washington DC |, Copyright 2023 Cherry Bekaert. There are actually two types of Superfund excise taxes: a tax on the sale or use of chemicals by the manufacturer, producer or importer of those chemicals and a tax on the sale or use of imported substances comprised of more than 20 percent in weight or value of taxable chemicals. Companies opting for the latter run the risk, however, of incurring penalties, should the IRS adopt a different view. Initially, the Superfund program called for taxes by manufacturers of crude oil and certain chemicals to fund a trust to pay for environmental cleanup activities. They were reinstated by section 80201(c)(3) of the Infrastructure Investment and Jobs Act (Public Law 117-58, 135 Stat. If you would ike to contact us via email please click here. See also section 4661(b) for the tax rate for taxable chemicals. This ABA Tax Times article provides an illustration of the challenges faced by the oil and gas industry in applying one of these special rules related to two products derived from natural gas: methane and butane. How are the Superfund chemical excise taxes reported? Semimonthly periods are the first through 15th of the month and 16th through the end of the month, with the deposit being due the 14th day following the end of the semimonthly period. The first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). When is the first return due? 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. Yes. July 1 is fast approaching and the window to prepare for compliance with the reinstated Superfund Tax is brief. Yes. Acetylene Benzene Butane Butylene Butadiene Notice 89-61provided guidance under the previously applicable Superfund excise tax. Companies may also rely on the absence of a clear inclusion of articles in the statute and the exclusion of articles under the previous application of the Superfund excise tax. Sitemap Any taxable chemical or substance also qualifies for a Superfund Tax Credit. IRC 4671 imposes the excise tax on the sale or use by an importer of specified taxable substances (as initially identified in IRC 4672(a)(3) and IRS Notice 2021-66). Orlando | On December 27, 2022, the Treasury Department and the Internal Revenue Service issued interim guidance in the form of Notice 2023-7, addressing how the new corporate AMT applies to partnership interests, consolidated return groups and other significant events that affect corporations, including merger and acquisition activities and excepted cancellation of debt income. Greenville | (added June 24, 2022), Q6. Home Guidance Article Superfund Excise Taxes on Chemicals and Substances: How to Prepare. The section 4661 tax is imposed as a rate per ton of a taxable chemical. A3. Raleigh | Charter Brokerage is the only company that will work with the client through the entire process of maximizing your credits. The IRS recently issued FAQs and published tax rates for 121 of the 151 taxable substances. Even companies that have been on the market for decades may not have many employees who were around when the previous excise tax applied. The Infrastructure Investment and Jobs Act (the IIJA), signed into law on November 15, 2021, reinstated two environmental excise taxes that had been terminated over twenty-five years ago. NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. Excise taxes are reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. Do Not Sell My Personal Information as to BDO Investigative Due Diligence. 3/17/2022. This field is for validation purposes and should be left unchanged. | 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. Until then, companies may take the IRS previous position as an indication of how it is likely to view articles and fabricated products under the current Superfund excise tax. Are Your Companys Year-End Compensation Accruals Tax Deductible? Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. The IRS is working on calculating tax rates for taxable substances and will release them as they become available. 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. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. The Joint Committee on Taxation estimates these excise taxes combined would increase revenues by over $52 billion over a 10-year period. In order to pay for The tax The Infrastructure Investment and Jobs Act lowered this threshold to 20%. 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, including ammonia, butane, The IRS noted that the full list of taxable chemicals and substances could change over time. The first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). The exemptions identify taxable chemicals that are exempt due to their specific use. According to the IRS, 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. Below is the current list of taxable chemicals. The microbusiness also charges $5 for delivery. Now and for the future. Nearly three decades after expiring, the Superfund chemical excise tax is back. Start Here. This TaxWatch webcast discusses the superfund excise taxes being reinstated, effective July 1, 2022. Drive maximum value across your supply chain. Tune in to find out more. 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. 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. Florida Woman Sentenced to Prison for False Statement to Investigator Idaho Man Indicted for Federal Hate Crime Against LGBTQ Residents of EPA Proposes Cleanup Plan for Sulphur Bank Mercury Mine Superfund B&C Biobased and Sustainable Chemicals Practice Group Bergeson & Campbell, P.C. A7. Calculating First, a substance can be added to the list of taxable substances by the Secretary, in consultation with the Administrator of the Environmental Protection Agency and the Commissioner of U.S. Customs and Border Protection, if the Secretary determines that taxable chemicals constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce the substance (determined on the basis of the predominant method of production). The Inflation Reduction Act (IRA) enacted on August 16, 2022, created a new corporate alternative minimum tax (AMT) for taxable years beginning after December 31, 2022. The reauthorization doubled the tax rates on taxable chemicals, vastly expanded listed taxable substances, and increased the cap size of the trust fund. Currently, there are 42 taxable chemicals, each with a specified tax rate imposed on a per-ton basis, and 151 taxable substances for which the tax rate is dependent on the substances unique chemical composition. Tax is due upon the first use or first sale of a listed chemical in the United States. Accordingly, these FAQs may not address any particular taxpayer's specific facts and circumstances, and they may be updated or modified upon further review. July 1, 2021 thru June 30, 2022. The excise tax collection expired in 1995 but resumed on July 1, 2022. Tax on Imported Chemical Substances, IRS No. With over 10 years of experience, Sales Tax Manager Elizabeth Perez Gonzalez specializes in sales and use tax services. 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. Sightline is a tax platform that makes the entire tax process more collaborative and insightful. 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. See Section 4671(b)(2). The Superfund Chemicals Excise Tax Makes a Comeback. The excise tax applies to companies that manufacture, produce, or import any of the 42 specific chemicals listed inSection 4661of the Tax Code, most of them common in consumer products, including ammonia, butane, benzene, and mercury. But under the Biden plan, those taxes would be reinstated. More information about reliance is available. These FAQs were announced in IR-2022-131. 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. At the time of publication of these FAQs, 151 substances are listed as taxable substances. 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. published tax rates for 121 of the 151 taxable substances. Cherry Bekaert is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC provide professional services. Certain non-fuel and agricultural uses of some of these chemicals were exempted from the excise tax. (added June 24, 2022), Q10. All rights reserved. Elizabeth supports clients with sales and use tax nexus studies, tax registration, voluntary disclosure agreements, audit representation, item taxability, overpayment recovery, and exposure audits. The Treasury Department and the IRS (collectively the IRS) have released Notice 2022-15, which provides relief for certain reinstated Superfund chemical excise taxes Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. An official website of the United States Government. The Superfund Chemicals Excise Tax Makes a Comeback. Form 6627, Environmental Taxes, previously used to report the Superfund Tax, will likely be used again to report the tax owed. Each member firm is a separate legal entity. Ascend Performance Materials is the premium provider of high quality chemicals, fibers and plastics. 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. - January 2023 Edition. 11758), which was signed into law on November 15, 2021, reinstated theChemicals Superfund Tax and the Hazardous Substances Tax at twice the prior rates through 2031. Any later updates or modifications to these FAQs will be dated to enable taxpayers to confirm the date on which any changes to the FAQs were made. In the meantime, reach out to your RKL advisor with questions or to discuss your companys specific circumstances. That authority expired in 1995. (added June 24, 2022), Q7. Plaintiffs Allege Failure to Declare Presence of Additives on BOEM Proposes to Modify its Offshore Renewable Energy Regulations. FHA Implements COVID-19 Property Charge Repayment Plan for HECM America the Beautiful: Number of New Citizens at 15-Year High. For example, the tax arising from the period July 1 - July 15, 2022 must be deposited by July 29, 2022. | Privacy Policy Exporters will not be taxed. Relief provided for Superfund chemical excise tax semimonthly deposits. The relief applies to the first three quarters of the SCET, i.e., the third and fourth quarters of 2022 and the first The National Law Review is a free to use, no-log in database of legal and business articles. The Environmental Protection Agency (EPA) identifies sites such as Kti Chemicals Inc because they pose or had once posed a potential risk to human health and/or the environment due to contamination by one or more hazardous wastes. Class Action Year in Review: The Rise Of The Self-Tapping Website? Nearly three decades after expiring, the Superfund chemical excise tax is back. 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. The Superfund chemical excise taxes previously expired on December 31, 1995. Deposits, if required, must be made electronically, often requiring submission before the actual due date to process timely. $300 plus $0.085 per each acre-foot greater than 10 acre-feet. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. These taxes expired more than 25 years ago. Statement By Secretary Walsh On the Telecommunications Workforce EPA Announces Appointments to Local Government Advisory Committee. Ethylene and propylene may also be exempt, but only when used in the production of fuel (motor fuel, diesel fuel, aviation fuel, or jet fuel). IRC section 4661(b) lists 42 chemicals that are once again subject to the Superfund Excise Tax effective July 1, 2022. The Brazilian government on December 29, 2022, published draft legislation to align Brazils transfer pricing rules with the Organization for Economic Cooperation and Development (OECD) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. In Philadelphia, Economy Struggles to Keep Up with New Influx of Immigrants. The IRS determined this threshold in consultation with the Environmental Protection Agency and U.S. Customs and Border Protection. Tampa | The section 4661 tax is imposed as a rate per ton of a taxable chemical. 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The Inflation Reduction Act (Pub.L. These Superfund tax credits can be taken by either the importer, the manufacturer, or the exporter, depending on the commercial agreements that have been established among those parties. For example, methane or butane used as a fuel, or nitric acid, sulfuric acid, ammonia, or methane used in production of fertilizer are exempt. 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. However, Notice 2022-15, 2022-18 I.R.B. Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. However, the first Fast forward to today. Tax credits abound. Boston | This new tax does not need to add additional costs to your products. Aside from this quarterly filing, taxpayers with a quarterly liability of greater than $2,500 will be required to make semi-monthly tax deposits of at least 95 percent of the net tax liability incurred during the tax period (unless a safe harbor applies). The table below outlines products that are impacted by this excise tax. Tax Implications and Financial Business Guidance Regarding the Coronavirus. The Joint Committee on Taxation estimates these excise taxes combined would increase revenues by over $52 billion over a 10-year period How KPMG can help A4. 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. Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661(b). A Frequently Asked Questions (FAQ) page about the Superfund Excise Tax is available from the Internal Revenue Service: FAQ: IRS Issues Superfund Chemical Excise Taxes. Does Your Cyber Insurance Policy Cover a Ransomware Attack? Due to the complicated nature of the tax assessments, and the detailed information required, gaps in existing systems and processes may exist. The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. Texas Unclaimed Property, a Division of the Texas Comptroller of Public Accounts (Texas Comptroller), is increasing compliance efforts through outreach. This potential change in Brazilian transfer pricing policies could have significant consequences from a U.S. transfer pricing and international tax perspective. Various exemptions exist for taxable chemicals. The Superfund chemical taxes should be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. As a result, large and small companies alike who produce or import these chemicals or substances are about to be slammed with additional costs. If you are a manufacturer or importer, it is essential that your organization be prepared to report and remit the excise tax. The relevance of this guidance to the new tax is unclear. July 1, 2021 thru June 30, 2022. Are you capturing all of them? Implementing process improvements including potential technology solutions to efficiently monitor products subject to tax and possible exemptions. The Superfund Excise Tax: Back in action. 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 Companies are likely to be caught off guard by this reinstated tax. The manufacturer or importer pays the excise tax for chemicals, which is due on the first use or sale in the United States. Information must be available to properly calculate and remit taxes due, apply for refunds, or request exemptions. System and Organization Control Reporting (SOC), GDPR General Data Protection Regulation. Operating now under a new set of rules, organizations manufacturing or importing certain chemicals now face new tax challenges. A13. A9. As reinstated, the tax The tax law is included in the Infrastructure Investment and Jobs Act that was signed into law on November 15, 2021. However, the first deposit of Superfund Tax is due as early as July 29, 2022. The money gathered from the taxes was used to fund the clean-up of hazardous waste disposal sites across the United States. WebTax Podcast: The Superfund Excise Tax: Back in action President Bidens Infrastructure bill revitalized the long-expired Superfund Excise Tax on chemical sales, which goes into effect July 1. The infrastructure bill imposes taxes on certain chemicals and imported substances under Internal Revenue Code sections 4661 through 4672. 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. Section 4661 imposes tax on the sale by the manufacturer, producer or importer of taxable chemicals. This is the first person/company at which the taxable chemical lands in the U.S. for the preceding reasons. Delivering tax services, insights and guidance on US tax policy, tax reform, legislation, registration and tax law. Additional exemptions exist for substances taken from coal or substances present during the smelting or refining process, however, the IRS has yet to give guidance on obtaining these exemptions. 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. Part III. Cherry Bekaert: Tax, Audit and Advisory Services, Superfund Excise Taxes on Chemicals and Substances: How to Prepare, Starting a New Business & Launching Successfully: Tax and Business Planning Tips, IRS Rev. This excise tax, which is imposed on certain chemicals and imported chemical substances, was reinstated effective July 1, 2022, as part of the Infrastructure Investment and Jobs Act of November 2021. Go back five years for manufacturing drawback. There are two separate Superfund chemical excise taxes: a tax on the sale or use of "taxable chemicals" under section 4661 of the Internal Revenue Code and a tax on the sale or use of imported "taxable substances" under section 4671 (all section references are to the Internal Revenue Code unless otherwise stated). Sign up to receive the latest BDO news and insights.

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