(added June 24, 2022), Q13. Since its reinstatement, the excise tax has raised many questions and caused significant industry consternation. The Superfund excise taxes are part of Subtitle D, Chapter 38 of the Tax Code. 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. When expanded it provides a list of search options that will switch the search inputs to match the current selection. services, Comprehensive Environmental Response Compensation, and Liability Act of 1980 (CERCLA). 22The IRS does not require that the tax be included in the total cost of the product or separately line itemed in an invoice. The tax would apply after December 31, 2021, until January 1, 2032. 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 Infrastructure Investment and Jobs Act, section 80201, reinstates the excise taxes imposed on certain chemical substances by sections 4661 and 4671, effective July 1, 2022. Tax Partner 429 (2021)), effective July 1, 2022, with modifications to the applicable rates of tax and other provisions related to those taxes. Otherwise, companies risk finding out about this tax when they are audited and risk becoming liable for penalties. 2Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), Pub. 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. 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. 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). 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 Because these FAQs have not been published in the Internal Revenue Bulletin, they will not be relied on or used by the IRS to resolve a case. The content and links on www.NatLawReview.comare intended for general information purposes only. No. Companies are likely to be caught off guard by this reinstated tax. What is the purpose of the Superfund Chemical Excise Taxes? For chemicals, the taxable event is the sale or use by the manufacturer, producer, or importer of the chemical, and the tax is due in the U.S. upon the first use or sale. When the IIJA reinstated these two taxes, it doubled the previous rates. The legislation would impose an excise tax of fractions of a penny on crude oil and oil products, and between six cents and $14.30 on chemical feedstocks, while it would tax corporate income over $4.7 million at less than 1%. ADVANCED! A taxable substance is one that is . Frequently Asked Questions: Superfund Chemical Excise Taxes. 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. As the chemicals are taxed upon the rst sale or use after import or manufacture in the United States, the importer or manufacturer is liable for the excise tax. Assisting with filing refund claims and reporting requirements around exemption certificates. 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. 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. 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. They were reinstated by section 80201(c)(3) of the Infrastructure Investment and Jobs Act (Public Law 117-58, 135 Stat. Part of the Tax News & Views podcast series. 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. The rationale for the fee collection point was so that the fee would be equally distributed among all hazardous waste generators and suppliers.6. : Advanced Marketing Compels Trial on Arbitration in a TCPA Health Plans Gag Clause Attestations Due December 31, 2023. At what point in a transaction do the new taxes kick in? The Superfund Amendments and Reauthorization Act of 1986 was enacted as Pub. Explore all 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. 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. . Semi-monthly payments should be made by the 15 th and 30 th of each month, but the IRS is providing relief from penalties for non-payment up through the first quarter of 2023. Providence | Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. Section 80201 of the IIJA reinstates the Superfund excise tax on certain chemical substances under Sections4661and4671of the Internal Revenue Code (Tax Code), effectiveJuly 1, 2022. 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 Infrastructure Investment and Jobs Act lowered this threshold to 20%. Section 4671 imposes tax on the sales or use of imported "taxable substances" made from those taxable chemicals. accounts, Payment, 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. Various exemptions exist for taxable chemicals, including: Additionally, the export of taxable chemicals is eligible for a refund of any tax paid on the chemical.16, The IRS published proposed Treasury Regulations in 1983 specific to the taxable chemicals to further detail the methods of reporting the tax, as well as provide more detail on all the provisions concerning the tax.17. 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. FAQs The tax on 4661 chemicals is imposed on a rate per ton of taxable chemical and can range from $0.44 to $9.74 per ton. Chemical tax to clean up toxic sites gets new life as part of infrastructure deal. Treas. Helping businesses navigate financial due diligence engagements and domestic and cross-border transactions. Try our solution finder tool for a tailored set In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. 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). View Full Firm Disclosure. In brief. Fullwidth SCC. The first return, for the. Substances. 13I.R.C. _____________________________________________________________________________________________. 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? 4672(a)(2)(B)(2021). The Superfund excise taxes are set to expire at the end of 2031. 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. 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. 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. 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. More for Boston | and accounting software suite that offers real-time 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. Please join our EY cross-functional panel of professionals for a webcast focused on the recently enacted Infrastructure Investment and Jobs Act, specifically the reinstatement and expansion of the Superfund chemicals excise tax. Taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the tax. Who is responsible for reporting and paying Superfund chemical excise taxes? US Executive Branch Update February 27, 2023. Certain services may not be available to attest clients under the rules and regulations of public accounting. This could create a potential liability for downstream users such that the rst company that uses the methane or butane in a manner other than as a fuel will have to report and remit the Superfund Tax. 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. The Superfund tax on chemicals is also a tax on the import of taxable substances. Abusive Arbitrage Devices Its Time to Get Reacquainted (Episode 2 B&C Biobased and Sustainable Chemicals Practice Group Bergeson & Campbell, P.C. Raleigh | 4661 imposes tax on the sale or use by the manufacturer, producer, or importer of 42 listed chemicals. Second, an importer or exporter of a substance (or other interested person) can petition the Secretary to add the substance to or remove the substance from the list of taxable substances. Waters of the United States and Winston Churchill. Hampton Roads | What is a taxable chemical? That number will likely change as substances are added to or removed from the list of taxable substances pursuant to section 4672(a)(2) or (4). 4672(a)(2)(B)(1995). Read our analysis and reports on the landmark Supreme Court sales tax case, and learn how it impacts your clients and/or business. It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. 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. 3684 (Aug. 2, 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. 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. The Treasury Department and the IRS (collectively the IRS) have released Notice 2021-66, providing guidance on the reinstatement of the Superfund chemical excise taxes (SCET) under the Infrastructure Investment and Jobs Act (sometimes referred to as the Bipartisan Infrastructure Bill, or IIJA) enacted on November 15. 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. Good News for American Businesses: H1-B Denial Rates Plummet Under USCIS Extends Comment Period for Proposed Fee Increases, OFCCP Rescinds Trump-Era Religious Exemption Rule. 5Id. Comprehensive Service. Social login not available on Microsoft Edge browser at this time. Austin | Nota Bene Episode 160: European Update: Oliver Heinisch and Scott Federal Communications Commission to Consider Rules and Proposals to Whats the Standard? The National Law Review is a free to use, no-log in database of legal and business articles. Tax Senior Manager Reinstatement of Superfund excise taxes. The Superfund tax is assessed on the manufacturer or importer of these chemicals. There are several potential issues related to taxpayer liabilities, refund considerations, and other recordkeeping requirements to consider with regards to the Superfund Excise Taxes. Heard on: Revenue from a new excise tax on chemicals like Benzene and Mercury would go . The law imposes a tax on any taxable chemical sold by the manufacturer, producer, or importer. South Florida | 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. Part II of Form 6627, Environmental Taxes, will be updated to reflect the tax rate per ton of each taxable chemical. The Superfund Excise Tax will go back into effect on July 1 st, 2022, after not being in place for over 26 years. 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. The rates are listed in IRS release IR-2022-133 (June 24, 2022). Thomson Reuters/Tax & Accounting. What happens if an importer does not calculate the section 4671 tax? First Offshore Wind Energy Lease Sales in the Gulf of Mexico, Telephone and Texting Compliance News: Litigation Update February 2023. Tax Managing Director 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. Reminder: High-Earning Exempt Professionals Must Be Paid a "True Gold Dome Report Legislative Day 24 (2023). Get the insight and tools you need to fully understand and comply with changes resulting from this major tax reform. Deloitte Tax On November 15, 2021, President Biden signed into law theInfrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. See section 4671(b)(3). 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. The excise tax collection expired in 1995 but resumed on July 1, 2022. The Petroleum Superfund Tax is proposed to be indexed for inflation beginning in calendar year 2023. Is the rate different for taxable substances? 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.
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