The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. The site is 15 miles east of Sacramento, California. 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. Taxpayers must make semimonthly deposits of the Superfund chemical excise taxes. Its been a while since manufacturers or other affected organizations had to consider this levy, so lets take a closer look at these excise taxes and how taxpayers can determine applicability and prepare for compliance. See Section 4671(b)(2). With world scale integrated manufacturing facilities we are During the first, second, and third calendar quarters of2023, the IRS will not withdraw a taxpayers right to use the deposit safe harbor rules of the Excise Tax Procedural Regulations at 26 C.F.R. BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. Among the requirements mentioned (briefly) in Notice 2021-66, SCET taxpayers with a net quarterly liability in excess of $2,500 must make deposits of tax for each semimonthly period in which the tax liability is incurred. 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 Inflation Reduction Act (Pub.L. Policy on Demand is a news platform that provides in-depth insights and analysis on policy developments that impact your business. Learn how tax plays a key role in your business while the stakes continue to be high in regards to managing potential changes to US and global tax policy. 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. A2. Webrate and the $0.164 per barrel petroleum Superfund tax rate. There are 42 chemicals listed in section 4661(b). Sightline is a tax platform that makes the entire tax process more collaborative and insightful. 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 The taxes are reported quarterly on the IRS Form 720, which is part of the Quarterly Federal Excise Tax Return. Notice 2021-66 does not specify the tax rate for each taxable substance. The reauthorization doubled the tax rates on taxable chemicals, vastly expanded listed taxable substances, and increased the cap size of the trust fund. An importer of a taxable substance is subject to the section 4671 tax on the sale or use of the taxable substance on or after July 1, 2022. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. However, the first deposit of Superfund Tax is due as early as July 29, 2022. Chemicals. The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. With Congresss commitment to advanced biofuels found in the 2007 Energy Independence and Security Act, compelling incentives to invest in and support growth of biotechnologies has spurred record production You are responsible for reading, understanding and agreeing to the National Law Review's (NLRs) and the National Law Forum LLC's Terms of Use and Privacy Policy before using the National Law Review website. As of July 1, 2022, The Infrastructure Investment and Jobs Act (IIJA) has reinstated excise taxes imposed on certain chemicals and imported chemical substances. 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. Duration: 00:12:55. When is the first return due? Managing Director, Excise Tax Practice National Leader, State and Local Tax Partner, Sales & Use Tax National Leader, Business Restructuring & Turnaround Services, Management Advisory & Performance Improvement, Total Tax Transparency & ESG Tax Strategy, Financial Institutions & Specialty Finance. 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. The infrastructure bill imposes taxes on certain chemicals and imported substances under Internal Revenue Code sections 4661 through 4672. 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. The Infrastructure Investment and Jobs Act included the reauthorization of the Superfund law (P.L. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. South Florida | 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. These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. Superfund Excise Tax - What You Need to Know, This analysis is intended for informational purposes only and is not tax advice. 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. Austin | 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. 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 IRS is working on calculating tax rates for taxable substances and will release them as they become available. Accordingly, the procedural rules in26 C.F.R. 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. FS-2022-31 (Issued 6/24/2022), IRS issues Superfund Chemical Excise Taxes FAQs ( Link) Rev. The tax on substances depends on their chemical composition and if it has 20% or more of a chemical on the taxable list. Houston | At the time of publication of these FAQs, 151 substances are listed as taxable substances. Raleigh | (added June 24, 2022), Q14. The National Law Review is a free to use, no-log in database of legal and business articles. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. There is some ambiguity in the calculation of the tax on substances, but IRS Notice 2021-66 suggests that the default tax calculation will be 10 percent of the assessed import value. For purposes of this code section the term importer means the person for which the taxable chemical is brought to the U.S. for consumption, use or warehousing. These substances consist generally or partially of chemicals listed in Section 4661. In 2022, IRS received petitions to add polyoxymethylene and polyphenylene sulfide to the list of A6. Nearly three decades after expiring, the Superfund chemical excise tax is back. How does ESG fit into business strategy? Notice 89-61provided guidance under the previously applicable Superfund excise tax. (added June 24, 2022), Q15. In addition, our guarantee ensures that we will even defend such claims under audit. The money gathered from the taxes A7. For consideration: Notice 2022-15 provides notable relief for taxpayers during these initial quarters. Manufacturers, laboratories and other businesses may begin to see these excise taxes passed along to them on invoices from their suppliers. A3. Section 704.3. The Superfund Chemicals Excise Tax Makes a Comeback. Sign up to receive the latest BDO news and insights. This potential change in Brazilian transfer pricing policies could have significant consequences from a U.S. transfer pricing and international tax perspective. Companies might receive a refund of the tax paid if they export products made with specific chemicals and substances if they paid before manufacturing. How are substances added to or removed from the list of taxable substances? Data Security Kti Chemicals Inc is a superfund site located at 1170 Sonora Ct, Sunnyvale, CA 94086. All rights reserved. See question 3 for more information on taxable chemicals and question 6 for more information on calculating the tax imposed by section 4661 (section 4661 tax). 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. During her free time Elizabeth enjoys going to concerts, traveling, hanging out with her pets, and caring for her succulent plants. See Notice 2021-66, 2021-52 I.R.B. This initiative came to be commonly known as the Superfund Excise Tax on Chemicals. 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. Part II of Form 6627, Environmental Taxes, will be updated to reflect the tax rate per ton of each taxable chemical. The manufacturer or importer pays the excise tax for chemicals, which is due on the first use or sale in the United States. $150 plus $0.069 per each acre-foot greater than 10 acre-feet. FHA Implements COVID-19 Property Charge Repayment Plan for HECM America the Beautiful: Number of New Citizens at 15-Year High. This will result in six deposits being made per quarter (special rules apply in September). 177-58) reauthorizes Superfund with expanded provisions of doubled rates on Taxable Chemicals, and a vast expansion of Taxable Substances. Download list of 42 taxable chemicals and 151 taxable substances. A12. If your organization believes it may be subject to the reinstated Superfund Excise taxes, be prepared to begin reporting on chemical use. 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 you have any questions regarding Superfund tax credits, contact us [email protected], and one of our Superfund tax credit experts will assist you. Elizabeth received her Bachelor of Science degree in Criminal Justice from Florida Gold Coast University. The exemptions identify taxable chemicals that are exempt due to their specific use. Statement in compliance with Texas Rules of Professional Conduct. See also section 4661(b) for the tax rate for taxable chemicals. Unless your company is a manufacturer or importer of chemicals and substances, there is no additional reporting required regarding the superfund excise tax. Download list of 42 taxable chemicals and 151 taxable substances. Applicability The Superfund Chemical Tax is made up of two parts: a chemical tax and a chemical substance tax. Nursing Homes Brace for Reforms and Heightened Government Scrutiny. Since the Superfund excise tax expired almost three decades ago, the industrial chemical communitys familiarity with their application is attenuated at best. This new tax does not need to add additional costs to your products. Elizabeth supports clients with sales and use tax nexus studies, tax registration, voluntary disclosure agreements, audit representation, item taxability, overpayment recovery, and exposure audits. 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). If your company is a business that manufactures, produces or imports any of the listed chemicals or substances, determine your liability for the taxes. Will the IRS prescribe tax rates for taxable substances? 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. Consider the action items above, particularly the last one, making sure the information systems are in place to capture the data needed to comply with this tax. | 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. After a more than 26 year hiatus, on July 1, 2022, the Superfund chemical excise tax (the Superfund Chemical Tax) will again become effective. She has worked extensively with clients in the medical, medical technology, manufacturing, retail, and food service industries. Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. Companies are likely to be caught off guard by this reinstated tax. . When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. Richmond | 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. This memorandum explains why. The Infrastructure Investment and Jobs Act not only reinstated the Superfund excise tax but also expanded its rate and reach. On November 15, 2021, President Biden signed into law theInfrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. The tax may be passed along to customers. To obtain certainty prior to IRS issuing guidance on this matter, companies that import taxable substances as part of articles can seek clarification from the IRS. 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, benzene and mercury. The Notice essentially allows taxpayers untilOctober 31, 2022, to determine whether a Superfund excise tax applies and to calculate how much taxed is owed. Identify exempt chemicals and substances under export rules. Aside from this quarterly filing, taxpayers 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. (added June 24, 2022), Q2. The list of 42 chemicals and their respective excise tax rates is found in Internal Revenue Code (IRC) 4661(b). 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. 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. FS-2022-31, June 2022. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. Atlanta | Observation: Under Notice 2022-15, deposits still are required and must be timely to avoid Section 6656 penalties, but failing to meet the 95% accuracy threshold will not result in penalties. Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. 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. Section 4661 imposes tax on the sale by the manufacturer, producer or importer of taxable chemicals. What are the Superfund chemical excise taxes? The National Law Review - National Law Forum LLC 3 Grant Square #141 Hinsdale, IL 60521 Telephone (708) 357-3317 ortollfree(877)357-3317. See questions 4-5 for more information on taxable substances and questions 7-9 for more information on calculating the tax imposed by section 4671 (section 4671 tax). A substance is listed as a taxable substance if it is listed under section 4672(a)(3), or if the Secretary of the Treasury or her delegate (Secretary) has added it to the list of taxable substances pursuant to section 4672(a)(2) or (4). The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. Partner, Tax Controversy and Regulatory Services, PwC US. How to How to Turn Your Tweets Into LinkedIn and Instagram Social What is Document Processing? Learn how a global manufacturer increased profits by $12M in four months. 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). Many entities are struggling with its application. 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. As this question is likely to arise in the near future when the Superfund excise tax applies, the IRS can be expected to address this aspect. Tech trends in Take inventory of chemicals and determine effects on manufacturing processes and product pricing to ascertain business impact and identify tax exposure. Applicability of the information to specific situations should be determined through consultation with your tax adviser. 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. 2022 Global Digital Trust Insights Survey, Application Security and Controls Monitoring Managed Services, Controls Testing and Monitoring Managed Services, Financial Crimes Compliance Managed Services, Virtual Business Office services for healthcare. The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. However, Notice 2022-15, 2022-18 I.R.B. 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