Stephanie provides tax planning and compliance services to corporations, pass-through entities and individuals. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. - January 2023 Edition. No other Superfund tax refund service provider has the experience of Charter Brokerage. A1. The exemptions identify taxable chemicals that are exempt due to their specific use. Helping businesses navigate financial due diligence engagements and domestic and cross-border transactions. Section 4661 imposes tax on the sale by the manufacturer, producer or importer of taxable chemicals. Managing Director, Excise Tax Practice, KPMG US, Senior Manager, Tax | WNT - SALT Income & Incentives, KPMG US, Partner, Tax, Accounting Methods & Credits, KPMG US. The microbusiness also charges $5 for delivery. 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 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. This current iteration is set to expire on December 31, 2031. The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. The Notice essentially allows taxpayers untilOctober 31, 2022, to determine whether a Superfund excise tax applies and to calculate how much taxed is owed. As is the case with many excise taxes, the cost to businesses is expected to be passed down the supply chain, and ultimately to the end consumer in the form of increased prices and fees. 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. What is a taxable chemical? The frequent and sizeable requirements of the reinstated superfund excise tax reporting can be burdensomeespecially for resource-constrained tax departments or those unfamiliar with the requirements. WebWork with outside vendor on Superfund Excise tax compliance; Ascend Performance Materials is the premium provider of high quality chemicals, fibers and plastics. 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). Under the rules, a late fee of 5% may be applied on the amount due for each month the form remains delinquent up to a total penalty of 25%. The IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. - 2023 PwC. In addition, our guarantee ensures that we will even defend such claims under audit. Applicants for registration may call 859-320-4091 and select menu option #1. Relief provided for Superfund chemical excise tax semimonthly deposits. The Superfund Amendments and Reauthorization Act (SARA) of 19861995 expanded the programs scope. Are Your Companys Year-End Compensation Accruals Tax Deductible? If you have any questions regarding Superfund tax credits, contact us [email protected], and one of our Superfund tax credit experts will assist you. No such update has been issued to date, however. $150 plus $0.069 per each acre-foot greater than 10 acre-feet. Please see www.pwc.com/structure for further details. Managing Licenses, Careers | Careers 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. It started with the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 19801986. The taxes are effective July 1, 2022. Otherwise, companies risk finding out about this tax when they are audited and risk becoming liable for penalties. 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. Identify exempt chemicals and substances under export rules. See the full preliminary list in Internal Revenue Code 4661, 4671, 4672; Notice 2021-66. What happens if an importer does not calculate the section 4671 tax? Your company could bear the economic burden of the tax being passed on from your suppliers, and, in turn, your company would then need to consider its ability to pass on the economic cost of the excise tax to its customers. 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. 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, Chicago | Companies are likely to be caught off guard by this reinstated tax. Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. Additionally the new legislation also decreased the threshold amount from 50% to 20% of 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. All rights reserved. No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. Form 6627, Environmental Taxes, previously used to report the Superfund Tax, will likely be used again to report the tax owed. 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. 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. 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. For taxable chemicals, the manufacturer, producer, or importer of the taxable chemical is responsible for reporting and paying the section 4661 tax to the IRS. Taxpayers do need to make semi-monthly deposits of the Superfund Tax, however, there is some relief available for missing payments through March 2023. 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. Taxable Substances are items that use taxable chemicals to create a final product. 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. Some deposit amount is still required by July 29 to satisfy the relief provisions set out in Notice 2022-15. 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. The content and links on www.NatLawReview.comare intended for general information purposes only. The Reinstated Superfund Excise Taxes. (added June 24, 2022), Q4. Built by tax professionals for tax professionals. Biobased chemicals and biofuels have taken root thanks to both popular appeal and political support. Proc. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. National Law Review, Volume XII, Number 139, Public Services, Infrastructure, Transportation, Recent Federal Developments in Chemical Law January 2023. A10. The original Superfund Chemical Excise Tax was enacted with the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) and expired on December 31, 1995. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. 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. Since the Superfund excise tax expired almost three decades ago, the industrial chemical communitys familiarity with their application is attenuated at best. 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). A2. Sitemap 1043, provides transitional relief for the third and fourth calendar quarters of 2022, and the first calendar quarter of 2023, regarding the failure to deposit penalties imposed by section 6656 for failures to deposit Superfund chemical excise taxes through March 31, 2023. The reinstated excise tax on chemicals and substances containing chemicals funds a portion of the Superfund Trust Fund. 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. IRC section 4661(b) lists 42 chemicals that are once again subject to the Superfund Excise Tax effective July 1, 2022. The Superfund Chemicals Excise Tax Makes a Comeback. Substances are generally determined to be taxable if more than 20% of the weight or value of the materials used to produce the substance are taxable chemicals identified in IRC 4661. 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. According to the IRS, the tax rates for chemicals and substances depend on several factors. Part II of IRS Form 6627 has been updated to reflect these rates. A3. For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. 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 microbusiness also charges $5 for delivery. 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 Superfund taxes are expected to generate approximately $14.5 billion over a 10-year period. When do the Superfund chemical excise taxes go into effect? An alternative liability is a 10% tariff of the import value. Section 704.3. After a more than 26 year hiatus, on July 1, 2022, the Superfund chemical excise tax (the Superfund Chemical Tax) will again become effective. Nearly three decades after expiring, the Superfund chemical excise tax is back. But under the Biden plan, those taxes would be reinstated. 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. (added June 24, 2022), Q13. FS-2022-31 (Issued 6/24/2022), IRS issues Superfund Chemical Excise Taxes FAQs ( Link) Rev. See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. The tax 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 IRS has release additional information on the Superfund Excise Taxes on Chemicals. 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. Elizabeth received her Bachelor of Science degree in Criminal Justice from Florida Gold Coast University. The IRS is working on calculating tax rates for taxable substances and will release them as they become available. Mississippi Gaming Commission Agenda: January 19 Meeting. Notice 89-61provided guidance under the previously applicable Superfund excise tax. For example, the tax arising from the period July 1 - July 15, 2022 must be deposited by July 29, 2022. Nursing Homes Brace for Reforms and Heightened Government Scrutiny. For example, butane and methane are exempt if used in fuel but not if they are used for other purposes. Exporters that export either a taxable chemical or taxable substance generate Superfund credits. Nearly three decades after expiring, the Superfund chemical excise tax is back. $225 plus $0.073 per each acre-foot greater than 10 acre-feet. Webrate and the $0.164 per barrel petroleum Superfund tax rate. Many entities are struggling with its application. The Treasury Department and the IRS (collectively the IRS) have released Notice 2022-15, which provides relief for certain reinstated Superfund chemical excise taxes (Note that industry is requesting that the IRS establish a fixed rate by agreement between the IRS and Industry but it remains to be seen if this will be adopted by the IRS). 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). Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. 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. All rights reserved. 11 In addition to the reinstatement of the taxes, All Rights Reserved. For consideration: Notice 2022-15 provides notable relief for taxpayers during these initial quarters. Taxable substances are defined inSection 4672as any substance that, at the time of sale or use by the importer, is listed as a taxable substance. Funds collected will be added to the Hazardous Substance Superfund Trust. If you are a manufacturer or importer, it is essential that your organization be prepared to report and remit the excise tax. FHA Implements COVID-19 Property Charge Repayment Plan for HECM America the Beautiful: Number of New Citizens at 15-Year High. A8. 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. There are 42 listed taxable chemicals under IRC 4661, which imposes excise tax on the sale or use by a manufacturer, producer or importer of such chemicals. More. The Treasury Department and the IRS reportedly intend to update Notice 89-61 to reflect the changes made to Section 4672(a)(2) by the IIJA and to make other changes that may be necessary. Kti Chemicals Inc is a superfund site located at 1170 Sonora Ct, Sunnyvale, CA 94086. Requesting additions and/or deletions to the taxable substances list pursuant to updated IRS guidance and procedure. The Infrastructure Bill reinstated the Superfund Excise Taxes on chemicals and taxable substances, effective July 1, 2022. This approach includes: Let us help you address the compliance issues associated with reinstatement of Superfund chemical excise taxes. Normally, if a taxpayer deposits less than 95% of its required deposit and is not following the prescribed safe-harbor method, Section 6656 imposes a penalty that reaches its maximum rate of 10% after only 15 days. Cherry Bekaert Advisory LLC and its subsidiary entities are not licensed CPA firms. . The Superfund tax is assessed on the manufacturer or importer of these chemicals. AllRightsReserved. The Infrastructure Investment and Jobs Act (Pub.L. 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. Read about their experiences and a few lessons learned along the way. In Philadelphia, Economy Struggles to Keep Up with New Influx of First Major Overhaul of Cosmetics Regulation Since FDR Administration, Governor Kathy Hochul Proposes New York State Housing Compact. How do I calculate the section 4671 tax? The term Superfund refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. The table below outlines products that are impacted by this excise tax. 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 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. It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. (added June 24, 2022), Q6. Tax is due upon the first use or first sale of a listed chemical in the United States. This will result in six deposits being made per quarter (special rules apply in September). Will the IRS prescribe tax rates for taxable substances? Manufacturers, laboratories and other businesses may begin to see these excise taxes passed along to them on invoices from their suppliers. 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. Who should lead the charge? A15. 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). As reinstated, the excise tax rates are doubled from pre-1996 levels and range from $0.44 cents per ton to $9.74 per ton. South Florida | Section 4661(b) lists the almost three and a half dozen chemicals that this Kti Chemicals Inc is a superfund site located at 1170 Sonora Ct, Sunnyvale, CA 94086. The Infrastructure Investment and Jobs Act included the reauthorization of the Superfund law (P.L. Sightline is a tax platform that makes the entire tax process more collaborative and insightful. State Green and Sustainability Claims: A Roundtable Discussion. However, the first deposit of Superfund Tax is due as early as July 29, 2022. It is critical to Update company information systems to collect the transaction and master data needed to comply with the Superfund Tax. Reinstated excise tax Procedural Regulations the excise tax is due upon the first use first! Or first sale of a listed chemical in the United States July 15, 2022 June 24,,... 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