superfund excise tax chemicalssuperfund excise tax chemicals

(added June 24, 2022), Q8. Analyzing Superfund Excise Tax calculations and reporting requirements based on a companys unique business scenario. The Superfund chemicals excise tax has been reinstated as part of the Infrastructure Investment and Jobs Act (the Act) effective July 1, 2022. Clarifies that neither the mining of the ore nor the extraction of the taxable chemical from the ore is a taxable event. A semimonthly period is the first fifteen (15) days of a calendar month or the portion of a calendar month following the 15th day of the month. UK Data Protection Reform: who would want to be a Senior Responsible Dual Purpose Communication Why It Is Important for In-House Counsel Editors Roundtable: Predictions About the Upcoming Farm Bill. 5Id. Time: 2:00-3:00 p.m. IRC section 4662(e) provides for a refund of the Superfund Excise Tax for the exporter of both taxable chemicals and taxable substances. Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. Sixth Circuit Limits Anti-Kickback Claims Brought Under False Claims No Written Change Order? FAQs Accordingly, the chemicals are taxed upon the first sale or use after import or manufacture in the United States, and the importer or manufacturer is liable for the excise tax, which it may pass along to its customers.22. We offer some guidance below and stand ready to assist. A4. While the majority of the 42 listed chemicals are taxable by the manufacturer or importer upon the first sale or use, butane and methane only become taxable upon the first use other than as a fuel.23 This creates a potential liability for downstream product sales such that the first company that uses the methane or butane in a manner other than as a fuel will have to report and remit the Superfund Excise Tax. Who is responsible for reporting and paying Superfund chemical excise taxes? Defines a chemical mixture to mean a substance composed of two or more physically combined components that are not chemically bonded. PURPOSE . ; Mo B. Clarifies that the term taxable chemical does not include any substances derived from coal. Notice 2021-66. 9601-9675 (2021). Litigation Minute: Website Analytics or Illegal Wiretapping? 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). The IRS also recently releasedRevenue Procedure 2022-26, which provides the exclusive procedures for requesting a determination under Section 4672(a)(2) of the Internal Revenue Code (Code) that a substance be added to or removed from the list of taxable substances under Section 4672(a) of the Code (List). A8. Taxpayers may petition the IRS to determine whether a substance falls within the taxable substances list. The list of 42 chemicals and their IRS Issues New Proposed Regulations on Superfund Excise Taxes, Navigating Nearshoring in Mexico: Direct Investment, International Tax, & Transfer Pricing Considerations, Refund Process for the Kansas City Earnings Tax, Kentucky Enacts Pass-Through Entity Tax Election, Intellectual or Developmental Disabilities & Behavioral Health, This section included clarification by adding that the tax under 4661 attaches when the manufacturer, producer, or importer of a taxable chemical first sells or uses the taxable chemical.. 96-125 at 14878 (1979). A petition may be submitted to remove a substance from the List if taxable chemicals constitute 20 percent or less of the weight and 20 percent or less of the value of the materials used to produce such substance. WebThe section 4661 tax and the section 4671 tax are collectively referred to as the Superfund chemical taxes because these excise taxes fund the Hazardous Substance Response

What are the Superfund chemical excise taxes? 16I.R.C. Reporting The tax is assessed based on the amount per ton sold by the taxpayer, with applicable tax rates ranging from $0.44 per ton to $9.74 per ton. 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. This message will not be visible when page is activated. 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. See section 4671(b)(1). 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. See how we connect, collaborate, and drive impact across various locations. The FAQs state that at the time of publication, June 24, 2022, 151 substances are listed as taxable substances. Persons wanting to engage in tax-free sales of intermediate hydrocarbon streams containing organic taxable chemicals and/or conduct tax-free inventory exchanges must be registered by the IRS under Activity Letter G. Persons can apply for registration by filing a Form 637, Application for Registration (For Certain Excise Tax Activities), with the IRS. WebFor purposes of determining whether a substance imported by a taxpayer would be subject to the excise tax, the amount of taxable chemicals in a substance would be decreased from 50% to 20% of the weight or value of the materials used to produce, or contained in, the substance or chemical compound. 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). (added June 24, 2022), Q14. Effectively tracking necessary data through the supply chain may be a challenge as well. Assisting with filing refund claims and reporting requirements around exemption certificates. Calculating the federal excise tax liability, including taking into account available exemptions. Defines intermediate hydrocarbons as a mixture of organic chemicals that requires further distillation or processing to manufacture or produce a taxable chemical. The IRS released proposed rules Monday on the Superfund excise tax, a tax on certain chemical companies and importers for substances known to pollute, in 42 New Excise Taxes on Chemicals. Superfund tax on chemicals Sec. Recent U.S. Sanctions, Export Controls On Russia And Belarus How to Implement Payment Plans for Lawyers, The UK Data Protection Regulator Fines TikTok 12.7 Million, Hunton Andrews Kurths Privacy and Cybersecurity, Hedging: Favorable Tax Treatment Requires Careful Compliance, Arizona House Introduces Potential General Franchise Law. 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. Webinar Materials Available: Chinas New Personal Data Export International Trade Practice at Squire Patton Boggs. 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). The Jobs Act also reinstated the Superfund chemicals excise tax on an importer's sale or use of any taxable substance pursuant to 4671 (Taxable Substances Excise Tax). A12. Chemical mixtures include alloys, solutions, suspensions, and colloids. How do I calculate the section 4671 tax? 2022-26, 2022-29 I.R.B. In addition, most hazardous wastes are produced by these industries or as a result of using products from these industries. More information on the procedures for petitioning the Secretary to add or remove substances from the list of taxable substances will be released in advance of July 1, 2022. A taxable substance is any substance that, at the time of sale or use by the importer of the substance, is listed as a taxable substance -- substances that are not listed are not taxable, regardless of their content.

These chemicals include chlorine, ethylene, propylene, and other chemical building blocks for compounds used in everything from automobiles to building and construction. A2. Notice 2023-28 . WebThe Infrastructure Investment and Jobs Act (Infrastructure Act), signed by President Biden on November 15, 2021, has revived and doubled the long-expired Superfund excise taxes on selected chemicals. IRC section 4672 additionally directed importers and exporters to request a determination from the IRS as to whether a specific unlisted chemical substance should be included in the list of taxable substances. The proposed regulations affect code Sections 4661, 4662, 4671, and 4672 of the Internal Revenue Code to amend the Environmental Tax Regulations (26 CFR part 52). This notice extends temporary relief provided in Notice 2022-15, 2022-18 I.R.B. 21See I.R.C. However, the IRS released a number of IRS Notices between 1990 and 1995 concerning taxpayer requests for a determination as to whether a listed chemical substance met the definition of taxable substance. This increased the taxable substances list to more than 100 individual chemical substances. 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. Deloitte Tax Companies with a large volume of transactions should consider automating their tax calculation and reporting processes to increase efficiency and accuracy. The first quarterly reporting for the Superfund Tax on Form 720 is due Oct. 31, 2022. Specifically, the relief is extended in connection with the deposits of the Superfund chemical taxes for semimonthly periods in the second, third, and fourth calendar quarters of 2023 even if the deposits are computed incorrectly, provided (a) the taxpayer makes timely deposits and (b) any underpayment is paid in full by the due date for filing the Form 720 return for that calendar quarter. 3S. The excise tax was applied to a list of 42 chemicals used predominantly in the oil, gas, and chemical industries. 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).

WebRecommended field of study: Taxes. 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. On March 27, 2023, the IRS published an advanced copy of the new proposed regulations related to the federal Superfund chemical excise taxes imposed on certain chemicals and certain imported substances, effective July 1, 2022., In general, the excise tax on taxable chemicals is imposed on the sale or use of taxable chemicals by manufacturers, producers, and importers of such chemicals. Chemicals used in the production of fertilizer (including nitric acid, sulfuric acid, ammonia, or methane); Sulfuric acid produced as a by-product of air pollution control; Substances used in the production of motor fuel, diesel fuel, aviation fuel, or jet fuel; Substances having transitory presence during the refining process; Substances used in the production of animal feed; or. Chemicals. Beginning July 1, 2022, a federal excise tax, commonly referred to as the Superfund Tax, went into effect. (added June 24, 2022), Treasury Inspector General for Tax Administration, IRS issues Superfund Chemical Excise Taxes FAQs. A provision of the Infrastructure Investment and Jobs Act (Pub. (added June 24, 2022), Q4. The Superfund Excise Taxes will be reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. Clarifies that any 4661 tax paid by the manufacturer, producer, or importer (initial manufacturer) with respect to a tax-paid chemical that is subsequently used by any person (subsequent manufacturer) in the manufacture or production of any other substance that is a taxable chemical (subsequent taxable chemical) will be allowed as a credit or refund to the subsequent manufacturer in the same manner as if it were an overpayment of the 4661 tax. Is CMS Ignoring the Realities of Biopharmaceutical Costs? 13I.R.C. Part II of Form 6627 has been updated to reflect the current tax rate per ton of each taxable chemical. The rates range from $1.49 to $23.65 per ton. [email protected], Marshal Sulayman Webthe NPL are called Superfund sites. The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) established the Hazardous Substance Response Trust Fund (the Superfund), which was to be administered by the Environmental Protection Agency (EPA).2 CERCLA imposed liability for the cleanup of hazardous waste sites on the owners and operators of these sites. Copyright 1996 2023, Ernst & Young LLP. You can learn about and register for any EY Tax webcast here. The Superfund Excise Tax is imposed on the manufacturer or importer of the listed chemicals, and the tax becomes due upon the first use or sale in the United States.15. The National Law Review is a free to use, no-log in database of legal and business articles. Prior to 1996, the rates of tax on those chemicals ranged from $0.22 per ton to $4.87 per ton. L. No. The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. 901, for the initial list of substances that the Secretary has added to the list of taxable substances. It is important for companies to engage in early conversations with procurement, contracting, IT, and other internal departments to identify and assess their exposure and potential gaps in data gathering. Gives guidance on the conditions to allowance of claim for credits or refunds, including the supporting information required. 117-58, enacted November 15, 2021) reinstated excise taxes imposed on certain chemicals and substances under sections 4661 and 4671 (often referred to as Superfund excise taxes) and modified the applicable rates of tax and other provisions related to such taxes. The Superfund Chemicals tax previously expired in 1995. Deloitte Tax Notice 2023-28 extends the temporary relief provided under 3(a) of Notice 2022-15 related to the failure to deposit penalty imposed by code 6656. For instance, necessary data elements may not be available to properly identify the taxable chemicals and components. 2023 A taxable chemical is a chemical that is: (1) listed in Section 4661(b) of the Code; and (2) manufactured or produced in the United States or entered into the United States for consumption, use, or warehousing. The Maywood Chemical Co. Superfund site is located in Maywood, Lodi and Rochelle Park, New Jersey. Kentucky HB 360 would allow a PTE to elect to pay its tax liability at the entity level on behalf of its individual owners. SEC Revisits Regulation S-P After Twenty Years of Innovation to Information Utility Ownership of Renewable Energy Projects; A Review of the Tax Normalization USCIS to Prioritize Pending I-539 Applications When Employers File I-129 Ogletree, Deakins, Nash, Smoak & Stewart, P.C. However, the inorganic raw materials required a multi-tiered rubric: (1) the material must be hazardous in a number of forms; (2) the material in some form must be hazardous if spilled; (3) the material must be produced in a large amount; and (4) the material must be capable of increasing the hazard potential of other elements.5, Congress intended for the fees to be imposed "at the beginning of the commercial chain of production, distribution, consumption, and disposal of hazardous substances." Celebrating the Two-Year Anniversary of Ford The Ninth Circuits China Import Duties Here to Stay? The 180-day determination period may be extended by agreement between the petitioner and the IRS. Describes how synthetic organic substances and inorganic substances are eligible for addition to the list of taxable substances through weight or value test. Assisting with development and implementation of technology solutions to enable identification of taxable chemicals and substances, as well as exemptions. 52.4661-1 4662-4, 48 Fed. Clarifies that nitric acid, sulfuric acid, ammonia, or methane used to produce ammonia are the only chemicals that qualify as exempt chemicals if used as fertilizers. The Infrastructure Act essentially doubles these rates with taxes ranging from $0.44 per ton to $9.74 per ton. The Instructions for Form 6627 state that to calculate the tax, taxpayers will generally need to know the ratio of the weight of each taxable chemical used to make the substance to the total weight of the substance (the conversion factor). 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. 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 To stay logged in, change your functional cookie settings. This Week in 340B: March 28 April 3, 2023. If, on the other hand, a company manufactures a paint component in the United States using a taxable chemical, the company would be taxed on the use or sale of the taxable chemical regardless of the quantity of the chemical in the product. A1. If you have questions or need assistance, please reach out to a professional at FORVIS or use the Contact Us form below. The rationale for the fee collection point was so that the fee would be equally distributed among all hazardous waste generators and suppliers.6. The IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. Technology/systems impacts A9.

What happens if an importer does not calculate the section 4671 tax? See also section 4661(b) for the tax rate for taxable chemicals. A13. A6. Under section 3(a) 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 The Internal Revenue Service (IRS) has postedInstructions for Form 6627, as well asfrequently asked questions (FAQ)on the tax. 4Id. DeloitteTax Updated procedural guidance on how to request the determination has not yet been published by the IRS as of the date of this article. WebRead how it will affect chemical manufacturers, importers and purchasers in our article for the AICPA's Tax Adviser. The chemicals selected to be subject to the fee were based on two categories: petrochemical feedstocks and inorganic raw materials. The return of the chemical excise tax affects taxpayers that manufacture, produce, or import certain chemicals, as Superfund Chemical Taxes are imposed on the sale of 42 specific chemicals (Taxable Chemicals) listed in 4661 (Chemical Sales Excise Tax), including ammonia, butane, benzene, mercury, and other common chemicals. Final CPE award to be based on content, polling, and length of participation. Exceptional organizations are led by a purpose. Until the Taxpayers should be proactive and carefully analyze and consider the potential tax liabilities, tax reporting requirements, and systems impacts as a result. When the owner or operator was not identified, or the site cleanups needed to be expedited, financing for the cleanup was to be provided by the Superfund. However, since the IRS ruled that these substances met the definition of taxable substance, these new substances were also subject to the tax if imported by taxpayers, thereby effectively increasing the list of taxable substances of IRC section 4672. During 1979 Senate discussions, it was estimated that expenditures for hazardous waste disposal sites related to chemicals would be $200 million (versus $40 million for sites related to crude oil).3 During this congressional hearing, it was determined that the proposed system of fees would cover: (1) crude oil; (2) petrochemical feedstocks; and (3) certain highly toxic and/or high-volume inorganic materials including heavy metals, halogens, acids, bases, and ammonia.4. NFA Imposes New Compliance Obligations on Members Engaged in Digital PE Firms Face Liability for the Conduct of their Portfolio Companies Washington Energy & Sustainability Update April 2023, U.S. Executive Branch Update March 3, 2023, Top 10 Issues Facing Consumer Products Industry in 2023.