superfund excise taxes on chemicals

Multiple Concussions Result in Greater Cognitive Deficits, DOL Issues Internal Guidance on Telework Under the FLSA & FMLA, USPTO Launches Cancer Moonshot Expedited Examination Pilot Program. Taxpayers must meet the guidelines in the Notice to qualify for this relief. Key considerations for dealings with the reinstated Superfund Tax include: For producers, importers, exporters, and customers of businesses making and distributing identified chemicals and substances, action is needed quickly. The Superfund excise taxes are set to expire at the end of 2031. 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. The chemicals selected to be subject to the fee were based on two categories: petrochemical feedstocks and inorganic raw materials. 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. These taxes have not been in effect since 1995, so companies that havent had to deal with them for the past 27 years are now scrambling to understand the complexities and requirements of this new iteration of the law. The tax law is included in the Infrastructure Investment and Jobs Act that was signed into law on November 15, 2021. Licenses for Exports to Are You Ready for the UPC? The content and links on www.NatLawReview.comare intended for general information purposes only. There are other exemptions as welle.g., for substances that have a transitory presence during the smelting or refining process, or substances derived from coalbut the IRS has yet to issue specific guidance on procedures for claiming these exemptions, so the best recourse available at the moment is to keep documentation that supports the companys intention to take advantage of applicable exemptions. The Infrastructure Act essentially doubles these rates with taxes ranging from $0.44 per ton to $9.74 per ton. 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). Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. As part of the Infrastructure Investment and Jobs Act signed into law November 15, 2021, the Superfund Excise Taxes go into effect July 1, 2022. The proposal would essentially create a new excise tax on the manufacture, production, or importation of 42 chemicals. No such update has been issued to date, however. The National Law Review is not a law firm nor is www.NatLawReview.com intended to be a referral service for attorneys and/or other professionals. 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. Challenges to the No Surprises Act Continue: The Latest includes a Navigating Permissive State Laws in Light of the Federal Information FDA Publishes List of 2023 Priority Guidance Topics. 3S. Customer Reviews: Five-Star Enforcement and the Expanding Regulations. The rates are listed in IRS release IR-2022-133 (June 24, 2022). (All oil and almost all hazardous substances are products of the oil industry, chemical and allied industries, and heavy metals industries. 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. Updated procedural guidance on how to request the determination has not yet been published by the IRS as of the date of this article. Semi-monthly payments should be made by the 15th and 30th of each month, but the IRS is providing relief from penalties for non-payment up through the first quarter of 2023. It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. Therefore, a chemical substance could qualify as a taxable substance if taxable chemicals listed in IRC section 4662 constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce such substance.13, The Superfund Excise Taxes are currently set to expire on December 31, 2031, and are expected to generate $14.4 billion of revenue (or approximately $1.2 billion annually).14, IRC section 4661(b) lists 42 chemicals, identified in Exhibit A. The initial list of 50 taxable substances is found in IRC 4672(a)(3). 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. Historical reporting requirements for Superfund excise taxes Prior to the expiration of the Superfund excise taxes in 1995, taxpayers were required to register under Form 637, Application for Registration (For Certain Excise Tax Activities), activity letter G (Persons making inventory exchanges of taxable chemicals under section 4662(c)(2) or persons selling or buying *Note: Self-assessing based on 10% of appraisal value will almost always yield a higher tax rate than either of the other methods. An official website of the United States Government. California Law May Limit Hospitals Ability to Adopt The Joint Ankura CTIX FLASH Update - February 28, 2023, Ankura Cyber Threat Investigations and Expert Services. The return of the Superfund excise tax on chemicals affects taxpayers that manufacture, produce, or import certain chemicals, as it imposes an excise tax on the sale of 42 specific chemicals listed in Section 4661 of the tax code, including ammonia, butane, benzene, mercury, and other common products. A14. All Rights Reserved. 4661. A15. In brief. 4671. 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. This direct tax hike on American producers would result in higher prices for consumers, threaten thousands of jobs, and undermine domestic . Our use of the terms our Firm and we and us and terms of similar import, denote the alternative practice structure of Cherry Bekaert LLP and Cherry Bekaert Advisory LLC. Fast forward to today. Effective July 1, the Infrastructure Investment and Jobs Act (IIJA) reinstated the excise taxes imposed on certain chemicals and imported chemical substances under IRC Sections 4661 through 4672 (Superfund excise taxes). Under Section 4661, an excise tax is imposed on the sale by manufacturers, producers, and importers of 42 taxable chemicals (see table below for a list of those chemicals). IRC section 4662 directs the IRS to release guidance as to the appropriate manner of reporting exempt sales or claiming refunds. 23I.R.C. The chemicals Superfund tax was initially enacted in 1980 as a response to high-profile environmental disasters relating to hazardous waste. 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. 21See I.R.C. Yes. More information about reliance is available. 15I.R.C. The taxes, which should go in effect on 1 July 2022, are estimated to raise approximately $14.45bn over a 10-year period Identification of the chemical manufacturers and importers subject to the Superfund Tax. The rate of excise tax per ton is based on the amount of each chemical included in the substance. Yes. 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 current list is published in IRC section 4672(a)(3) and attached as Exhibit B. A11. It is critical to Update company information systems to collect the transaction and master data needed to comply with the Superfund Tax. policy, Privacy technology solutions for global tax compliance and decision Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. 17Prop. Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661(b). The Superfund chemical excise taxes previously expired on December 31, 1995. Additionally, prior versions of these FAQs will be maintained on IRS.gov to ensure that taxpayers, who may have relied on a prior version, can locate that version if they later need to do so. Form 6627, Environmental Taxes, previously used to report the Superfund Tax, will likely be used again to report the tax owed. There are three ways to arrive at a tax determination for the Superfund Tax: 2. (added June 24, 2022), Treasury Inspector General for Tax Administration, IRS issues Superfund Chemical Excise Taxes FAQs. A third excise tax on crude oil and petroleum products was reinstated in the Inflation Reduction Act . It is important for companies to be aware of the existence of this tax, and to evaluate the chemicals and substances they import, to establish whether they owe any excise taxes. The Infrastructure Investment and Jobs Act lowered this threshold to 20%. 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. These taxes have not been in effect since 1995, so companies that havent had to deal with them for the past 27 years are now scrambling to understand the complexities and requirements of this new iteration of the law. See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. Nashville | Words With Friends, Part 1: Insurance Requirements and Contracts, Legislator Proposes To Expand CFL To Encompass "Commercial CERCLA PFAS Scope May Broaden To Many More PFAS, AI Avatar App is the Latest Target of BIPA Class Action Litigation. To accomplish this, the current system capability should be assessed. Austin | statement, 2019 Due to the complicated nature of the Superfund Excise Tax and the granularity of the tax rate structure, gaps in existing systems and processes may exist. Some companies did not yet exist when the previous excise tax applied and have no experience with the old tax and thus no internal processes for determining their liability for the Superfund excise tax. The statute provides an initial list of 50 taxable substances and instructs the IRS to add any substance in which taxable chemicals constitute more than 20% of the weight or value. 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