The new Superfund Chemical Tax, which is slated to expire on December 31, 2031, unless extended, is expected to yield $14.5 billion in fund revenue over the next decade or $1.44 billion each year on average. Cherry Bekaert Advisory LLC and its subsidiary entities are not licensed CPA firms. 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. Aside from this quarterly filing, taxpayers The Superfund Excise Taxes are currently set to expire on December 31, 2031. The Inflation Reduction Act (Pub.L. What happens if an importer does not calculate the section 4671 tax? 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. Petitions to Add Polyoxymethylene and Polyphenylene Sulfide. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. 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. 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. 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. The infrastructure bill imposes taxes on certain chemicals and imported substances under Internal Revenue Code sections 4661 through 4672. (added June 24, 2022), Q5. Reinstating the tax on chemicals will unduly burden consumers. 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). Start Here. WebEarlier Superfund excise taxes were 9.7 cents per barrel of crude oil or refined oil products, and a variety of excise taxes, ranging from $0.22 to $4.87 per ton on some 42 chemicals and metal compounds. Additionally the new legislation also decreased the threshold amount from 50% to 20% of See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. $225 plus $0.073 per each acre-foot greater than 10 acre-feet. - January 2023 Edition. 429. Read about the challenges and opportunities that could lie ahead. See the full preliminary list in Internal Revenue Code 4661, 4671, 4672; Notice 2021-66. NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. 429 (2021)), effective July 1, 2022, with modifications to the applicable rates of tax and other provisions related to those taxes. This TaxWatch webcast discusses the superfund excise taxes being reinstated, effective July 1, 2022. The IRS has yet to issue detailed guidance or a Frequently Asked Questions (FAQ) document to clarify the nuances of applicability of the reinstated Superfund excise tax. FS-2022-31, June 2022. Aside from this quarterly filing, taxpayers with a quarterly liability of greater than $2,500 will be required to make semi-monthly tax deposits of at least 95 percent of the net tax liability incurred during the tax period (unless a safe harbor On November 15, 2021, President Biden signed into law theInfrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. Aerojet and its subsidiaries have 3/17/2022. Charlotte | Read about their experiences and a few lessons learned along the way. $150 plus $0.069 per each acre-foot greater than 10 acre-feet. Contributed by Stephanie C. Cason, CPA, MAcc, Manager in RKLs Tax Services Group. The Superfund excise taxes include two separate but interrelated excise taxes applicable to crude oil and petroleum products, chemicals, and hazardous substances, which fund the Hazardous Substance Superfund for the cleanup of hazardous waste sites. How are substances added to or removed from the list of taxable substances? Retailer's Wholesale Cost ($1,000 + $200) $1,200.00. The 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. 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. Any manufacturer, producer, or importer of a taxable chemical is subject to the superfund excise tax. 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). . Specifically, the due date for the deposit accelerates to the immediately preceding date that is not a Saturday, Sunday, or legal holiday. 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. WebClaims for refund of excise taxes. IRC section 4661(b) lists 42 chemicals that are once again subject to the Superfund Excise Tax effective July 1, 2022. Each chemical has a specified rate of tax, imposed on a per-ton basis, which has now been doubled. Download list of 42 taxable chemicals and 151 taxable substances. More substances are expected to be added in the future, but the list as it stands is available below. See also section 4661(b) for the tax rate for taxable chemicals. 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. The excise tax collection expired in 1995 but resumed on July 1, 2022. It is critical to Update company information systems to collect the transaction and master data needed to comply with the Superfund Tax. See Notice 2021-66, 2021-52 I.R.B. Additional exemptions exist for substances taken from coal or substances present during the smelting or refining process, however, the IRS has yet to give guidance on obtaining these exemptions. A15. 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. 177-58) and was signed on November 15, 2021. The Infrastructure Bill reinstated the Superfund Excise Taxes on chemicals and taxable substances, effective July 1, 2022. 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. That authority All rights reserved. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. on The Reinstated Superfund Excise Tax for Chemicals and Imported Substances, How Finance and Accounting Outsourcing Helps Companies Grow, How Sage Intacct Real Estate Simplifies Property Management and Reporting. The tax law is included in the Infrastructure Investment and Jobs Act that was signed into law on November 15, 2021. Accordingly, a manufacturer, producer, or importer of a taxable chemical is subject to the section 4661 tax on the sale or use of the taxable chemical on or after July 1, 2022. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. What is a taxable substance? The first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. Partner, Tax Controversy and Regulatory Services, PwC US. Duration: 00:12:55. The reauthorization doubled the tax rates on taxable chemicals, vastly expanded listed taxable substances, and increased the cap size of the trust fund. Reconciling The relief applies to the first three quarters of the SCET, i.e., the third and fourth quarters of 2022 and the first Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. Tax credits abound. 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. A10. Various exemptions exist for taxable chemicals. (added June 24, 2022), Q6. 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. However, the first Part 40regarding filing, deposits, and related procedural issues apply to companies subject to the reinstated Superfund excise taxes. 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. Richmond | How does ESG fit into business strategy? 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. Companies might receive a refund of the tax paid if they export products made with specific chemicals and substances if they paid before manufacturing. $300 plus $0.085 per each acre-foot greater than 10 acre-feet. The tax on substances depends on their chemical composition and if it has 20% or more of a chemical on the taxable list. The term Superfund refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. The microbusiness also charges $5 for delivery. The taxes apply to any taxable chemical under Internal Revenue Code (IRC) 4661 and any taxable substance under IRC 4671. 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. 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. 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. In these cases, the other person would be liable for paying the excise tax, not the initial importer. 429, Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). Superfund Excise Tax on Chemicals Has Been Revived Effective July 1, 2022, Congress has revived the Superfund Excise tax on Taxable Chemicals and Taxable Substances that previously existed from 1980 through 1995. Biobased chemicals and biofuels have taken root thanks to both popular appeal and political support. Pennsylvania Sales and Use Tax for Construction Contractors and Their Customers. The first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). . The imported substances tax is due upon the first sale or use after import. 338(h)(10) Transaction Structure: Pros and Cons for Sellers and Buyers. 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. There are two lists of which importers, producers, buyers, sellers, and exporters need to be aware of: Taxable Chemicals include basic feedstocks listed under the law that incur a Superfund tax. Washington DC |, Copyright 2023 Cherry Bekaert. This new tax does not need to add additional costs to your products. 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. 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. Similarly, if an FAQ turns out to be an inaccurate statement of the law as applied to a particular taxpayer's case, the law will control the taxpayer's tax liability. Since the Superfund excise tax expired almost three decades ago, the industrial chemical communitys familiarity with their application is attenuated at best. 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. 177-58) reauthorizes Superfund with expanded provisions of doubled rates on Taxable Chemicals, and a vast expansion of Taxable Substances. 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%. No other Superfund tax refund service provider has the experience of Charter Brokerage. 11 In addition to the reinstatement of the taxes, On December 27, 2022, the Treasury Department and the Internal Revenue Service issued interim guidance in the form of Notice 2023-7, addressing how the new corporate AMT applies to partnership interests, consolidated return groups and other significant events that affect corporations, including merger and acquisition activities and excepted cancellation of debt income. 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. Does Your Cyber Insurance Policy Cover a Ransomware Attack? The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. 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