2017 The imported substances tax is due upon the first sale or use after import. The Superfund Excise Tax on chemical sales is back! See section 4671(b)(3). The Anti-Money Laundering Act of 2020 Gets a Glow Up: Congress FINRA Files Amendments to Proposed Rule Change That Will Allow Remote Corporate Practice of Medicine Doctrine: Increased Enforcement on the Environmental Justice Update: EPA Announces $100 Million in EJ Grants Insurers Beware of Silent Crypto Exposure: PART III, Silent Crypto Court Rules that Brown Bread is Not Misleading, Whats Next in Washington? For tax advice, consult your tax adviser. $150 plus $0.069 per each acre-foot greater than 10 acre-feet. Boston | 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. A1. As a background, when these taxes were reinstated through the Infrastructure Investment and 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). This initiative came to be commonly known as the Superfund Excise Tax on Chemicals. The list of 42 chemicals and their respective excise tax rates is found in Internal Revenue Code (IRC) 4661(b). 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. Relief provided for Superfund chemical excise tax semimonthly deposits April 2022 In brief 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 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 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. 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. Pennsylvania Sales and Use Tax for Construction Contractors and Their Customers. Tax Implications and Financial Business Guidance Regarding the Coronavirus. How are substances added to or removed from the list of taxable substances? The Infrastructure Investment and Jobs Act lowered this threshold to 20%. Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. At the time of publication of these FAQs, 151 substances are listed as taxable substances. The Superfund Excise Tax: Back in action. | Privacy Policy As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. A6. | Agreed Terms of Use (added June 24, 2022), Q9. 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. Gas tax holiday: impact of changes in motor fuel tax rates, Tax automation: the ultimate guide to tax process efficiency, Reporting The IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. 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. 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. Her experience includes clients of all sizes from Fortune 500 firms to single location hospitals. Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. WebEffective July 1, 2022, Congress has revived the Superfund Excise tax on Taxable Chemicals and Taxable Substances that previously existed from 1980 through 1995. 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 However, the first July 1, 2021 thru June 30, 2022. Connecting with our core purpose through a renewed lens. Notice 2021-66 suspended the procedure in Notice 89-61 because the IRS plans to issue a more current guidance on this matter. 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. $300 plus $0.085 per each acre-foot greater than 10 acre-feet. Managing Director, Excise Tax Practice, KPMG US, Senior Manager, Tax | WNT - SALT Income & Incentives, KPMG US, Partner, Tax, Accounting Methods & Credits, KPMG US. 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. The term Superfund refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. A3. 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. The Inflation Reduction Act (Pub.L. 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. Charlotte | The new tax doubles the previous tax rate on Taxable Chemicals and Taxable Substances. 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 The The inaugural reporting for companies required to report Superfund excise taxes is on their third-quarter 2022 Form 720, due to be submitted byOctober 21, 2022. It has been almost 30 years since the Superfund excise tax was in effect. As we mentioned above, this tax is only for companies importing chemicals or hazardous substances on the list and filing an IRS Form 720. Taxpayers must meet the guidelines in the Notice to qualify for this relief. Unless otherwise noted, attorneys are not certified by the Texas Board of Legal Specialization, nor can NLR attest to the accuracy of any notation of Legal Specialization or other Professional Credentials. 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. Additional clarification and guidance are expected in the upcoming months. A7. 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. The taxes apply to any taxable chemical under Internal Revenue Code (IRC) 4661 and any taxable substance under IRC 4671. The taxes are effective July 1, 2022. Form 6627 must be led alongside Form 720 on a quarterly basis. Ethylene and propylene may also be exempt, but only when used in the production of fuel (motor fuel, diesel fuel, aviation fuel, or jet fuel). 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. Corresponding with the IRS, including requests for determination and other guidance. 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. Calculating Reinstating the tax on chemicals will unduly burden consumers. Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. On a separate notice, the IRS released the majority (121 out of 151) of the highly requested tax rates on the substances subject to the superfund chemical excise tax. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. She specializes in pass-through entity and multi-state compliance for family owned businesses in a variety of industries including manufacturing and distribution, retail and real estate. 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. There are 42 chemicals listed in section 4661(b). Reconciling Los Angeles | Richmond | The site is 15 miles east of Sacramento, California. 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. (added June 24, 2022), Q5. A13. July 1, 2022. The Aerojet General Corp. Superfund site covers about 5,900 acres near Rancho Cordova. 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. How does ESG fit into business strategy? These Superfund tax credits can be taken by either the importer, the manufacturer, or the exporter, depending on the commercial agreements that have been established among those parties. 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. This legislation provided a federal Superfund to clean up hazardous-waste sites and accidents, spills, or other emergency releases of pollutants and contaminants into the environment. The IRS determined this threshold in consultation with the Environmental Protection Agency and U.S. Customs and Border Protection. The Superfund Tax that was established over two decades ago and taxed specific chemicals and hazardous substances has been restored after the passing of the Infrastructure Investment and Jobs Act last year. Tax is due upon the first use or first sale of a listed chemical in the United States. (added June 24, 2022), Q15. On November 15, 2021, President Biden signed into law theInfrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. The information contained herein is of a general nature and based on authorities that are subject to change. The Superfund taxes are expected to generate approximately $14.5 billion over a 10-year period. Operating now under a new set of rules, organizations manufacturing or importing certain chemicals now face new tax challenges. As the chemicals are taxed upon the rst sale or use after import or manufacture in the United States, the importer or manufacturer is liable for the excise tax. 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. It started with the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 19801986. But under the Biden plan, those taxes would be reinstated. Aerojets previous disposal and operating practices led to soil and groundwater contamination. In Philadelphia, Economy Struggles to Keep Up with New Influx of Immigrants. Providence | 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. This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. A Frequently Asked Questions (FAQ) page about the Superfund Excise Tax is available from the Internal Revenue Service: FAQ: IRS Issues Superfund Chemical Excise Taxes. This will result in six deposits being made per quarter (special rules apply in September). Notice 2022-15 recognizes the burden on taxpayers, explicitly noting the short time frame between the reinstatement of the Superfund chemical taxes and the due date of the first deposit, the unavailability of the 40.6302(c)-1(b)(2) deposit safe harbor in 2022, the possible difficulties of computing the correct amount of tax during the third calendar quarter of 2022 (which is both the first calendar quarter the taxes are in effect and the look-back quarter for the first calendar quarter of 2023), and the number of new taxpayers owing Superfund chemical taxes that have not previously had to comply with the deposit requirements of section 6302.. The tax may be passed along to customers. (added June 24, 2022), Q12. The Inflation Reduction Act (Pub.L. The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. 429. See Section 4671(b)(2). Applicants for registration may call 859-320-4091 and select menu option #1. July 1, 2021 thru June 30, 2022. State Green and Sustainability Claims: A Roundtable Discussion. Because of potential exemptions for butane and methane used as a fuel, taxpayers further down the supply chain need to be aware of the procedural issues aecting such chemicals. It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. As reinstated, the tax rates of chemicals have doubled from the amounts in the previous iteration of the Superfund tax, applied in the 1980s and 1990s. 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. IRC section 4661(b) lists 42 chemicals that are once again subject to the Superfund Excise Tax effective July 1, 2022. Section 4661 imposes tax on the sale by the manufacturer, producer or importer of 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. 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 States or entered into the United States for consumption, use, or warehousing. Below is the current list of taxable chemicals. (added June 24, 2022), Q10. Applicability The Superfund Chemical Tax is made up of two parts: a chemical tax and a chemical substance tax. 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. See also section 4661(b) for the tax rate for taxable chemicals. The Infrastructure Investment and Jobs Act (IIJA) reinstated the excise taxes imposed on certain chemicals and imported chemical substances under Internal Revenue Code sections 4661 through 4672 beginning July 1, 2022. 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. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. Various exemptions exist for taxable chemicals. Heres more on what is included in the Superfund Excise Tax and what to keep an eye out for. (added June 24, 2022), Q8. 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. Kti Chemicals Inc is a superfund site located at 1170 Sonora Ct, Sunnyvale, CA 94086. How do I calculate the section 4671 tax? 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. 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. Many entities are struggling with its application. The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. That penalty can be avoided if the taxpayer demonstrates that the failure was due to reasonable cause and not due to wilful neglect. Contributed by Stephanie C. Cason, CPA, MAcc, Manager in RKLs Tax Services Group. 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. The term Superfund refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. Chemicals will be taxed based on how they're sold, used, or stored and can range from $0.44 to $9.74 and will be charged on a per-ton basis. Apprehended Woman Dies in Eagle Pass, Texas Soft Sided Facility, U.S. Customs and Border Protection Department of Homeland Security. Managing Licenses, Careers The relief applies to the first three quarters of the SCET, i.e., the third and fourth quarters of 2022 and the first (added June 24, 2022), Q14. Beginning Your Sustainability Journey? 177-58) reauthorizes Superfund with expanded provisions of doubled rates on Taxable Chemicals, and a vast expansion of Taxable Substances. The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. What happens if an importer does not calculate the section 4671 tax? That tax expired in 1995, but was partially reinstated on November 15, 2021, when President Biden signed the Bipartisan Infrastructure Law into law. Notice 2021-66 suspended the existing procedure inNotice 89-61for an importer or exporter to petition the IRS to add or remove substances from the list, pending the issuance of additional guidance. This memorandum explains why. The tax law is included in the Infrastructure Investment and Jobs Act that was signed into law on November 15, 2021. 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. 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. 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. A15. A5. AllRightsReserved. | Careers Section 4661(b) lists the almost three and a half dozen chemicals that this For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. published tax rates for 121 of the 151 taxable substances. Delivering tax services, insights and guidance on US tax policy, tax reform, legislation, registration and tax law. 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. After a more than 26 year hiatus, on July 1, 2022, the Superfund chemical excise tax (the Superfund Chemical Tax) will again become effective. Superfund excise taxes are reported on Form 6627, Environmental Taxes, which must be attached to Form 720 Quarterly Federal Excise Tax Return. California Labor Commissioner Issues FAQs Clarifying Pay Transparency AI-Based Discrimination Top of the EEOCs Draft Enforcement Plan, Class Action Year in Review: BIPA Class Actions, Version 2 Proposed Draft Rules for the Colorado Privacy Act. 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. The Superfund excise taxes are part of Subtitle D, Chapter 38 of the Tax Code. The calculation of the superfund excise taxes is complex, and accurate reporting data can help companies reduce their tax burden. These taxes expired more than 25 years ago. Page Last Reviewed or Updated: 24-Jun-2022, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), Fact Sheets for Frequently Asked Questions, Q1. Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. Hampton Roads | 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. See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. Cherry Bekaert LLP is a licensed CPA firm that provides attest services, and Cherry Bekaert Advisory LLC and its subsidiary entities provide tax and advisory services. Form 6627, Environmental Taxes, previously used to report the Superfund Tax, will likely be used again to report the tax owed. | 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. New Jersey enacted a new tax law (A.B. Tech trends in If your company is a business that manufactures, produces or imports any of the listed chemicals or substances, determine your liability for the taxes. Final Regulations Governing Illinois Equal Pay Acts Certification Weekly Bankruptcy Alert: January 17, 2023 (For the week ending Bankruptcy Court Allows Service of a Subpoena Via Twitter. WebTax Podcast: The Superfund Excise Tax: Back in action President Bidens Infrastructure bill revitalized the long-expired Superfund Excise Tax on chemical sales, which goes into effect July 1. They were reinstated by section 80201(c)(3) of the Infrastructure Investment and Jobs Act (Public Law 117-58, 135 Stat. July 1 is fast approaching and the window to prepare for compliance with the reinstated Superfund Tax is brief. More information about reliance is available. These FAQs were announced in IR-2022-131. Please reach out to our team if you have any questions about the implications of the infrastructure bill. 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