Connecting with our core purpose through a renewed lens. 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. 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. 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 was not only brought back, but the IIJA doubled the prior tax rate on chemicals. Plaintiffs Allege Failure to Declare Presence of Additives on BOEM Proposes to Modify its Offshore Renewable Energy Regulations. Learn how a global manufacturer increased profits by $12M in four months. In addition, our guarantee ensures that we will even defend such claims under audit. We recommend taking the following steps now to determine how this excise tax applies to your company and to help ensure compliance: In addition, it is important to identify your available resources for determining taxability, exemptions, making tax deposits, filing applicable IRS registrations (Form 637, Application for Registration For Certain Excise Tax Activities) and filing quarterly tax returns (Form 720, Quarterly Federal Excise Tax Return, and attachment Form 6627, Environmental Taxes). 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. A6. Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. The full list of taxed chemicals and substances can be viewed here. Start Here. Accordingly, these FAQs may not address any particular taxpayer's specific facts and circumstances, and they may be updated or modified upon further review. Taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the tax. Policy on Demand is a news platform that provides in-depth insights and analysis on policy developments that impact your business. The Heres more on what is included in the Superfund Excise Tax and what to keep an eye out for. The IRS previously released Notice 2021-66, providing guidance on the reinstatement of the SCET under the Infrastructure Investment and Jobs Act (sometimes referred to as the bipartisan infrastructure bill) enacted on November 15, 2021. | 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. 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. 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. Section 4661 imposes tax on the sale by the manufacturer, producer or importer of taxable chemicals. Petitions to Add Polyoxymethylene and Polyphenylene Sulfide. 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. DOE Publishes Notice of Intent to Fund Clean Hydrogen Projects. 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. Each chemical has a specified rate of tax, imposed on a per-ton basis, which has now been doubled. However, Notice 2022-15, 2022-18 I.R.B. Additional substances may be added if the weight or value of the substances is greater than 20% of the contained taxable chemical. In Philadelphia, Economy Struggles to Keep Up with New Influx of Immigrants. Additionally the new legislation also decreased the threshold amount from 50% to 20% of First, a substance can be added to the list of taxable substances by the Secretary, in consultation with the Administrator of the Environmental Protection Agency and the Commissioner of U.S. Customs and Border Protection, if the Secretary determines that taxable chemicals constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce the substance (determined on the basis of the predominant method of production). Managing Licenses, Careers 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. Section 80201 of the IIJA reinstates the Superfund excise tax on certain chemical substances under Sections4661and4671of the Internal Revenue Code (Tax Code), effectiveJuly 1, 2022. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten Petitions Filed To Add Polyoxymethylene And Polyphenylene Sulfide To List Of Chemical Substances Subject To Superfund Excise Tax: On December 28, 2022, the Superfund excise taxes are reported on Form 6627, Environmental Taxes, which must be attached to Form 720 Quarterly Federal Excise Tax Return. 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. 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. As a result, Notice 2022-15 provides welcome relief and affords SCET taxpayers additional time to perfect their SCET deposit process. For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. 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. The tax may be passed along to customers. See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. Data Security 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 IIJA also reinstated the Superfund excise tax on the import for sale or use of any taxable substance underSection 4671of the Tax Code. Are you capturing all of them? However, given the related compliance processes that need to be established (e.g., automating data capture, gathering exemption documentation, and return preparation and filing) and matters that need to be addressed (e.g, Form 637 registration and taxable substance listing), taxpayers should consider taking this opportunity to evaluate whether their overall SCET program is sufficiently robust and meets the greater needs of their organization for example, by reprioritizing activities within their project plans. The tax on substances depends on their chemical composition and if it has 20% or more of a chemical on the taxable list. Nearly three decades after expiring, the Superfund chemical excise tax is back. The content and links on www.NatLawReview.comare intended for general information purposes only. Who should lead the charge? 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. Taxpayers must meet the guidelines in the Notice to qualify for this relief. The infrastructure bill imposes taxes on certain chemicals and imported substances under Internal Revenue Code sections 4661 through 4672. Nashville | Part II of Form 6627, Environmental Taxes, will be updated to reflect the tax rate per ton of each taxable chemical. Tax Implications and Financial Business Guidance Regarding the Coronavirus. A4. The list of 42 chemicals and their respective excise tax rates is found in Internal Revenue Code (IRC) 4661(b). Find out what KPMG can do for your business. 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? Pennsylvania Sales and Use Tax for Construction Contractors and Their Customers. 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. Nonetheless, a taxpayer who reasonably and in good faith relies on these FAQs will not be subject to a penalty that provides a reasonable cause standard for relief, including a negligence penalty or other accuracy-related penalty, to the extent that reliance results in an underpayment of tax. Aerojets previous disposal and operating practices led to soil and groundwater contamination. Who is responsible for reporting and paying Superfund chemical excise taxes? NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. Superfund Excise Tax - What You Need to Know, This analysis is intended for informational purposes only and is not tax advice. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. Until then, companies may take the IRS previous position as an indication of how it is likely to view articles and fabricated products under the current Superfund excise tax. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. Orlando | Does Your Cyber Insurance Policy Cover a Ransomware Attack? Applicants for registration may call 859-320-4091 and select menu option #1. 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. For taxable substances, the importer of the taxable substance is responsible for reporting and paying the section 4671 tax to the IRS. 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. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. The applicable tax ranges from $.48 to $9.47 per ton. July 1, 2021 thru June 30, 2022. By continuing to use this site, you are giving consent to cookies being used. Kti Chemicals Inc is a superfund site located at 1170 Sonora Ct, Sunnyvale, CA 94086. If you are not responsible for paying and reporting the excise tax to the IRS but purchase any of the listed chemicals or substances from your suppliers, review the potential economic impact of the reinstated excise tax on your company. For more information on cookies and how we use them, view our Cookie Policy. Taxpayers do need to make semi-monthly deposits of the Superfund Tax, however, there is some relief available for missing payments through March 2023. (added June 24, 2022), Q2. 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 The Inflation Reduction Act (Pub.L. Providence | This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. Companies must report the reinstated Superfund excise taxes onForm 6627, Environmental Taxes, attached toForm 720, Quarterly Federal Excise Tax Return. 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. A15. 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. Section 4671(a) imposes an excise tax on the sale or use of a taxable substance by the importer of the taxable substance. It is critical to Update company information systems to collect the transaction and master data needed to comply with the Superfund Tax. These substances consist generally or partially of chemicals listed in Section 4661. Specifically, taxable substances include the 50 substances on the initial list of taxable substances in Section 4672(a)(3) and 101 taxable substances added by the IRS in December 2021, throughIRS Notice 2021-66. See section 4671(b)(1). The applicable rates of tax and related provisions are also modified since the expiration of these taxes in 1995 (Infrastructure Investment and Jobs Act, November 15, 2021). See section 4672(a)(1). The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. 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. Mississippi Gaming Commission Agenda: January 19 Meeting. At the time of publication of these FAQs, 151 substances are listed as taxable substances. 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. Yes. The Superfund taxes are expected to generate approximately $14.5 billion over a 10-year period. More information about reliance is available. These FAQs were announced in IR-2022-131. A Frequently Asked Questions (FAQ) page about the Superfund Excise Tax is available from the Internal Revenue Service: FAQ: IRS Issues Superfund Chemical Excise Tune in to find out more. The Environmental Protection Agency (EPA) identifies sites such as Kti Chemicals Inc because they pose or had once posed a potential risk to human health and/or the environment due to contamination by one or more hazardous wastes. 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%. How do I calculate the section 4661 tax? In the meantime, reach out to your RKL advisor with questions or to discuss your companys specific circumstances. Sightline is a tax platform that makes the entire tax process more collaborative and insightful. Companies opting for the latter run the risk, however, of incurring penalties, should the IRS adopt a different view. More substances are expected to be added in the future, but the list as it stands is available below. All Rights Reserved. The IRS has release additional information on the Superfund Excise Taxes on Chemicals. The Infrastructure Investment and Jobs Act included the reauthorization of the Superfund law (P.L. The Inflation Reduction Act (Pub.L. The first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). Washington DC |, Copyright 2023 Cherry Bekaert. Section 704.3. The Aerojet General Corp. Superfund site covers about 5,900 acres near Rancho Cordova. An importer of a taxable substance is subject to the section 4671 tax on the sale or use of the taxable substance on or after July 1, 2022. 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. The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. 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. The information contained herein is of a general nature and based on authorities that are subject to change. 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. The excise tax collection expired in 1995 but resumed on July 1, 2022. Read about the challenges and opportunities that could lie ahead. 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. Originally, Superfund cleanups were funded through corporate and excise taxes, commonly referred to as Superfund taxes, focused on the petroleum and chemical industries. (added June 24, 2022), Q14. 338(h)(10) Transaction Structure: Pros and Cons for Sellers and Buyers. Companies are likely to be caught off guard by this reinstated tax. In order to pay for Delivering tax services, insights and guidance on US tax policy, tax reform, legislation, registration and tax law. For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. 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. 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. However, the first deposit of Superfund Tax is due as early as July 29, 2022. Boston | Specifically, sections 4661(a) and 4662(c)(1) impose an excise tax on the sale or use of a taxable chemical by the manufacturer, producer, or importer of the taxable chemical. 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. Chicago | The taxes apply to any taxable chemical under Internal Revenue Code (IRC) 4661 and any taxable substance under IRC 4671. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. Please see links for details: 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 Superfund Excise Taxes are currently set to expire on December 31, 2031. Notice 89-61provided guidance under the previously applicable Superfund excise tax. Inferences, however, can be made from the absence of any mention in the law. Nursing Homes Brace for Reforms and Heightened Government Scrutiny. 177-58) reauthorizes Superfund with expanded provisions of doubled rates on Taxable Chemicals, and a vast expansion of Taxable Substances. Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. 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. Reinstating the tax on chemicals will unduly burden consumers. This law levies taxes on the manufacture, production, or importation of 42 specific chemicals and another 121 chemical Exporters will not be taxed. Follow these steps to assess applicability and prepare for compliance: The sooner these steps are completed, the more seamless this new reporting and filing will be. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form Copyright 2023 BDO USA LLP. (added June 24, 2022), Q7. The reinstated excise tax on chemicals and substances containing chemicals funds a portion of the Superfund Trust Fund. 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.
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