The rate of excise tax per ton is based on the amount of each chemical included in the substance. The reinstated excise tax on chemicals and substances containing chemicals funds a portion of the Superfund Trust Fund. It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. With over 10 years of experience, Sales Tax Manager Elizabeth Perez Gonzalez specializes in sales and use tax services. 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. Originally, Superfund cleanups were funded through corporate and excise taxes, commonly referred to as Superfund taxes, focused on the petroleum and chemical industries. Navigating the complex terrain of excise taxation and uncovering opportunities, Stay informed on excise tax-related news with ourKPMG TaxNewsFlasharchive. The Superfund law (P.L. 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. Operating now under a new set of rules, organizations manufacturing or importing certain chemicals now face new tax challenges. 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. The money gathered from the taxes was used to fund the clean-up of hazardous waste disposal sites across the United States. According to the IRS, 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. Do Not Sell My Personal Information as to BDO Investigative Due Diligence. 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. The IRS noted that the full list of taxable chemicals and substances could change over time. The Superfund Excise Taxes are currently set to expire on December 31, 2031. How Law Firms Can Leverage ChatGPT To Get More Cases, FTC Pursues Crackdown on Employee Noncompetes, Chapter 93A Litigation Newsletter | 4th Quarter 2022, Landmark NLRB Decision Expands Labor Violations, Weekly IRS Roundup January 9 January 13, 2023. Some deposit amount is still required by July 29 to satisfy the relief provisions set out in Notice 2022-15. The Superfund Chemicals Excise Tax Makes a Comeback. Semi-monthly deposits are required, however. Tune in to find out more. Tampa | The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. The imported substances tax is due upon the first sale or use after import. 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. 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. IRS publishes initial Superfund chemical list January 11, 2022 The IRS recently released guidance ( Notice 2021-66 ,) providing key information on the excise taxes imposed on certain chemicals and substances under Sections 4661 and 4671often referred to as Superfund excise taxes. Proc. There are 42 chemicals listed in section 4661(b). 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. 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. Austin | Who should lead the charge? In addition, our guarantee ensures that we will even defend such claims under audit. The term Superfund refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and 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. The hazardous substance tax will be imposed at a rate of 16.4 cents per barrel and will be adjusted for inflation on January 1 of each year until it expires on December 31, 2032. 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. Expanded Employee Retention Credit (ERC) & how our professionals can assist you. However, the first 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. Policy on Demand is a news platform that provides in-depth insights and analysis on policy developments that impact your business. The applicable rates of tax and related Unlike many filings, due dates for deposits are accelerated if the typical due date falls on a Saturday, Sunday, or a legal holiday in the District of Columbia. 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. View Full Firm Disclosure. She is passionate about supporting animal rescue organizations. Copyright 2023 BDO USA LLP. Aerojet and its subsidiaries have researched, designed and made rocket engines and chemicals on site since 1953. There are actually two types of Superfund excise taxes: a tax on the sale or use of chemicals by the manufacturer, producer or importer of those chemicals and a tax on the sale or use of imported substances comprised of more than 20 percent in weight or value of taxable chemicals. The full list of taxed chemicals and substances can be viewed here. Any taxable chemical or substance also qualifies for a Superfund Tax Credit. 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. 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 Joint Committee on Taxation estimates these excise taxes combined would increase revenues by over $52 billion over a 10-year period. BDOs excise tax professionals can help affected companies by performing a phased approach to determining the impact of the Superfund chemical excise taxes on your business. At the time of publication of these FAQs, 151 substances are listed as taxable substances. In turn, the tax rate of imported substances was effectively doubled as well. This potential change in Brazilian transfer pricing policies could have significant consequences from a U.S. transfer pricing and international tax perspective. 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, Read about their experiences and a few lessons learned along the way. Accordingly, the procedural rules in26 C.F.R. 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. 177-58) and was signed on November 15, 2021. . Charter is different from tax teams because we dont just focus on compliance we also find the credits your company qualifies to receive. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. The relief applies to the first three quarters of the SCET, i.e., the third and fourth quarters of 2022 and the first quarter of 2023. Unless your company is a manufacturer or importer of chemicals and substances, there is no additional reporting required regarding the superfund excise tax. Section 40.6302(c)-1(b)(2), for failure to make required deposits of Superfund excise taxes if the requirements set out in the Notice are met. As of July 1, 2022, The Infrastructure Investment and Jobs Act (IIJA) has reinstated excise taxes imposed on certain chemicals and imported chemical substances. Many in the industrial chemical community are unfamiliar with the Superfund excise tax legacy, and the IRS is seemingly unprepared for the learning curve challenge the reactivation of the tax has created. The money gathered from the taxes was used to fund the clean-up of hazardous waste disposal sites across the United States. These taxes expired more than 25 years ago. All rights reserved. What happens if an importer does not calculate the section 4671 tax? System and Organization Control Reporting (SOC), GDPR General Data Protection Regulation. 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. Identify exempt chemicals and substances under export rules. 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. No such update has been issued to date, however. 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. Sitemap A3. As a result, Notice 2022-15 provides welcome relief and affords SCET taxpayers additional time to perfect their SCET deposit process. 2022 Global Digital Trust Insights Survey, Application Security and Controls Monitoring Managed Services, Controls Testing and Monitoring Managed Services, Financial Crimes Compliance Managed Services, Virtual Business Office services for healthcare. The tax on substances depends on their chemical composition and if it has 20% or more of a chemical on the taxable list. 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. See Notice 2021-66, 2021-52 I.R.B. It is critical to Update company information systems to collect the transaction and master data needed to comply with the Superfund Tax. 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. 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 per-ton rate of tax varies depending on the taxable chemical being sold or imported, so the amount of Superfund Tax will vary by product. Deposits, if required, must be made electronically, often requiring submission before the actual due date to process timely. 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. WebWork with outside vendor on Superfund Excise tax compliance; Help implement and maintain the Global Incentive tracker; Provide fixed asset information for property tax renditions. 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. (added June 24, 2022), Q5. Taxpayers must make semimonthly deposits of the Superfund chemical excise taxes. 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. Webrate and the $0.164 per barrel petroleum Superfund tax rate. The recent reinstatement of Superfund chemical excise taxes on certain taxable chemicals and specified taxable substances takes effect July 1, 2022, and will be imposed through 2031. During her free time Elizabeth enjoys going to concerts, traveling, hanging out with her pets, and caring for her succulent plants. For tax advice, consult your tax adviser. Aside from this quarterly filing, taxpayers State Green and Sustainability Claims: A Roundtable Discussion. 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. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. This field is for validation purposes and should be left unchanged. 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. $150 plus $0.069 per each acre-foot greater than 10 acre-feet. The term Superfund refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. Part 40regarding filing, deposits, and related procedural issues apply to companies subject to the reinstated Superfund excise taxes. How are the Superfund chemical excise taxes reported? Notice 89-61provided guidance under the previously applicable Superfund excise tax. Is there a way to check the status of an application for Activity Letter G registration? 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. A15. | Careers Consider the action items above, particularly the last one, making sure the information systems are in place to capture the data needed to comply with this tax. Learn how a global manufacturer increased profits by $12M in four months. Are Your Companys Year-End Compensation Accruals Tax Deductible? 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. For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. 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. 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. In 2022, IRS received petitions to add polyoxymethylene and polyphenylene sulfide to the list of Superfund excise taxes are reported on Form 6627, Environmental Taxes, which must be attached to Form 720 Quarterly Federal Excise Tax Return. 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. WebWork with outside vendor on Superfund Excise tax compliance; Ascend Performance Materials is the premium provider of high quality chemicals, fibers and plastics. (added June 24, 2022), Q6. The Superfund taxes are expected to generate approximately $14.5 billion over a 10-year period. 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. While the majority of the listed chemicals are taxable by the manufacturer or importer upon the rst sale or use, butane and methane only become taxable upon the rst use other than as a fuel. Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. 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). To obtain certainty prior to IRS issuing guidance on this matter, companies that import taxable substances as part of articles can seek clarification from the IRS. For exporters, IRC 4662(e) provides for a refund of the Superfund Tax for both taxable chemicals and taxable substances that are exported. 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. Part II of IRS Form 6627 has been updated to reflect these rates. In Philadelphia, Economy Struggles to Keep Up with New Influx of First Major Overhaul of Cosmetics Regulation Since FDR Administration, Governor Kathy Hochul Proposes New York State Housing Compact. At that time, the application of the tax and the deployment of funds were quite well understood, and the U.S. Internal Revenue Service (IRS) developed a relatively robust series of guidance documents to explain how the tax operated and who was subject to the tax. FS-2022-31, June 2022. The IIJA also reinstated the Superfund excise tax on the import for sale or use of any taxable substance underSection 4671of the Tax Code. The IRS recently issued FAQs and published tax rates for 121 of the 151 taxable substances. Inferences, however, can be made from the absence of any mention in the law. Charlotte | 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. (added June 24, 2022), Q13. The Superfund Chemical Excise Tax is set to expire in 2031 and is expected to bring in an estimated $14 billion that will go to assisting the clean-up of hazardous waste disposal sites. Cannabis Excise Tax Calculation. The Superfund excise taxes are part of Subtitle D, Chapter 38 of the Tax Code. The Infrastructure Investment and Jobs Act included the reauthorization of the Superfund law (P.L. An official website of the United States Government. This initiative came to be commonly known as the Superfund Excise Tax on Chemicals. The IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. The taxes are reported quarterly on the IRS Form 720, which is part of the Quarterly Federal Excise Tax Return. Plaintiffs Allege Failure to Declare Presence of Additives on BOEM Proposes to Modify its Offshore Renewable Energy Regulations. FS-2022-31 (Issued 6/24/2022), IRS issues Superfund Chemical Excise Taxes FAQs ( Link) Rev. 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. Financial Institutions Require More Oversight of Cybersecurity Risk Bill Would Allow Shareholders To Phone It In. (added June 24, 2022), Q11. Exporters that export either a taxable chemical or taxable substance generate Superfund credits. These credits are accrued when a taxable chemical or taxable substance is exported. 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. Class Action Year in Review: The Rise Of The Self-Tapping Website? It is unclear whether and how the statute means to differentiate a substance from an article, and if so, whether the IRS would apply the definition of article under the Toxic Substances Control Act (TSCA). Greenville | As reinstated, the Superfund excise tax will apply to a list of taxable chemicals and taxable substances, as ofJuly 1, 2022,throughDecember 31, 2031, if not extended. Does Your Cyber Insurance Policy Cover a Ransomware Attack? It started with the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 19801986. 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. The table below outlines products that are impacted by this excise tax. 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. Such exemptions include methane or butane used as a fuel, chemicals used in the production of fertilizer (including nitric acid, sulfuric acid, ammonia, or methane) and substances derived from coal. Kti Chemicals Inc is a superfund site located at 1170 Sonora Ct, Sunnyvale, CA 94086. Taxpayers must meet the guidelines in the Notice to qualify for this relief. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. What are the Superfund chemical excise taxes? As a background, when these taxes were reinstated through the Infrastructure Investment and Sign up to receive the latest BDO news and insights. The Infrastructure Investment and Jobs Act not only reinstated the Superfund excise tax but also expanded its rate and reach. $300 plus $0.085 per each acre-foot greater than 10 acre-feet. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. Cherry Bekaert LLP and Cherry Bekaert Advisory LLC practice in an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations and professional standards. The IRS is working on calculating tax rates for taxable substances and will release them as they become available. Section 4662(c)(2) provides an additional exemption from tax liability where a company imports a taxable chemical and exchanges that chemical as part of an inventory exchange with another person. The Superfund Tax is effective as of July 1, 2022 and will remain in effect until the end of 2031. 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. 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. 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. But under the Biden plan, those taxes would be reinstated. For taxable chemicals, the manufacturer, producer, or importer of the taxable chemical is responsible for reporting and paying the section 4661 tax to the IRS. 11 In addition to the reinstatement of the taxes, This approach includes: Let us help you address the compliance issues associated with reinstatement of Superfund chemical excise taxes. 1043, provides transitional 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 section 6656 for failures to deposit Superfund chemical excise taxes through March 31, 2023. More information about reliance is available. These FAQs were announced in IR-2022-131. For consideration: Notice 2022-15 provides notable relief for taxpayers during these initial quarters. Client Advisory Board, 1175 Lombardi Access Rd., Ste 500, Green Bay, WI 54304. 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. The original excise tax expired on December 31, 1995. The Inflation Reduction Act (Pub.L. Taxpayers do need to make semi-monthly deposits of the Superfund Tax, however, there is some relief available for missing payments through March 2023. Managing Director, Excise Tax Practice, KPMG US, Senior Manager, Tax | WNT - SALT Income & Incentives, KPMG US, Partner, Tax, Accounting Methods & Credits, KPMG US. In order to pay for Are semimonthly deposits required? The Inflation Reduction Act added excise tax on domestic crude oil and imported petroleum products starting on January 1,2023. 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. 2017 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. Under what circumstances is registration required? A9. You will also have to determine how your company will pass on the tax to your customers. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. Notice 2021-66 does not specify the tax rate for each taxable substance. Requesting additions and/or deletions to the taxable substances list pursuant to updated IRS guidance and procedure. Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. For more information on cookies and how we use them, view our Cookie Policy. New Jersey enacted a new tax law (A.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. 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. 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. While the final taxable substance list and exact rates have yet to be finalized, costs will be calculated by weight or value of the contained taxable chemical. 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. 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 The Superfund Chemicals Excise Tax Makes a Comeback. The information contained herein is not intended to be written advice concerning one or more Federal tax matters subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230. Manufacturers, laboratories and other businesses may begin to see these excise taxes passed along to them on invoices from their suppliers. A7. It has been almost 30 years since the Superfund excise tax was in effect. What is a taxable chemical? Acetylene Benzene Butane Butylene Butadiene Chicago | Petitions Filed To Add Polyoxymethylene And Polyphenylene Sulfide To List Of Chemical Substances Subject To Superfund Excise Tax: On December 28, 2022, the The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. A1. 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.