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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. 2017 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. Taxable substances include substances where taxable chemicals constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce such substance (as determined based on the predominant method of production). DOE Publishes Notice of Intent to Fund Clean Hydrogen Projects. This Superfund Tax is assessed only on importers of taxable substances and is due upon the first sale or the first use after import into the United States. 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. The taxes are effective July 1, 2022. 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). Since its reinstatement, the excise tax has raised many questions and caused significant industry consternation. 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. They were reinstated by section 80201(c)(3) of the Infrastructure Investment and Jobs Act (Public Law 117-58, 135 Stat. Go back five years for manufacturing drawback. (added June 24, 2022), Q5. (added June 24, 2022), Q10. 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. Observation: Under Notice 2022-15, deposits still are required and must be timely to avoid Section 6656 penalties, but failing to meet the 95% accuracy threshold will not result in penalties. She is passionate about supporting animal rescue organizations. Notice 2021-66 does not specify the tax rate for each taxable substance. 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. Are semimonthly deposits required? Helping businesses navigate financial due diligence engagements and domestic and cross-border transactions. Built by tax professionals for tax professionals. 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. It's important to note that the tax only applies to imported chemicals and hazardous substances. Exporters will not be taxed. Inferences, however, can be made from the absence of any mention in the law. Houston | The microbusiness also charges $5 for delivery. Many entities are struggling with its application. All rights reserved. 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. 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 Joint Committee on Taxation estimates these excise taxes combined would increase revenues by over $52 billion over a 10-year period. 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. 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. 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 applicable rates of tax and related Helping tax leaders embrace disruption, seize new opportunities and drive greater value. $225 plus $0.073 per each acre-foot greater than 10 acre-feet. Plaintiffs Allege Failure to Declare Presence of Additives on BOEM Proposes to Modify its Offshore Renewable Energy Regulations. A substance is listed as a taxable substance if it is listed under section 4672(a)(3), or if the Secretary of the Treasury or her delegate (Secretary) has added it to the list of taxable substances pursuant to section 4672(a)(2) or (4). 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. $300 plus $0.085 per each acre-foot greater than 10 acre-feet. The Inflation Reduction Act (Pub.L. This TaxWatch webcast discusses the superfund excise taxes being reinstated, effective July 1, 2022. Gas tax holiday: impact of changes in motor fuel tax rates, Tax automation: the ultimate guide to tax process efficiency, Reporting 11 In addition to the reinstatement of the taxes, There are 42 chemicals listed in section 4661(b). Cannabis Excise Tax Calculation. After a more than 26 year hiatus, on July 1, 2022, the Superfund chemical excise tax (the Superfund Chemical Tax) will again become effective. 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 applies). As a result, Notice 2022-15 provides that SCET taxpayers will be deemed to have satisfied the reasonable cause standard and no Section 6656 penalty will be imposed if (1) the taxpayer makes semimonthly deposits of SCET, even if in the incorrect amount, and (2) any deposit underpayment is paid in full by the due date for filing the Form 720, Quarterly Federal Excise Tax Return, for the applicable quarter. 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. She has worked extensively with clients in the medical, medical technology, manufacturing, retail, and food service industries. Manufacturers, laboratories and other businesses may begin to see these excise taxes passed along to them on invoices from their suppliers. As of July 1, 2022, The Infrastructure Investment and Jobs Act (IIJA) has reinstated excise taxes imposed on certain chemicals and imported chemical substances. New Jersey enacted a new tax law (A.B. As reinstated, the excise tax rates are doubled from pre-1996 levels and range from $0.44 cents per ton to $9.74 per ton. The Infrastructure Investment and Jobs Act (the IIJA), signed into law on November 15, 2021, reinstated two environmental excise taxes that had been terminated over twenty-five years ago. Providence | Superfund Excise Tax - What You Need to Know, This analysis is intended for informational purposes only and is not tax advice. 429, Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). Aside from this quarterly filing, taxpayers Each member firm is a separate legal entity. Tech trends in 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. 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. 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. As a background, when these taxes were reinstated through the Infrastructure Investment and For purposes of this code section the term importer means the person for which the taxable chemical is brought to the U.S. for consumption, use or warehousing. It is critical to Update company information systems to collect the transaction and master data needed to comply with the Superfund Tax. See question 3 for more information on taxable chemicals and question 6 for more information on calculating the tax imposed by section 4661 (section 4661 tax). Any taxable chemical or substance also qualifies for a Superfund Tax Credit. These credits are accrued when a taxable chemical or taxable substance is exported. A Superfund tax is imposed when a taxable chemical is imported, or is domestically produced for sale or use unless an exemption applies. Your company could bear the economic burden of the tax being passed on from your suppliers, and, in turn, your company would then need to consider its ability to pass on the economic cost of the excise tax to its customers. Copyright 2023 BDO USA LLP. Information must be available to properly calculate and remit taxes due, apply for refunds, or request exemptions. The initial list of 50 taxable substances is found in IRC 4672(a)(3). 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. $225 plus $0.073 per each acre-foot greater than 10 acre-feet. Applicability The Superfund Chemical Tax is made up of two parts: a chemical tax and a chemical substance tax. 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. Companies with large volumes of transactions should consider automating their tax calculation and reporting processes. A8. 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 Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. Please see www.pwc.com/structure for further details. . Tax News & Views, our current events-focused tax podcast, can help provide clarity on the latest tax news and developments that could affect your business. For example, methane or butane used as a fuel, or nitric acid, sulfuric acid, ammonia, or methane used in production of fertilizer are exempt. Download list of 42 taxable chemicals and 151 taxable substances. 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). 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. 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. 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 Delivering tax services, insights and guidance on US tax policy, tax reform, legislation, registration and tax law. What is a taxable chemical? The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. 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. 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. However, the first If you are a manufacturer or importer, it is essential that your organization be prepared to report and remit the excise tax. The IRS noted that the full list of taxable chemicals and substances could change over time. With over 10 years of experience, Sales Tax Manager Elizabeth Perez Gonzalez specializes in sales and use tax services. 17. The Infrastructure Bill reinstated the Superfund Excise Taxes on chemicals and taxable substances, effective July 1, 2022. An alternative liability is a 10% tariff of the import value. As reinstated, the tax At the time of publication of these FAQs, 151 substances are listed as taxable substances. For consideration: Notice 2022-15 provides notable relief for taxpayers during these initial quarters. July 1, 2021 thru June 30, 2022. There are two ways a substance can be added to or removed from the list of taxable substances pursuant to section 4672(a)(2) and (4). Texas Unclaimed Property, a Division of the Texas Comptroller of Public Accounts (Texas Comptroller), is increasing compliance efforts through outreach. WebWork with outside vendor on Superfund Excise tax compliance; Ascend Performance Materials is the premium provider of high quality chemicals, fibers and plastics. It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. More substances are expected to be added in the future, but the list as it stands is available below. Taxpayers must make semimonthly deposits of the Superfund chemical excise taxes. All Rights Reserved. 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. Yes. How does ESG fit into business strategy? 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