The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. slunan@deloitte.com, Christina Gong As explained in today's IRS release: Certain services may not be available to attest clients under the rules and regulations of public accounting. Therefore, a chemical substance could qualify as a taxable substance if taxable chemicals listed in IRC section 4662 constitute more than 20 percent of the weight (or more than 20 percent of the value) of the materials used to produce such substance.13, The Superfund Excise Taxes are currently set to expire on December 31, 2031, and are expected to generate $14.4 billion of revenue (or approximately $1.2 billion annually).14, IRC section 4661(b) lists 42 chemicals, identified in Exhibit A. The IIJA also reinstated the Superfund excise tax on the import for sale or use of any taxable substance underSection 4671of the Tax Code. 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. Prior to 1996, the rates of tax on those chemicals ranged from $0.22 per ton to $4.87 per ton. (a) General rule There is hereby imposed a tax on any taxable chemical sold by the manufacturer, producer, or importer thereof. When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. 4Id. The Superfund chemical excise taxes previously expired on December 31, 1995. 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. 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. This effectively doubled the tax rate of the imported taxable substances as well, and the Infrastructure Bill further increased the alternative method of calculation of the taxable substances to 10% the value of import. The Superfund was to be financed through environmental excise taxes, including: (1) excise tax imposed on domestic crude oil; (2) excise tax imposed on imported crude oil and petroleum products; and (3) domestically produced and imported petrochemicals and inorganic chemicals. (added June 24, 2022), Q2. As soon as possible, companies that import any of the taxable chemicals or substances on the IRSs list need to conduct a thorough assessment of their manufacturing processes to find out when, where, and how the Superfund Chemical Excise Tax might apply. Its also important to understand the tax calculation and reporting requirements and to align with other business functions to implement a process to meet data, process, and system requirements. 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. There are three ways to arrive at a tax determination for the Superfund Tax: 2. 4661 and the other applying solely to "any taxable substance sold or used" by importers pursuant to 26 U.S.C. The rates are listed in IRS release IR-2022-133 (June 24, 2022). Semi-monthly payments should be made by the 15th and 30th of each month, but the IRS is providing relief from penalties for non-payment up through the first quarter of 2023. L. 117-58. 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. Sitemap For purposes of this part, if any organic taxable chemical on which no tax was imposed by reason of subparagraph (A) is isolated, extracted, or otherwise removed from, or ceases to be part of, an intermediate . Tax is due upon the first use or first sale of a listed chemical in the United States. Boston | When are the new Superfund Chemical Excise taxes due? 18I.R.S. 4671. The term " Superfund " refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. In our experience, it generally takes at least three months to fully implement and test a new business process and system implementation. The taxes are set to be reinstated beginning on July 1, 2022. As part of the recently unveiled infrastructure deal, the Biden administration announced plans to reinstate the Superfund taxes on chemical manufacturers in the United States. brands, Corporate income Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. The Superfund is a federal excise tax on various hazardous chemicals. Customer Reviews: Five-Star Enforcement and the Expanding Regulations. Connect with other professionals in a trusted, secure, The Infrastructure Investment and Jobs Act, signed at the end of 2021, reinstates the Superfund chemical excise taxes under Sections 4661 and 4671 of the Internal Revenue Code. Deposit payments with the Electronic Federal Tax Payment System (EFTPS). 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. Exporters The IRS has release additional information on the Superfund Excise Taxes on Chemicals. IRC section 4672 additionally directed importers and exporters to request a determination from the IRS as to whether a specific unlisted chemical substance should be included in the list of taxable substances. releases, Your Amendments. A1. 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 . 96-125 at 14878 (1979). chrigong@deloitte.com. Complete Analysis of the Tax Cuts and Jobs Act, The future of Indirect Tax (IDT): How to take charge of change, How to overcome the most common challenges of tax engine implementation, The Tax Technology Transformation: Getting Started. Proposed Nursing Home Disclosure Requirements Target Private Equity Regulation in the Post-FTX Environment: SECs Proposed Enhanced Can a Child Decide Whom They Want to Live With in Michigan? The tax would apply after December 31, 2021, until January 1, 2032. November 24, 2021. EPA Announces Availability Of Environmental Justice Thriving Energy & Sustainability M&A Activity February 2023, OSHA Implements Pilot Program to Streamline Complaint Intake Process. 10I.R.C. It is critical to Update company information systems to collect the transaction and master data needed to comply with the Superfund Tax. When the owner or operator was not identified, or the site cleanups needed to be expedited, financing for the cleanup was to be provided by the Superfund. Recent FTC Enforcement Action Merits Cyber Insurance Coverage Review, Two Ways to Redefine & Achieve CRM Success. The U.S. Environmental Protection Agency (EPA) administered the expenditures and used the funds to clean up hazardous waste sites around the United States. Will the IRS prescribe tax rates for taxable substances? 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. Importers Otherwise, companies risk finding out about this tax when they are audited and risk becoming liable for penalties. Labor Board Flip-Flops Again on Severance FRB Governor Bowman Speaks on Bank Regulation and Supervision. This message will not be visible when page is activated. Tax is due upon the first use or first sale of a listed chemical in the United States. On November 15, 2021, President Biden signed into law theInfrastructure Investment and Jobs Act (IIJA), Public Law 117-58, 135 Stat. Effective July 1, the Infrastructure Investment and Jobs Act (IIJA) reinstated the excise taxes imposed on certain chemicals and imported chemical substances under IRC Sections 4661 through 4672 (Superfund excise taxes). Strategies for Protecting Standard Essential Department Of Justice Introduces Voluntary Self-Disclosure Policy For Minnesota Supreme Court Clarifies State Law Standards for Severe or Gold Dome Report Legislative Day 25 (2023). A4. 4672(b)(1). Service. Social login not available on Microsoft Edge browser at this time. How do I calculate the section 4671 tax? Fast forward to today. Will Changes to the Option To Tax Regime Impact UK Insolvency Sales? 4671. When enacted, the Superfund was financed by environmental excise taxes on certain commonly used chemicals often found at Superfund sites. ADVANCED! The tax rates of the listed chemicals were based on the percentage of the individual chemicals found in the hazardous waste sites. California Assembly Bill Pushes for Womens Designated Restrooms on Mississippi Legislature Takes Up Pass-Through Entity Election FTC Signals Increased Scrutiny of Technology Sector Through Understanding the Corporate Transparency Act and Ensuring Compliance. Accordingly, the chemicals are taxed upon the first sale or use after import or manufacture in the United States, and the importer or manufacturer is liable for the excise tax, which it may pass along to its customers.22. (added June 24, 2022), Q6. Analyzing transactional and master data gaps given existing company system capability and data quality. Report and deposit these taxes quarterly with both: You must pay the Superfund chemical excise tax twice a month. The Petroleum Superfund Tax is proposed to be indexed for inflation beginning in calendar year 2023. Raleigh | The return of the Superfund excise tax on chemicals affects taxpayers that manufacture, produce, or import certain chemicals, as it imposes an excise tax on the sale of 42 specific chemicals listed in Section 4661 of the tax code, including ammonia, butane, benzene, mercury, and other common products. The tax expired under its terms in the mid-1990s but has now been reinstated. (added June 24, 2022), Q15. (added June 24, 2022), Q10. Deloittte Tax The latest reiteration of the excise tax will be comprised of two separate taxes on (1) chemical sales and (2) chemical importers. . Nothing in the statute or in Notice 2021-66, for example, references manufactured items in the context of taxable substances. Orlando | The legislation would impose an excise tax of fractions of a penny on crude oil and oil products, and between six cents and $14.30 on chemical feedstocks, while it would tax corporate income over $4.7 million at less than 1%. 16I.R.C. The Carter administration established the Superfund in 1980 to offset the high price tags associated with remediating uncontrolled or abandoned hazardous waste sites. 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. The Infrastructure Bill lowers the thresholdfor a chemical substance to meet the definition of taxable substance, thus more imports may be subject to this tax. Companies with a large volume of transactions should consider automating their tax calculation and reporting processes to increase efficiency and accuracy. Telephone and Texting Compliance News: Regulatory Update February 2023. US Executive Branch Update February 27, 2023. Some deposit amount is still required by July 29 to satisfy the relief provisions set out in Notice 2022-15. 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%. Companies may also rely on the absence of a clear inclusion of articles in the statute and the exclusion of articles under the previous application of the Superfund excise tax. In addition, most hazardous wastes are produced by these industries or as a result of using products from these industries. 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 Infrastructure Investment and Jobs Act, section 80201, reinstates the excise taxes imposed on certain chemical substances by sections 4661 and 4671, effective July 1, 2022. At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. Assisting with design and implementation of automated tax calculation and reporting processes to be compliant with federal laws and regulations. Deloitte Tax When do the Superfund chemical excise taxes go into effect? statement, 2019 As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. on a wide range of chemicals and substances. In November 2021, President Biden signed the Infrastructure Investment and Jobs Act. 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