(b) Amount of Tax The amount of tax imposed by subsection (a) shall be determined in accordance with the following table: (c) Termination No tax shall be imposed by this section after December 31, 2031. 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. 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. Many entities are struggling with its application. In these cases, the other person would be liable for paying the excise tax, not the initial importer. 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. 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. Reinstatement of Superfund excise taxes. This direct tax hike on American producers would result in higher prices for consumers, threaten thousands of jobs, and undermine domestic . In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. 13I.R.C. 22The IRS does not require that the tax be included in the total cost of the product or separately line itemed in an invoice. This law levies taxes on the manufacture, production, or importation of 42 specific chemicals and another 121 chemical substances. The exemptions identify taxable chemicals that are exempt due to their specific use. The Carter administration established the Superfund in 1980 to offset the high price tags associated with remediating uncontrolled or abandoned hazardous waste sites. This assessment should include a review of the transaction life cycle, master data setup, cost computation and recognition, and general entry posting. It's codified in IRC Sections 4671 and 4672, both of which were added by the Superfund Amendments and Reauthorization Act of 1986. The original excise tax expired on December 31, 1995. Under Section 4661, an excise tax is imposed on the sale by manufacturers, producers, and importers of 42 taxable chemicals (see table below for a list of those chemicals). _____________________________________________________________________________________________. View Full Firm Disclosure. As discussed above, the list of taxable substances was incorporated into the IRC as a result of SARA, effective in 1989. The specified. The National Law Review is a free to use, no-log in database of legal and business articles. In addition, exporters of chemicals and substances which were subject to the Superfund Tax can request a refund of the tax previously paid. Section 80201 of the bill would revive long-expired Superfund excise taxes at twice their previous level. brands, Corporate income Part 40regarding filing, deposits, and related procedural issues apply to companies subject to the reinstated Superfund excise taxes. Do not delete! The Infrastructure Investment and Jobs Act, which President Biden signed into law on November 15, 2021, reinstates Superfund excise taxes on the sale and import of certain chemicals as part of the law's revenue raising provisions. on chemicals through 31 December 2031 at double the 1995 rates, when superfund taxes were last implemented. Yes. A13. 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, most of them common in consumer products,. To apply to participate in tax-free sales of intermediate hydrocarbon streams containing organic taxable chemicals or tax-free inventory exchanges of taxable chemicals, file Form 637, Application for Registration (For Certain Excise Tax Activities) with activity letter G. Page Last Reviewed or Updated: 04-Jan-2023, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), Self-Employment Tax (Social Security and Medicare Taxes), Form 720, Quarterly Federal Excise Tax Return, Form 637, Application for Registration (For Certain Excise Tax Activities), Treasury Inspector General for Tax Administration. Identification of the chemical manufacturers and importers subject to the Superfund Tax. Accordingly, the procedural rules in26 C.F.R. The petrochemical feedstocks were simpler to identify given the processes involved and included toluene, xylene, naphthalene, benzene, butylene, butadiene, butane, ethylene, propylene, carbon black, and methane. Download pdf (1.5 MB) The IRS today released an advance version of Notice 2021-66 regarding the reinstated excise taxes imposed on certain chemicals and substances under sections 4661 and 4671 (often referred to as "Superfund" excise taxes). The Superfund excise taxes are set to expire at the end of 2031. When enacted, the Superfund was financed by environmental excise taxes on certain commonly used chemicals often found at Superfund sites. : Advanced Marketing Compels Trial on Arbitration in a TCPA Health Plans Gag Clause Attestations Due December 31, 2023. Form 6627 must be led alongside Form 720 on a quarterly basis. brands, Social Under what circumstances is registration required? Each chemical has a specified rate of tax, imposed on a per-ton basis, as identified in Exhibit A. See Notice 2021-66, 2021-52 I.R.B. services, Comprehensive Environmental Response Compensation, and Liability Act of 1980 (CERCLA). 52.4661-1 4662-4, 48 Fed. 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). The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. | Privacy Policy and accounting software suite that offers real-time 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.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 Superfund excise taxes are set to expire at the end of 2031. This tax provided a federal fund to remediate toxic spill sites when a responsible party could not be identified. The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. The list of 42 chemicals and their respective excise tax rates is found in Internal Revenue Code (IRC) 4661(b). Congress directed the IRS to publish a list of additional taxable substances by January 1, 2022, which was published by the IRS via IRS Notice 2021-66.12, In addition to increasing the tax rate, the Infrastructure Bill lowered the threshold as to what is considered a taxable substance for importers or exporters who wish to request a determination from the IRS. When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. For taxable substances, the importer of the taxable substance is responsible for reporting and paying the section 4671 tax to the IRS. A2. Congress set up a trust fund, or "Superfund," to clean up and mitigate environmental damage using new taxes imposed on 42 taxable chemicals that Congress identified as having the potential to cause harm upon improper handling or disposal. These taxes were in place until 1995 to fund the Federal Hazardous Substance Superfund, but expired in 1995. BIPA ALERT: Illinois Supreme Court Opens the Door to Punitive, President Biden to Nominate Julie Su as New Secretary of Labor, The European Unitary Patent: Why Retailers Should Care, New York City Employers Prepare for AI Bias Law [VIDEO], Administration's WOTUS Rule Muddies Jurisdictional Waters. Will the U.S. Supreme Court Make Marijuana Legal? 21See I.R.C. A Review of the Developing Legal Landscape Surrounding the "Student-Athlete" Debate. A14. Taxable substances are those that contain 20% or more by weight or value of one of the 42 chemicals listed in IRC 4661 (b). 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. However, since the IRS ruled that these substances met the definition of taxable substance, these new substances were also subject to the tax if imported by taxpayers, thereby effectively increasing the list of taxable substances of IRC section 4672. The section 4661 tax is imposed as a rate per ton of a taxable chemical. Biobased chemicals and biofuels have taken root thanks to both popular appeal and political support. In Notice 2021-66 the IRS published a list of 100 additional substances subject to the Superfund Tax. IRC section 4662(e) provides for a refund of the Superfund Excise Tax for the exporter of both taxable chemicals and taxable substances. technology solutions for global tax compliance and decision This would be for the periodJuly 1-September 30, 2022. 19I.R.C. The New York City Council Sets its Sights on Non-Profit Housing DOJ Announces New Voluntary Self-Disclosure Policy for U.S. Attorney Supreme Court: Salary, Not Daily Pay, Required for FLSA Overtime Time Is Money: A Quick Wage-Hour Tip on the Tip Credit, EDPB issues its Opinion on the EU-U.S. Data Privacy Framework, Hunton Andrews Kurths Privacy and Cybersecurity. See section 4671(b)(1). A taxable substance is defined as a substance that contains 20% or more by weight or value of any one of the chemicals listed in Section 4661 (down from 50% in the previous iteration of the law). 8Id. The Superfund Excise Tax is imposed on the manufacturer or importer of the listed chemicals, and the tax becomes due upon the first use or sale in the United States.15. No. The Infrastructure Bill lowered this threshold to 20%. Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. For purposes of claiming refunds under section 4662(e) for section 4661 tax paid on chemicals used in the production of an exported substance, in the case of a petition of an importer or exporter (i) that is filed and accepted by the Secretary before January 1, 2023, (ii) that seeks to add the substance to the list of taxable substances, and (iii) based on which the Secretary adds the substance to the list of taxable substances, both the filing date of the petition and the date the substance is added to the list of taxable substances will be deemed to be July 1, 2022. 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