UK Data Protection Reform: who would want to be a Senior Responsible Dual Purpose Communication Why It Is Important for In-House Counsel Editors Roundtable: Predictions About the Upcoming Farm Bill. A petition may be submitted to add a substance to the List if taxable chemicals constitute more than 20 percent of the weight or value (as an aggregate of all taxable chemicals) of the materials used to produce such substance. The tax rate for taxable substances is dependent on the individual chemical composition of the substance.19 For example, if polypropylene is composed of 50% propylene (a listed taxable chemical), then the rate for polypropylene would be $9.74 x 50%, or $4.87. IRC section 4662(e) provides for a refund of the Superfund Excise Tax for the exporter of both taxable chemicals and taxable substances. 1043, regarding deposits of the excise tax imposed on certain chemicals under 4661 of the Internal Describes how synthetic organic substances and inorganic substances are eligible for addition to the list of taxable substances through weight or value test. The IRS also recently releasedRevenue Procedure 2022-26, which provides the exclusive procedures for requesting a determination under Section 4672(a)(2) of the Internal Revenue Code (Code) that a substance be added to or removed from the list of taxable substances under Section 4672(a) of the Code (List). 4661. Legislative proposals would reinstate a third excise tax. As reported in our May 19, 2022,memorandum, the Superfund excise tax on certain chemical substances was reinstated beginning on July 1, 2022, under the Infrastructure Investment and Jobs Act. No 4661 attaches when the manufacturer, producer, or importer of a chemical mixture containing one or more tax-paid chemicals, or a subsequent purchaser of such chemical mixture, dilutes the chemical mixture with a solvent to change the concentration of the tax-paid chemical or chemicals in the chemical mixture, provided the solvent is not a taxable chemical. 16I.R.C. SaraBeth Smith Deloitte Tax 20I.R.C. A6. Deloittte Tax 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. 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. How do I calculate the section 4671 tax? WebRecommended field of study: Taxes. (added June 24, 2022), Q5. CPE credit offered: up to 1.2 depending on duration. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. Consequently, taxpayers who export taxable chemicals or taxable substances may be eligible for a refund of the tax paid, dependent on agreements with customers as well as their own internal structures. Hydrocarbon streams containing mixtures of organic taxable chemicals. 4671. 19I.R.C. The National Law Review - National Law Forum LLC 3 Grant Square #141 Hinsdale, IL 60521 Telephone (708) 357-3317 ortollfree(877)357-3317. What are the Superfund chemical excise taxes? The FAQs note that number will likely change as substances are added to or removed from the List. A provision of the Infrastructure Investment and Jobs Act (Pub. The Superfund excise tax will apply to a list of taxable chemicals and taxable substances, as of July 1, 2022, through December 31, 2031, if not extended. WebRecommended field of study: Taxes. This notice extends temporary relief provided in Notice 2022-15, 2022-18 I.R.B. The Yes. WebUnder the Infrastructure Act, beginning July 1, 2022, manufacturers, producers and importers will be responsible for an excise tax on a universe of 42 chemicals, or on substances made from them, which will be directed to The tax would apply to the import of the taxable chemical only if the import of the chemical were contemporaneous with the sale of the chemical. Recent U.S. Sanctions, Export Controls On Russia And Belarus How to Implement Payment Plans for Lawyers, The UK Data Protection Regulator Fines TikTok 12.7 Million, Hunton Andrews Kurths Privacy and Cybersecurity, Hedging: Favorable Tax Treatment Requires Careful Compliance, Arizona House Introduces Potential General Franchise Law. Reinstatement of the Superfund excise tax The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. Chemicals. WebThe Treasury Department and the IRS (collectively the IRS) on March 27 released revised guidance on application of the reinstated Superfund chemical excise taxes (SCET) in the form of Notice 2023-28 and Rev. Guidance Regarding Required Changes to Severance/Separation Agreements, FDA Holds Joint Meeting on Food Safety with Mexican Counterparts. We will also share insights into aspects of the Superfund Tax clarified by the proposed regulations, issues that the proposed regulations did not address, and new uncertainties potentially created by the proposed regulations. For instance, necessary data elements may not be available to properly identify the taxable chemicals and components. These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. 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. There are two separate Superfund chemical excise taxes: a tax on the sale or use of "taxable chemicals" under section 4661 of the Internal Revenue Code and a tax on the sale or use of imported "taxable substances" under section 4671 (all section references are to the Internal Revenue Code unless otherwise stated). The Superfund Excise Taxes will be reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. 2022-26, 2022-29 I.R.B. 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. Chemical mixtures include alloys, solutions, suspensions, and colloids. If you would ike to contact us via email please click here. Webinar Materials Available: Chinas New Personal Data Export International Trade Practice at Squire Patton Boggs. The new Superfund Chemical Tax, which is set to expire on December 31, 2031, unless otherwise extended, is estimated to generate $14.5B in fund revenue over the next decade at an average of $1.44B annually. Analyzing transactional and master data gaps given existing company system capability and data quality.

1Investment and Jobs Act, Pub. Biobased chemicals and biofuels have taken root thanks to both popular appeal and political support. 3684 (Aug. 2, 2021). Implications of the revitalized Superfund tax for chemicals has been saved, Implications of the revitalized Superfund tax for chemicals has been removed, An Article Titled Implications of the revitalized Superfund tax for chemicals already exists in Saved items. 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. [3] Applicability The Superfund Chemical Tax is comprised of two main regimes, a tax on chemicals [4] and a tax on chemical Taxpayers may petition the IRS to determine whether a substance falls within the taxable substances list. At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. FORVIS, LLP. See Notice 2021-66, 2021-52 I.R.B. There are 42 chemicals listed in Section 4661(b). 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). If, on the other hand, a company manufactures a paint component in the United States using a taxable chemical, the company would be taxed on the use or sale of the taxable chemical regardless of the quantity of the chemical in the product. See also section 4661(b) for the tax rate for taxable chemicals. Heavy metals, halogens, acids, and bases are significant raw materials for many toxic inorganics.) During 1979 Senate discussions, it was estimated that expenditures for hazardous waste disposal sites related to chemicals would be $200 million (versus $40 million for sites related to crude oil).3 During this congressional hearing, it was determined that the proposed system of fees would cover: (1) crude oil; (2) petrochemical feedstocks; and (3) certain highly toxic and/or high-volume inorganic materials including heavy metals, halogens, acids, bases, and ammonia.4. B&C Biobased and Sustainable Chemicals Blog, Form 720, Quarterly Federal Excise Tax Return. 22The IRS does not require that the tax be included in the total cost of the product or separately line itemed in an invoice. 9See I.R.C. Companies may want to analyze the proposed regulations to determine their potential impact; and consider submitting comments. 901, for the initial list of substances that the Secretary has added to the list of taxable substances. 96-125 at 14878 (1979). However, Notice 2022-15, 2022-18 I.R.B. Statement in compliance with Texas Rules of Professional Conduct. Part of the Tax News & Views podcast series. Any later updates or modifications to these FAQs will be dated to enable taxpayers to confirm the date on which any changes to the FAQs were made. No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. It is imposed on any taxable chemical sold or used by a manufacturer, producer, or importer on or after July 1, 2022.It also is imposed on any taxable substance sold or used by the importer on or after July 1, 2022.The Superfund Tax It is critical for companies to engage in discussions with their IT departments early to prepare for the new reporting requirements. Read on for, This 3-minute videoclip, taken from a webinar presented by Mike Roney and Wes Ernst, highlights why the NMTC program works by driving real, This 7-minute video clip, taken from a webinar presented by Mike Roney and Wes Ernst, highlights the discussion of how the New Markets Tax, Subscribe to our content or get in touch with us today. The IRS is working on calculating tax rates for taxable substances and will release the tax rates as they become available. The IRS published IRS Notice 2021-66 on December 13, 2021, which included the list of approximately 100 taxable substances previously considered by the IRS in the early 1990s via individual IRS Notices, which will now be subject to the Superfund Excise Taxes (see Exhibit C).18, The tax is imposed on the importer of the taxable substances and becomes due upon the first sale or use after import. Tax News Update Email this document Print this document, Wednesday, April 19 | What you need to know about the new Superfund Tax Proposed Regulations (2 pm ET). Technology/systems impacts At the time of publication of these FAQs, 151 substances are listed as taxable substances. 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. Chemical manufacturers and importers Congress directed the Department of Treasury to publish an additional list of the taxable substances by January 1, 2022. There is nothing intuitive or easy about this tax -- neither knowing when it applies nor computing it. A2. Kansas City has changed the procedure in which taxpayers may request a refund for the Kansas City earnings tax. However, the Build Back Better Act currently under consideration in Congress proposes to reinstate the tax and increase the rate to 16.4 cents per barrel. Under section 3(a) 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 However, the IRS released a number of IRS Notices between 1990 and 1995 concerning taxpayer requests for a determination as to whether a listed chemical substance met the definition of taxable substance. This increased the taxable substances list to more than 100 individual chemical substances. Accordingly, these FAQs may not address any particular taxpayer's specific facts and circumstances, and they may be updated or modified upon further review. Effective July 1, 2022, after a 25-year expiration, Congress reinstated two excise taxes on chemicals and imported hazardous substances via the Infrastructure Investment and Jobs Act. 18I.R.S. 6Id. 88 Fed. IRS Issues New Proposed Regulations on Superfund Excise Taxes, Navigating Nearshoring in Mexico: Direct Investment, International Tax, & Transfer Pricing Considerations, Refund Process for the Kansas City Earnings Tax, Kentucky Enacts Pass-Through Entity Tax Election, Intellectual or Developmental Disabilities & Behavioral Health, This section included clarification by adding that the tax under 4661 attaches when the manufacturer, producer, or importer of a taxable chemical first sells or uses the taxable chemical.. In our experience, it generally takes at least three months to fully implement and test a new business process and system implementation. Taxable chemicals that are sold or used in the United States are taxed regardless of the quantity sold or used. 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. Learning objectives: Understand the recently enacted Infrastructure legislation as it pertains to the Superfund chemicals excise tax; identify the tracking, importation, and tax implications of the legislation upon a company; provide a perspective on how leading-practice organizations are planning to comply. The Jobs Act also reinstated the Superfund chemicals excise tax on an importer's sale or use of any taxable substance pursuant to 4671 (Taxable Substances Excise Tax). Clarifies that inventory exchanges by two parties registered with activity letter G 637 registration qualify as exempt and provides a sample of the model certificate to be used. ; Mo B. 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. Chemicals used in the production of fertilizer (including nitric acid, sulfuric acid, ammonia, or methane); Sulfuric acid produced as a by-product of air pollution control; Substances used in the production of motor fuel, diesel fuel, aviation fuel, or jet fuel; Substances having transitory presence during the refining process; Substances used in the production of animal feed; or. (added June 24, 2022), Q4. 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. A5. The U.S. Treasury Department and IRS today released for publication in the Federal Register proposed regulations (REG-105954-22) providing guidance on the application, effective July 1, 2022, of the reinstated excise taxes imposed on certain chemicals and certain imported substances (known as the Superfund chemical taxes). 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. 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. Webthe NPL are called Superfund sites. 48839 (Oct. 21, 1983). CIT Upholds Section 301 Tariffs. The newly reinstated tax has caught many off guard, and most subject to the tax are struggling with computing and reporting the tax. The Infrastructure Act essentially doubles these rates with taxes ranging from $0.44 per ton to $9.74 per ton. Acetylene Benzene Butane Butylene Butadiene Ethylene Methane Naphthalene Propylene Toluene Xylene Ammonia Antimony Antimony trioxide Arsenic Arsenic trioxide Barium sulfide Bromine Cadmium Chlorine Chromium Chromite Potassium dichromate Sodium dichromate Cobalt Cupric The Superfund chemical excise taxes previously expired on December 31, 1995. L. No. 12I.R.S. There are two separate Superfund chemical excise taxes: a tax on the sale or use of taxable chemicals and a tax on the sale or use of imported taxable Clarifies that the term taxable chemical does not include any substances derived from coal. The Infrastructure Bill lowered this threshold to 20%. See Section 4671(b)(2). Exceptional organizations are led by a purpose. A3. As part of the Infrastructure Investment and Jobs Act signed into law November 15, 2021, the Superfund Excise Taxes go into effect July 1, 2022. The excise tax, which went into effect in July 2022, was reinstated after nearly 30 years as part of the 2021 infrastructure law to help fund the cleanup of hazardous sites. On March 27, 2023, the IRS published an advanced copy of the new proposed regulations related to the federal Superfund chemical excise taxes imposed on certain chemicals and certain imported substances, effective July 1, 2022. FS-2022-31, June 2022. Additionally, Form 6627, Environmental Taxes, was previously used to report the Superfund Excise Taxes when the taxes were last in effect, and this form will be used again to report the taxes owed. We provide an overview of the origins of the Superfund Excise Tax and take a closer look at the revitalized tax (effective July 1, 2022), as included within the Infrastructure Investment and Jobs Act (the The Infrastructure Bill), signed into law on November 15, 2021.1 Through this lens, we highlight issues to consider in evaluating the Superfund tax on chemicals and chemical substances. The FAQs state that [t]he 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.. Sixth Circuit Limits Anti-Kickback Claims Brought Under False Claims No Written Change Order? The excise tax was applied to a list of 42 chemicals used predominantly in the oil, gas, and chemical industries. Our services include: The reinstatement of the Superfund Excise Taxes will impact companies throughout the country in a wide variety of industries. Under certain state laws the following statements may be required on this website and we have included them in order to be in full compliance with these rules. Assisting with risk analyses and internal processes (design or documentation). Effectively tracking necessary data through the supply chain may be a challenge as well. The law imposes a tax on any taxable chemical sold by the manufacturer, producer, or importer. Provides a sample copy of the model certificate of the taxable chemical registrant. Section 4672(a)(2) of the Code allows an importer or exporter of any chemical substance to request a determination of whether such substance should be listed as a taxable substance on the list or be removed from the list. Deloitte Tax Social login not available on Microsoft Edge browser at this time. 2023. This Week in 340B: March 28 April 3, 2023. Below is the current list of taxable chemicals. According to the FAQs, importers are not required to use the IRS-prescribed tax rates for the Section 4671 tax and may calculate their own rates. IRS issues Superfund Chemical Excise Taxes FAQs. 15I.R.C. Weekends Revisited? The rationale for the fee collection point was so that the fee would be equally distributed among all hazardous waste generators and suppliers.6. Defines conversion factors, importer, drop shipments, predominant method of production, taxable chemical, taxable substance, weight, and value tests. 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. Reg. Please see www.deloitte.com/about to learn more about our global network of member firms. Is Falsifying A Business Record A Crime In California? Heres how to analyze the implications and plan now for the revitalized Superfund Excise Tax. Provides that a manufacturer or producer may not sell a taxable chemical tax free to a first purchaser for resale to a second purchaser if the second purchaser does not intend to export the taxable chemical itself but instead plans to sell it to a third purchaser that will resell the taxable chemical or export it. Organic: Relating to compounds that contain hydrocarbon groups. 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. The IRS recently released guidance (Notice 2021-66,) providing key information on the excise taxes imposed on certain chemicals and substances under Sections From 1983 to 2009, the electroplating plant continued to operate as the chemical contaminated the factory building, soil, and groundwater in the area. Recommended field of study: Taxes. In general, the excise tax on taxable chemicals is imposed on the sale or use of taxable chemicals by This course has no prerequisites or advanced preparation. 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. The 180-day determination period may be extended by agreement between the petitioner and the IRS. When do the Superfund chemical excise taxes go into effect? The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. Provides that a manufacturer or producer of a taxable chemical may sell a taxable chemical tax free only if the person who purchases the taxable chemical from the manufacturer or producer (first purchaser) intends to export the taxable chemical or resell it to a second purchaser that intends to export the taxable chemical. See section 4671(b)(1). Extension of Temporary Relief Related to the Penalty for Failure to Deposit Superfund Chemical Taxes . Assisting with filing the federal excise tax returns and semi-monthly deposit reporting. NFA Imposes New Compliance Obligations on Members Engaged in Digital PE Firms Face Liability for the Conduct of their Portfolio Companies Washington Energy & Sustainability Update April 2023, U.S. Executive Branch Update March 3, 2023, Top 10 Issues Facing Consumer Products Industry in 2023.

This box/component contains JavaScript that is needed on this page. A petition may be submitted to remove a substance from the List if taxable chemicals constitute 20 percent or less of the weight and 20 percent or less of the value of the materials used to produce such substance. The chemicals selected to be subject to the fee were based on two categories: petrochemical feedstocks and inorganic raw materials. 90, provides the procedures for importers, exporters, and interested persons to request a determination that a substance be added to or removed from the list.. 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). In brief. 4672(a)(2)(B)(2021). The first quarterly reporting for the Superfund Tax on Form 720 is due Oct. 31, 2022. 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. (added June 24, 2022), Q9. Specifically, taxpayers affected by these regulations include manufacturers, producers, and importers that sell or use taxable chemicals and importers that sell or use taxable substances. The original Superfund taxes targeted three areas: petroleum excise taxes, chemical feedstock excise taxes, and environmental income taxes. If youre managing taxes related to the sale or use of chemicals or hazardous substances identified by the IRS, volume-based tax calculations can be a manual and complex process. 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. Who is responsible for reporting and paying Superfund chemical excise taxes? A10.

Analyzing and assisting in documenting available exemptions (e.g., certain taxable chemicals used in the production of fuel). Provides the circumstances under which a credit or refund (without interest) of the 4661 tax is allowed to the person who paid the 4661 tax. Separate petitions must be submitted for each substance to be added to or removed from the List. A1. 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). Proc. SEC Revisits Regulation S-P After Twenty Years of Innovation to Utility Ownership of Renewable Energy Projects; A Review of the Tax USCIS to Prioritize Pending I-539 Applications When Employers File I- A Sight for Sore Eyes: Sixth Circuit Rejects Governments Expansive EPA Will Hold GenRA Training on May 23, 2023, FTC Issues Three Important Reminders About HSR Compliance, IRS Releases Guidance on Energy Community Credit Adder. 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. 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. DTTL and each of its member firms are legally separate and independent entities. Taxpayers must make semimonthly deposits of the Superfund chemical excise taxes. Time: 2:00-3:00 p.m. The recently passed Infrastructure Investment and Jobs Act reinstated Superfund excise taxes effective July 1, 2022, doubled the applicable tax rates, and expanded the reach of the tax.

DeloitteTax The chemical New Jersey American Water Co. found, 1,4-Dioxane, is a byproduct of plastic manufacturing that is considered a likely carcinogen by the federal (added June 24, 2022), Q2. Taxable substances are defined in 4672 as: (i) the 50 substances included on the initial list of taxable substances in 4672(a)(3), (ii) substances that exceed a 20% The IRS will publish a Notice of Filing in theFederal Register, beginning a 60-day comment period on the petition.