Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). What is a taxable chemical? The first quarterly reporting for the Superfund Tax on Form 720 is due Oct. 31, 2022. Deloittte Tax
Cherry Bekaert LLP is a licensed CPA firm that provides attest services, and Cherry Bekaert Advisory LLC and its subsidiary entities provide tax and advisory services. If you would ike to contact us via email please click here. Semi-monthly payments should be made by the 15 th and 30 th of each month, but the IRS is providing relief from penalties for non-payment up through the first quarter of 2023. Please see www.deloitte.com/about to learn more about our global network of member firms. (added June 24, 2022), Q9. The Reinstated Superfund Excise Tax for Chemicals and Imported Substances As of July 1, 2022, The Infrastructure Investment and Jobs Act (IIJA) has reinstated excise taxes imposed on certain chemicals and imported chemical substances. Sitemap Superfund Chemical Excise Taxes are reported on Form 6627 (Environmental Taxes), which attaches to Form 720 (Quarterly Federal Excise Tax Return). 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. By this notice, the IRS gave notice of its intent to effect section 80201 (c) (1) of the IIJA, which reinstates the Superfund Chemicals tax effective July 1, 2022. In addition to having deep tax technical knowledge surrounding federal excise taxes, Deloitte leverages leading technology tools and processes. 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. 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. Notice 2021-66 does not specify the tax rate for each taxable substance. 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. 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. 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. 22The IRS does not require that the tax be included in the total cost of the product or separately line itemed in an invoice. | Agreed Terms of Use 429. Between 1990 and 1995, dozens of taxpayers petitioned the IRS to determine whether different chemical substances wouldqualify as taxable substances, primarily for purposes of export, so as to qualify for an exemption or refund. A12. Effectively tracking necessary data through the supply chain may be a challenge as well. Substances. Section 704.3. Houston | Words With Friends, Part 1: Insurance Requirements and Contracts, Legislator Proposes To Expand CFL To Encompass "Commercial CERCLA PFAS Scope May Broaden To Many More PFAS, AI Avatar App is the Latest Target of BIPA Class Action Litigation. The latest reiteration of the excise tax will be comprised of two separate taxes on (1) chemical sales and (2) chemical importers. November 24, 2021. The National Law Review is a free to use, no-log in database of legal and business articles. Are semimonthly deposits required? Section 4661 imposes a per-ton tax, ranging from $0.44 to $9.74 per ton on the following 42 chemicals: No such update has been issued to date, however. Yes. 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. However, importers with estimated tax totals of more than $2,500 per year are required to start making bi-weekly deposits to the Superfund Tax as early as July 29, 2022. More for Assisting with development and implementation of technology solutions to enable identification of taxable chemicals and substances, as well as exemptions. Notice 2021-66 suspended the procedure in Notice 89-61 because the IRS plans to issue a more current guidance on this matter. There are two separate Superfund chemical excise taxes: a tax imposed on the sale or use by the manufacturer or importer of "taxable chemicals" listed in section 4661, and a tax on the sale or use by the importer of "taxable substances" listed in section 4672 and IRS Notice 2021-66. Read our analysis and reports on the landmark Supreme Court sales tax case, and learn how it impacts your clients and/or business. What is the purpose of the Superfund Chemical Excise Taxes? Importers
of products and services. 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). discount pricing. Litigation Setback for Employers Under Illinois Biometric Information Senate Committee Holds Hearing on Future of Low Carbon Transportation North Carolina Senate Passes Compassionate Care Act at Exactly 4:20 States and Feds Signal Big Changes to Telehealth Prescribing. When are the new Superfund Chemical Excise taxes due? Richmond | Inferences, however, can be made from the absence of any mention in the law. A8. Please enable JavaScript to view the site. The chemicals Superfund tax was initially enacted in 1980 as a response to high-profile environmental disasters relating to hazardous waste. 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%. customs, Benefits & Chemical manufacturers and importers
The Superfund tax is assessed on the manufacturer or importer of these chemicals. See 40.0-1(c) and 40.6302(c)-1 of the Excise Tax Procedural Regulations. The term substance, therefore, excluded fabricated products that are molded, formed, woven, or otherwise finished into end-use products. Yes. Pending further guidance, the previously published tax rates, adjusted for the IIJA increases, and the examples outlined in Notice 89-61 could be helpful in calculating the tax on taxable substances and the potential tax exposure if a substance is subsequently added to the list. Draft the To Each Their Own: Agency Must Consider Experience of Each Partner in CMS Updates List of Telehealth Services for CY 2023, What You Need to Know About the New Tariffs on Imports from Russia. A14. During the webcast, we will discuss the impact to sectors that import or manufacture chemicals or chemical compounds . View Full Firm Disclosure. These taxes were in place until 1995 to fund the Federal Hazardous Substance Superfund, but expired in 1995. IRS issues Superfund Chemical Excise Taxes FAQs FS-2022-31, June 2022 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. Various exemptions exist for taxable chemicals. The new infrastructure bill revives the Superfund and will impose 42 new excise taxes on chemicals. Assisting with filing refund claims and reporting requirements around exemption certificates. The content and links on www.NatLawReview.comare intended for general information purposes only. Chicago | 4671(b)(2). There are other exemptions as welle.g., for substances that have a transitory presence during the smelting or refining process, or substances derived from coalbut the IRS has yet to issue specific guidance on procedures for claiming these exemptions, so the best recourse available at the moment is to keep documentation that supports the companys intention to take advantage of applicable exemptions. At what point in a transaction do the new taxes kick in? 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. 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. 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. A15. Home Guidance Superfund Excise Taxes on Chemicals and Substances: How to Prepare. Fast forward to today. Section 4671(a) imposes an excise tax on the sale or use of a taxable substance by the importer of the taxable substance. Applicants for registration may call 859-320-4091 and select menu option #1. 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. 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). Explore all Connect with other professionals in a trusted, secure, industry questions. 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. Tampa | The Superfund Excise Tax will go back into effect on July 1 st, 2022, after not being in place for over 26 years. Who is responsible for reporting and paying Superfund chemical excise taxes? Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. How are substances added to or removed from the list of taxable substances? 3684 (Aug. 2, 2021). The Superfund tax on chemicals is also a tax on the import of taxable substances. The original excise tax expired on December 31, 1995. I am an importer of taxable substances. Try our solution finder tool for a tailored set Do Issuers Fail To File Form Ds Because They Fear Trolls? Telephone and Texting Compliance News: Regulatory Update February 2023. The term " Superfund " refers to chemical excise taxes imposed by the IRS on certain domestically produced and imported chemicals, and imported substances. Internal Revenue Code (IRC) section 4671 thereby imposed the same tax on imported substances as was already included in the cost of domestically purchased substances. 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. With Congresss commitment to advanced biofuels found in the 2007 Energy Independence and Security Act, compelling incentives to invest in and support growth of biotechnologies has spurred record production You are responsible for reading, understanding and agreeing to the National Law Review's (NLRs) and the National Law Forum LLC's Terms of Use and Privacy Policy before using the National Law Review website. 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. 6Id. A third excise tax on crude oil and petroleum products was reinstated in the Inflation Reduction Act . *Note: Self-assessing based on 10% of appraisal value will almost always yield a higher tax rate than either of the other methods. 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. chrigong@deloitte.com. 2022 Superfund excise taxes. The more you buy, the more you save with our quantity Taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the tax. 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. Will the U.S. Supreme Court Make Marijuana Legal? 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. 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 . 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. Taxpayers may petition the IRS to determine whether a substance falls within the taxable substances list. An exporter who did not pay the initial assessment of the Superfund Tax may still be entitled to the refund if certain condition are met. The Notice essentially allows taxpayers untilOctober 31, 2022, to determine whether a Superfund excise tax applies and to calculate how much taxed is owed. The notice also addresses registration requirements to exempt certain sales and uses of taxable chemicals from tax. and services for tax and accounting professionals. Deloitte Tax
Persons wanting to engage in tax-free sales of intermediate hydrocarbon streams containing organic taxable chemicals and/or conduct tax-free inventory exchanges must be registered by the IRS under Activity Letter G. Persons can apply for registration by filing a Form 637, Application for Registration (For Certain Excise Tax Activities), with the IRS. Taxable substances are those substances listed in either section 4672(a)(3) of the Code or Notice 2021-66. 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). Desperate Times, Desperate Measuring Cups FTC Brings Enforcement Trending in Telehealth: February 20 26, 2023, IRS Sets Deadline For Using 401(K) Plan Forfeitures, How Generative AI Generates Legal Issues in the Games Industry, DOJ Announces New Nationwide Voluntary Self-Disclosure Policy. US Executive Branch Update February 28, 2023. In fact, companies that export products comprised of taxable chemicals or substances are entitled to a refund if they paid prior to manufacturing. This assessment should include a review of the transaction life cycle, master data setup, cost computation and recognition, and general entry posting. No. Is there a way to check the status of an application for Activity Letter G registration? 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). Charlotte | 9601-9675 (2021). At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. Exporters
When do the Superfund chemical excise taxes go into effect? Due to the complicated nature of the tax assessments, and the detailed information required, gaps in existing systems and processes may exist. The Superfund tax rate will now be adjusted annually to . Deloitte Tax
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