The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. Excise taxes are reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. 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. The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. This new tax does not need to add additional costs to your products. FHA Implements COVID-19 Property Charge Repayment Plan for HECM America the Beautiful: Number of New Citizens at 15-Year High. Charter Brokerage is the only company that will work with the client through the entire process of maximizing your credits. 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. More. For more information on cookies and how we use them, view our Cookie Policy. When the Superfund tax was last applied back in 1995, a taxable substance was required to have 50% of a chemical. The National Law Review - National Law Forum LLC 3 Grant Square #141 Hinsdale, IL 60521 Telephone (708) 357-3317 ortollfree(877)357-3317. What is a taxable substance? Petitions to Add Polyoxymethylene and Polyphenylene Sulfide. Any taxable chemical or substance also qualifies for a Superfund Tax Credit. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. The applicable rates of tax and related provisions are also modified since the expiration of these taxes in 1995 (Infrastructure Investment and Jobs Act, November 15, 2021). Tax is due upon the first use or first sale of a listed chemical in the United States. These credits are accrued when a taxable chemical or taxable substance is exported. 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. In addition, exporters of chemicals and substances which were subject to the Superfund Tax can request a refund of the tax previously paid. 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). Deposits, if required, must be made electronically, often requiring submission before the actual due date to process timely. In order to pay for WebClaims for refund of excise taxes. Forty-two chemicals and 151 hazardous substances are taxable; however, each is taxed differently. Sign up to receive the latest BDO news and insights. 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. A12. 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 first reporting of Superfund excise taxes is due October 31, 2022 (for the period July 1, 2022, through September 30, 2022). It started with the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 19801986. Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. 429. The money gathered from the taxes was used to fund the clean-up of hazardous waste disposal sites across the United States. The section 4661 tax is imposed as a rate per ton of a taxable chemical. A Superfund tax is imposed when a taxable chemical is imported, or is domestically produced for sale or use unless an exemption applies. (added June 24, 2022), Q6. 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 429 (2021)), effective July 1, 2022, with modifications to the applicable rates of tax and other provisions related to those taxes. Unlike many filings, due dates for deposits are accelerated if the typical due date falls on a Saturday, Sunday, or a legal holiday in the District of Columbia. She is passionate about supporting animal rescue organizations. 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. Inferences, however, can be made from the absence of any mention in the law. In these cases, the other person would be liable for paying the excise tax, not the initial importer. 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. A10. These taxes expired more than 25 years ago. It is not clear that that the IRS can offer any more relief to taxpayers than has already been given in Notice 2022-15. 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 Infrastructure Investment and Jobs Act not only reinstated the Superfund excise tax but also expanded its rate and reach. There are actually two types of Superfund excise taxes: a tax on the sale or use of chemicals by the manufacturer, producer or importer of those chemicals and a tax on the sale or use of imported substances comprised of more than 20 percent in weight or value of taxable chemicals. The IRS determined this threshold in consultation with the Environmental Protection Agency and U.S. Customs and Border Protection. Due to the complicated nature of the tax assessments, and the detailed information required, gaps in existing systems and processes may exist. 2017 Accordingly, the procedural rules in26 C.F.R. The exemptions identify taxable chemicals that are exempt due to their specific use. Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. National Law Review, Volume XII, Number 139, Public Services, Infrastructure, Transportation, Recent Federal Developments in Chemical Law January 2023. (added June 24, 2022), Q12. Such exemptions include methane or butane used as a fuel, chemicals used in the production of fertilizer (including nitric acid, sulfuric acid, ammonia, or methane) and substances derived from coal. Superfund is also imposed when a taxable substance is imported for consumption, use, or warehousing. The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. 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. Notice 2021-66 does not specify the tax rate for each taxable substance. 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. 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. 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. 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. 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. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. A6. Providence | This ABA Tax Times article provides an illustration of the challenges faced by the oil and gas industry in applying one of these special rules related to two products derived from natural gas: methane and butane. The Aerojet General Corp. Superfund site covers about 5,900 acres near Rancho Cordova. It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. 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. Heres more on what is included in the Superfund Excise Tax and what to keep an eye out for. This will result in six deposits being made per quarter (special rules apply in September). 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. 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. Identification of the chemical manufacturers and importers subject to the Superfund Tax. 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. Read about their experiences and a few lessons learned along the way. Are semimonthly deposits required? The Infrastructure Bill reinstated the Superfund Excise Taxes on chemicals and taxable substances, effective July 1, 2022. Final Regulations Governing Illinois Equal Pay Acts Certification Weekly Bankruptcy Alert: January 17, 2023 (For the week ending Bankruptcy Court Allows Service of a Subpoena Via Twitter. She specializes in pass-through entity and multi-state compliance for family owned businesses in a variety of industries including manufacturing and distribution, retail and real estate. See also section 4661(b) for the tax rate for taxable chemicals. Second, an importer or exporter of a substance (or other interested person) can petition the Secretary to add the substance to or remove the substance from the list of taxable substances. Notice 2022-15 recognizes the burden on taxpayers, explicitly noting the short time frame between the reinstatement of the Superfund chemical taxes and the due date of the first deposit, the unavailability of the 40.6302(c)-1(b)(2) deposit safe harbor in 2022, the possible difficulties of computing the correct amount of tax during the third calendar quarter of 2022 (which is both the first calendar quarter the taxes are in effect and the look-back quarter for the first calendar quarter of 2023), and the number of new taxpayers owing Superfund chemical taxes that have not previously had to comply with the deposit requirements of section 6302.. Tech trends in Atlanta | 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. Reconciling The Infrastructure Investment and Jobs Act included the reauthorization of the Superfund law (P.L. The Taxpayers do need to make semi-monthly deposits of the Superfund Tax, however, there is some relief available for missing payments through March 2023. 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. Are you capturing all of them? In order to pay for the provisions in The Infrastructure Investment and Jobs Act (also referred to as the Bipartisan Infrastructure Bill), Superfund was reinstated with double the tax rate on chemicals and a vast expansion of substances. The calculation of the superfund excise taxes is complex, and accurate reporting data can help companies reduce their tax burden. Legal Disclaimer|Privacy Policy | Copyright 2022 IGenFuels LLC. 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.
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