(Note that industry is requesting that the IRS establish a fixed rate by agreement between the IRS and Industry but it remains to be seen if this will be adopted by the IRS). Permit & License. Copyright 2023 BDO USA LLP. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. A1. Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. Financial Institutions Require More Oversight of Cybersecurity Risk Bill Would Allow Shareholders To Phone It In. 177-58) and was signed on November 15, 2021. New Jersey enacted a new tax law (A.B. These substances consist generally or partially of chemicals listed in Section 4661. Specifically, the due date for the deposit accelerates to the immediately preceding date that is not a Saturday, Sunday, or legal holiday. Florida Woman Sentenced to Prison for False Statement to Investigator Idaho Man Indicted for Federal Hate Crime Against LGBTQ Residents of EPA Proposes Cleanup Plan for Sulphur Bank Mercury Mine Superfund B&C Biobased and Sustainable Chemicals Practice Group Bergeson & Campbell, P.C. The IRS is expected to issue guidance prior to theJuly 1, 2022, effective date of the Superfund excise taxes. Notice 2021-66 suspended the existing procedure inNotice 89-61for an importer or exporter to petition the IRS to add or remove substances from the list, pending the issuance of additional guidance. A12. . The Treasury Department and the IRS (collectively the IRS) have released Notice 2022-15, which provides relief for certain reinstated Superfund chemical excise taxes A Superfund tax is imposed when a taxable chemical is imported, or is domestically produced for sale or use unless an exemption applies. Petitions to Add Polyoxymethylene and Polyphenylene Sulfide. 3/17/2022. Aside from this quarterly filing, taxpayers with a quarterly liability of greater than $2,500 will be required to make semi-monthly tax deposits of at least 95 percent of the net tax liability incurred during the tax period (unless a safe harbor applies). The National Law Review - National Law Forum LLC 3 Grant Square #141 Hinsdale, IL 60521 Telephone (708) 357-3317 ortollfree(877)357-3317. Accordingly, a manufacturer, producer, or importer of a taxable chemical is subject to the section 4661 tax on the sale or use of the taxable chemical on or after July 1, 2022. July 1, 2021 thru June 30, 2022. Substances. A11. However, given the related compliance processes that need to be established (e.g., automating data capture, gathering exemption documentation, and return preparation and filing) and matters that need to be addressed (e.g, Form 637 registration and taxable substance listing), taxpayers should consider taking this opportunity to evaluate whether their overall SCET program is sufficiently robust and meets the greater needs of their organization for example, by reprioritizing activities within their project plans. The microbusiness also charges $5 for delivery. 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. - 2023 PwC. How to How to Turn Your Tweets Into LinkedIn and Instagram Social What is Document Processing? Expanded Employee Retention Credit (ERC) & how our professionals can assist you. The taxes apply to any taxable chemical under Internal Revenue Code (IRC) 4661 and any taxable substance under IRC 4671. 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. The Infrastructure Bill reinstated the Superfund Excise Taxes on chemicals and taxable substances, effective July 1, 2022. Superfund Excise Tax on Chemicals Has Been Revived Effective July 1, 2022, Congress has revived the Superfund Excise tax on Taxable Chemicals and Taxable Substances that previously existed from 1980 through 1995. Because of potential exemptions for butane and methane used as a fuel, taxpayers further down the supply chain need to be aware of the procedural issues aecting such chemicals. The Joint Committee on Taxation estimates these excise taxes combined would increase revenues by over $52 billion over a 10-year period. 117-169), which was signed into law on August 16, 2022, reinstated the Petroleum Superfund Tax at a rate of 16.4 cents per barrel. Form 6627, Environmental Taxes, previously used to report the Superfund Tax, will likely be used again to report the tax owed. 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. (added June 24, 2022), Q2. See the full disclaimer. Manufacturers, producers, or importers that sell or use any of these chemicals must pay a tax of $0.22 to $4.87 per ton, depending on the chemical. Drive maximum value across your supply chain. If you are not responsible for paying and reporting the excise tax to the IRS but purchase any of the listed chemicals or substances from your suppliers, review the potential economic impact of the reinstated excise tax on your company. Semi-monthly deposits are required, however. This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. Are Your Companys Year-End Compensation Accruals Tax Deductible? The Inflation Reduction Act (Pub.L. The first return, for the calendar quarter ending on September 30, 2022, is due by October 31, 2022. The first quarterly Superfund Tax reporting on Form 720 is due October 31, 2022. 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. Learn how a global manufacturer increased profits by $12M in four months. Review your business processes, entities and products to determine the effect on contracts, invoicing, cost recovery, technology and potential future audits. Class Action Year in Review: The Rise Of The Self-Tapping Website? The excise tax applies to companies that manufacture, produce, or import any of the 42 specific chemicals listed inSection 4661of the Tax Code, most of them common in consumer products, including ammonia, butane, benzene, and mercury. 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. Texas Unclaimed Property, a Division of the Texas Comptroller of Public Accounts (Texas Comptroller), is increasing compliance efforts through outreach. Operating now under a new set of rules, organizations manufacturing or importing certain chemicals now face new tax challenges. COPYRIGHT 2023 RKL. July 1, 2022. A diversity, equity and inclusion video series. It's important to note that the tax only applies to imported chemicals and hazardous substances. (added June 24, 2022), Q6. 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. Providence | 429. There are 42 chemicals listed in section 4661(b). Section 4662(c)(2) provides an additional exemption from tax liability where a company imports a taxable chemical and exchanges that chemical as part of an inventory exchange with another person. The relief applies to the first three quarters of the SCET, i.e., the third and fourth quarters of 2022 and the first The IRS noted that the full list of taxable chemicals and substances could change over time. Certain non-fuel and agricultural uses of some of these chemicals were exempted from the excise tax. WebEffective July 1, 2022, Congress has revived the Superfund Excise tax on Taxable Chemicals and Taxable Substances that previously existed from 1980 through 1995. A3. (added June 24, 2022), Q7. 338(h)(10) Transaction Structure: Pros and Cons for Sellers and Buyers. Please see links for details: 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. For this example, the sales tax rate is 8.5 percent, the cannabis excise tax is 15 percent, and there is a 10 percent local business tax. The NLR does not wish, nor does it intend, to solicit the business of anyone or to refer anyone to an attorney or other professional. Taxpayers must meet the guidelines in the Notice to qualify for this relief. See section 4672(a)(1). 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). The Infrastructure Investment and Jobs Act (Pub.L. 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.. Superfund excise taxes are reported on Form 6627, Environmental Taxes, which must be attached to Form 720 Quarterly Federal Excise Tax Return. 2022-19: Relief for S Corporation Owners, Financial Secrecy Under Attack in the United States: Final Regulations Issued for Beneficial Ownership Information Reporting, Cybersecurity Maturity Model Certification, Business Intelligence and Data Analytics Services, Digital Strategy & Transformation Services, Government Contractor Consulting Services, SBA 8(a) Business Development Program Consulting Services, Information Technology Audit & Consulting, Cybersecurity Maturity Model Certification (CMMC), Outsourced Sales Tax Compliance and Managed Services, IRS issues Superfund Chemical Excise Tax Rates, IRS issues Superfund Chemical Excise Taxes FAQs, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. (added June 24, 2022), Q9. 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. Cherry Bekaert LLP and Cherry Bekaert Advisory LLC practice in an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations and professional standards. Notice 2021-66 suspended the procedure in Notice 89-61 because the IRS plans to issue a more current guidance on this matter. (added June 24, 2022), Q11. IRC section 4661(b) lists 42 chemicals that are once again subject to the Superfund Excise Tax effective July 1, 2022. Relief provided for Superfund chemical excise tax semimonthly deposits April 2022 In brief 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 State Green and Sustainability Claims: A Roundtable Discussion. A substance is listed as a taxable substance if it is listed under section 4672(a)(3), or if the Secretary of the Treasury or her delegate (Secretary) has added it to the list of taxable substances pursuant to section 4672(a)(2) or (4).
