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. According to the IRS, 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. Semi-monthly deposits are required, however. How Law Firms Can Leverage ChatGPT To Get More Cases, FTC Pursues Crackdown on Employee Noncompetes, Chapter 93A Litigation Newsletter | 4th Quarter 2022, Landmark NLRB Decision Expands Labor Violations, Weekly IRS Roundup January 9 January 13, 2023. A6. A1. The content and links on www.NatLawReview.comare intended for general information purposes only. Its tax re-imagined. 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. 177-58) and was signed on November 15, 2021. 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. The Superfund chemical excise taxes are reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return. The Superfund chemical taxes should be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. Taxable Chemicals. These credits are accrued when a taxable chemical or taxable substance is exported. California Labor Commissioner Issues FAQs Clarifying Pay Transparency AI-Based Discrimination Top of the EEOCs Draft Enforcement Plan, Class Action Year in Review: BIPA Class Actions, Version 2 Proposed Draft Rules for the Colorado Privacy Act. Biobased chemicals and biofuels have taken root thanks to both popular appeal and political support. Kti Chemicals Inc is a superfund site located at 1170 Sonora Ct, Sunnyvale, CA 94086. Our use of the terms our Firm and we and us and terms of similar import, denote the alternative practice structure of Cherry Bekaert LLP and Cherry Bekaert Advisory LLC. Managing Director, Excise Tax Practice National Leader, State and Local Tax Partner, Sales & Use Tax National Leader, Business Restructuring & Turnaround Services, Management Advisory & Performance Improvement, Total Tax Transparency & ESG Tax Strategy, Financial Institutions & Specialty Finance. 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. As we mentioned above, this tax is only for companies importing chemicals or hazardous substances on the list and filing an IRS Form 720. System and Organization Control Reporting (SOC), GDPR General Data Protection Regulation. In Notice 2021-66 the IRS published a list of 100 additional substances subject to the Superfund Tax. 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. The Superfund Excise Tax: Back in action. During the first, second, and third calendar quarters of2023, the IRS will not withdraw a taxpayers right to use the deposit safe harbor rules of the Excise Tax Procedural Regulations at 26 C.F.R. While the final taxable substance list and exact rates have yet to be finalized, costs will be calculated by weight or value of the contained taxable chemical. Some exported chemicals and hazardous substances used in different types of fertilizer, animal feed, and fuel are exempt from the superfund tax. Superfund is also imposed when a taxable substance is imported for consumption, use, or warehousing. - January 2023 Edition. Operating now under a new set of rules, organizations manufacturing or importing certain chemicals now face new tax challenges. 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 Attorney Advertising Notice: Prior results do not guarantee a similar outcome. Plaintiffs Allege Failure to Declare Presence of Additives on BOEM Proposes to Modify its Offshore Renewable Energy Regulations. Since its reinstatement, the excise tax has raised many questions and caused significant industry consternation. FS-2022-31, June 2022. A Superfund excise tax on chemicals has been signed into law and went into effect on July 1, 2022. 11758), which was signed into law on November 15, 2021, reinstated theChemicals Superfund Tax and the Hazardous Substances Tax at twice the prior rates through 2031. Otherwise, companies risk finding out about this tax when they are audited and risk becoming liable for penalties. Accordingly, the procedural rules in26 C.F.R. Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. As a result, large and small companies alike who produce or import these chemicals or substances are about to be slammed with additional costs. Client Advisory Board, 1175 Lombardi Access Rd., Ste 500, Green Bay, WI 54304. There are 42 chemicals listed in section 4661(b). An alternative liability is a 10% tariff of the import value. A3. The Superfund Tax rate for chemicals range from $048 per ton for nitric acid to $9.74 per ton for Benzene. But under the Biden plan, those taxes would be reinstated. The Environmental Protection Agency (EPA) identifies sites such as Kti Chemicals Inc because they pose or had once posed a potential risk to human health and/or the environment due to contamination by one or more hazardous wastes. Petitions to Add Polyoxymethylene and Polyphenylene Sulfide. July 1, 2021 thru June 30, 2022. The National Law Review - National Law Forum LLC 3 Grant Square #141 Hinsdale, IL 60521 Telephone (708) 357-3317 ortollfree(877)357-3317. Chemicals. 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 States or entered into the United States for consumption, use, or warehousing. Below is the current list of taxable chemicals. July 1, 2022. For purposes of this code section the term importer means the person for which the taxable chemical is brought to the U.S. for consumption, use or warehousing. The taxes had previously expired on Dec. 31, 1995, but were reinstated as part of the infrastructure legislation signed by President Biden in November 2021. Orlando | Under the rules, a late fee of 5% may be applied on the amount due for each month the form remains delinquent up to a total penalty of 25%. Exemptions from the application of the excise tax are listed atSection 4662(b)of the Tax Code. 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), Q12. The tax may be passed along to customers. A11. The Superfund tax is assessed on the manufacturer or importer of these chemicals. 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. IRC section 4661(b) lists 42 chemicals that are once again subject to the Superfund Excise Tax effective July 1, 2022. (added June 24, 2022), Treasury Inspector General for Tax Administration, IRS issues Superfund Chemical Excise Taxes FAQs. Providence | Specifically, the due date for the deposit accelerates to the immediately preceding date that is not a Saturday, Sunday, or legal holiday. Is there a way to check the status of an application for Activity Letter G registration? Raleigh | (added June 24, 2022), Q10. As reinstated, the tax The Anti-Money Laundering Act of 2020 Gets a Glow Up: Congress FINRA Files Amendments to Proposed Rule Change That Will Allow Remote Corporate Practice of Medicine Doctrine: Increased Enforcement on the Environmental Justice Update: EPA Announces $100 Million in EJ Grants Insurers Beware of Silent Crypto Exposure: PART III, Silent Crypto Court Rules that Brown Bread is Not Misleading, Whats Next in Washington? The relief applies to the first three quarters of the SCET, i.e., the third and fourth quarters of 2022 and the first Nearly three decades after expiring, the Superfund chemical excise tax is back. The Superfund Amendments and Reauthorization Act (SARA) of 19861995 expanded the programs scope. Richmond | 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. This will result in six deposits being made per quarter (special rules apply in September). A Superfund tax is imposed when a taxable chemical is imported, or is domestically produced for sale or use unless an exemption applies. Aerojets previous disposal and operating practices led to soil and groundwater contamination. Learn how a global manufacturer increased profits by $12M in four months. Even companies that have been on the market for decades may not have many employees who were around when the previous excise tax applied. Gas tax holiday: impact of changes in motor fuel tax rates, Tax automation: the ultimate guide to tax process efficiency, Reporting Taxable substances are defined inSection 4672as any substance that, at the time of sale or use by the importer, is listed as a taxable substance. Since the Superfund excise tax expired almost three decades ago, the industrial chemical communitys familiarity with their application is attenuated at best. Excise taxes are reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. The new Superfund Chemical Tax, which is slated to expire on December 31, 2031, unless extended, is expected to yield $14.5 billion in fund revenue over the next decade or $1.44 billion each year on average. The Superfund Chemicals Excise Tax Makes a Comeback. Aside from this quarterly filing, taxpayers 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. Please reach out to our team if you have any questions about the implications of the infrastructure bill. 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 taxes apply to any taxable chemical under Internal Revenue Code (IRC) 4661 and any taxable substance under IRC 4671. COPYRIGHT 2023 RKL. Cherry Bekaert LLP is a licensed independent CPA firm that provides attest services to its clients, and Cherry Bekaert Advisory LLC and its subsidiary entities provide tax and business advisory services to their clients. Substances. A2. As a result, Notice 2022-15 provides welcome relief and affords SCET taxpayers additional time to perfect their SCET deposit process. The rate of excise tax per ton is based on the amount of each chemical included in the substance. Cherry Bekaert is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC provide professional services. If you are a manufacturer or importer, it is essential that your organization be prepared to report and remit the excise tax. The Inflation Reduction Act added excise tax on domestic crude oil and imported petroleum products starting on January 1,2023. The Superfund Chemical Excise Tax was created in 1980 through the Comprehensive Environment Response, Compensation, and Liability Act. Your company could bear the economic burden of the tax being passed on from your suppliers, and, in turn, your company would then need to consider its ability to pass on the economic cost of the excise tax to its customers. Atlanta | She is passionate about supporting animal rescue organizations. The section 4661 tax is imposed as a rate per ton of a taxable chemical. Applicants for registration may call 859-320-4091 and select menu option #1. Chemicals will be taxed based on how they're sold, used, or stored and can range from $0.44 to $9.74 and will be charged on a per-ton basis. 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