Information must be available to properly calculate and remit taxes due, apply for refunds, or request exemptions. Expanded Employee Retention Credit (ERC) & how our professionals can assist you. It states that it was Congress intent that taxable substances only include chemicals that are intended for further chemical conversion. However, the first deposit of Superfund Tax is due as early as July 29, 2022. The table below outlines products that are impacted by this excise tax. This would make the first tax deposit covering thefirst half of July 2022due byJuly 29, 2022. (added June 24, 2022), Q14. The Joint Companies opting for the latter run the risk, however, of incurring penalties, should the IRS adopt a different view. Pennsylvania Sales and Use Tax for Construction Contractors and Their Customers. The hazardous substance tax will be imposed at a rate of 16.4 cents per barrel and will be adjusted for inflation on January 1 of each year until it expires on December 31, 2032. The Superfund Excise Tax on chemical sales is back! 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). As a result, large and small companies alike who produce or import these chemicals or substances are about to be slammed with additional costs. | Privacy Policy Stephanie provides tax planning and compliance services to corporations, pass-through entities and individuals. Calculating Her experience includes clients of all sizes from Fortune 500 firms to single location hospitals. 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. Section 80201(c)(1) of the IIJA modified the method for determining whether a substance is a taxable substance by lowering the required percentage of taxable chemicals used to produce the substance from 50 percent to 20 percent of the weight (or the value) of the materials used to produce such substance. The Superfund Chemicals Excise Tax Makes a Comeback. 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. For example, methane or butane used as a fuel, or nitric acid, sulfuric acid, ammonia, or methane used in production of fertilizer are exempt. The Infrastructure Investment and Jobs Act signed into law November 15, 2021, reinstated the Superfund Excise Taxes (Superfund Tax) on chemicals and substances. If you have any questions regarding Superfund tax credits, contact us atinquiries@charterbrokerage.net, and one of our Superfund tax credit experts will assist you. Part II of Form 6627, Environmental Taxes, will be updated to reflect the tax rate per ton of each taxable chemical. 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. The original Superfund Chemical Excise Tax was enacted with the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) and expired on December 31, 1995. 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. Mississippi Gaming Commission Agenda: January 19 Meeting. The National Law Review - National Law Forum LLC 3 Grant Square #141 Hinsdale, IL 60521 Telephone (708) 357-3317 ortollfree(877)357-3317. The IIJA also reinstated the Superfund excise tax on the import for sale or use of any taxable substance underSection 4671of the Tax Code. 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. The information contained herein is not intended to be written advice concerning one or more Federal tax matters subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230. State Green and Sustainability Claims: A Roundtable Discussion. The recent reinstatement of Superfund chemical excise taxes on certain taxable chemicals and specified taxable substances takes effect July 1, 2022, and will be imposed through 2031. Inferences, however, can be made from the absence of any mention in the law. Los Angeles | Cherry Bekaert: Tax, Audit and Advisory Services, Superfund Excise Taxes on Chemicals and Substances: How to Prepare, Starting a New Business & Launching Successfully: Tax and Business Planning Tips, IRS Rev. In addition, our guarantee ensures that we will even defend such claims under audit. Exporters will not be taxed. 2022 Global Digital Trust Insights Survey, Application Security and Controls Monitoring Managed Services, Controls Testing and Monitoring Managed Services, Financial Crimes Compliance Managed Services, Virtual Business Office services for healthcare. Due to the complicated nature of the tax assessments, and the detailed information required, gaps in existing systems and processes may exist. No other Superfund tax refund service provider has the experience of Charter Brokerage. Originally, Superfund cleanups were funded through corporate and excise taxes, commonly referred to as Superfund taxes, focused on the petroleum and chemical industries. 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). $225 plus $0.073 per each acre-foot greater than 10 acre-feet. Apprehended Woman Dies in Eagle Pass, Texas Soft Sided Facility, U.S. Customs and Border Protection Department of Homeland Security. 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). You Meta Believe the GDPR Penalties Are No Joke! As a background, when these taxes were reinstated through the Infrastructure Investment and As defined, the taxable substances appear to stop short of what would be defined as an article according to40 C.F.R. Who should lead the charge? Specifically, taxable substances include the 50 substances on the initial list of taxable substances in Section 4672(a)(3) and 101 taxable substances added by the IRS in December 2021, throughIRS Notice 2021-66. Many entities are struggling with its application. Notice 2021-66 suspended the procedure in Notice 89-61 because the IRS plans to issue a more current guidance on this matter. The Superfund Chemical Excise Tax is set to expire in 2031 and is expected to bring in an estimated $14 billion that will go to assisting the clean-up of hazardous waste disposal sites. In Philadelphia, Economy Struggles to Keep Up with New Influx of First Major Overhaul of Cosmetics Regulation Since FDR Administration, Governor Kathy Hochul Proposes New York State Housing Compact. $150 plus $0.069 per each acre-foot greater than 10 acre-feet. 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. 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. Nursing Homes Brace for Reforms and Heightened Government Scrutiny. 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. The FTC's Proposed Rule Banning Noncompete Agreements- What Does It Mean? Are Your Companys Year-End Compensation Accruals Tax Deductible? (added June 24, 2022), Q11. In response to pointed public comment, on April 15, 2022, the IRS released an advance version ofNotice 2022-15, providing relief for thethirdandfourth calendar quarters of 2022, and the first calendar quarter of2023, regarding the failure to deposit penalties imposed bySection 6656of the Tax Code, as those penalties relate to the Superfund excise taxes. In Notice 2021-66 the IRS published a list of 100 additional substances subject to the Superfund Tax. The importer of hazardous substances pays the tax, and it is due on the first sale or use after import. Statement in compliance with Texas Rules of Professional Conduct. This is the first person/company at which the taxable chemical lands in the U.S. for the preceding reasons. As reinstated, the tax Plaintiffs Allege Failure to Declare Presence of Additives on BOEM Proposes to Modify its Offshore Renewable Energy Regulations. Section 4661 imposes tax on the sale by the manufacturer, producer or importer of taxable chemicals. Duration: 00:12:55. 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. The tax may be passed along to customers. Superfund Chemical Excise Taxes Effective July 1, 2022, excise taxes are reinstated on certain chemicals and imported chemical substances. The manufacturer or importer pays the excise tax for chemicals, which is due on the first use or sale in the United States. The National Law Review is not a law firm nor is www.NatLawReview.com intended to be a referral service for attorneys and/or other professionals. 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. A11. The Infrastructure Bill reinstated the Superfund Excise Taxes on chemicals and taxable substances, effective July 1, 2022. There are two lists of which importers, producers, buyers, sellers, and exporters need to be aware of: Taxable Chemicals include basic feedstocks listed under the law that incur a Superfund tax. With world scale integrated manufacturing facilities we are Notice IR-2022-132 focused on issuing tax rates for 121 taxable substances. Some exported chemicals and hazardous substances used in different types of fertilizer, animal feed, and fuel are exempt from the superfund tax. 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. Richmond | Legal Disclaimer|Privacy Policy | Copyright 2022 IGenFuels LLC. 429, Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). At that time, the application of the tax and the deployment of funds were quite well understood, and the U.S. Internal Revenue Service (IRS) developed a relatively robust series of guidance documents to explain how the tax operated and who was subject to the tax. Taxpayers with a quarterly liability greater than $2,500 will be required to make semi-monthly tax deposits of the tax. Cannabis Excise Tax Calculation. 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. 4295) on December 22, 2022, that accomplishes three things: (1) eliminates the requirement to affirmatively elect New Jersey S corporation status, while including an opt-out provision; (2) adopts the federal centralized partnership audit regime, with certain modifications; and (3) ends certain COVID-related extensions. As a result, Notice 2022-15 provides that SCET taxpayers will be deemed to have satisfied the reasonable cause standard and no Section 6656 penalty will be imposed if (1) the taxpayer makes semimonthly deposits of SCET, even if in the incorrect amount, and (2) any deposit underpayment is paid in full by the due date for filing the Form 720, Quarterly Federal Excise Tax Return, for the applicable quarter. A13. Policy on Demand is a news platform that provides in-depth insights and analysis on policy developments that impact your business. Each member firm is a separate legal entity. 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 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. This new tax does not need to add additional costs to your products. That authority Tax on Imported Chemical Substances, IRS No. 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. The section 4661 tax is imposed as a rate per ton of a taxable chemical. If your organization believes it may be subject to the reinstated Superfund Excise taxes, be prepared to begin reporting on chemical use. Companies must report the reinstated Superfund excise taxes onForm 6627, Environmental Taxes, attached toForm 720, Quarterly Federal Excise Tax Return. This Superfund Tax is assessed only on importers of taxable substances and is due upon the first sale or the first use after import into the United States. Notice 2022-15 provides temporary relief from the failure-to-deposit tax penalty. The reauthorization doubled the tax rates on taxable chemicals, vastly expanded listed taxable substances, and increased the cap size of the trust fund. 901, for the initial list of substances that the Secretary has added to the list of taxable substances. The Chemicals Superfund Tax and the Hazardous Substances Tax took effect on July 1, 2022 with a ten Applicability of the information to specific situations should be determined through consultation with your tax adviser. Taxable Chemicals. 338(h)(10) Transaction Structure: Pros and Cons for Sellers and Buyers. 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. In the meantime, reach out to your RKL advisor with questions or to discuss your companys specific circumstances. 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