IRS Issues Superfund Chemical Excise Tax Rates and FAQs
June 28 Update: The IRS recently issued Rev. Proc. 2022-26, which details the exclusive procedures for requesting a change to the list of chemical substances subject to the Superfund chemical excise tax.
Rev. Proc. 2022-26 states that an importer, exporter or other "interested person" may request a determination by the U.S. Treasury Department that a substance be added to or removed from the list, with the determination to be made within 180 days (Sec. 4672(a)(2) (flush language)). The procedure specifies that interested parties may make a request by submitting a petition to the IRS. The petition may be made by email (encryption is recommended), certified mail or fax. The IRS encourages petitioners to submit by secure fax.
The petition must include the petitioner's name, address and taxpayer identification number; certain technical and classification information about the substance and its production; and other information detailed in Section 6 of the revenue procedure. A separate petition is required for each substance for which a determination is requested.
Requests will be published in the Federal Register as part of a notice-and-comment process. The IRS strongly discourages petitioners from submitting confidential business information or trade secrets.
June 24: The IRS recently announced it has prescribed tax rates for taxable substances that are subject to the Superfund chemical excise tax. In addition, the agency issued frequently asked questions (FAQs) regarding the reinstated tax.
The excise taxes imposed on certain chemicals and imported chemical substances were reinstated beginning on July 1, 2022, under the Infrastructure Investment and Jobs Act (IIJA). Taxable substances are those substances listed in either section 4672(a)(3) of the Code or Notice 2021-66. Substances may be added or removed from the list of taxable substances at a later date.
The rates will be included in the instructions to Form 6627, Environmental Taxes, and under Recent Developments for Form 6627, Environmental Taxes.
There are two separate Superfund chemical excise taxes: a tax on the sale or use of "taxable chemicals" and a tax on the sale or use of imported "taxable substances." Specifically, the reinstated taxes impose an excise tax on the sale or use of a taxable chemical by the manufacturer, producer or importer of the taxable chemical. They also impose an excise tax on the sale or use of a taxable substance by the importer of the taxable substance.
The new FAQs provide general information on what the Superfund chemical excise tax is, how the tax is computed and who may be liable for the tax. At the time of publication of the FAQs, 151 substances are listed as taxable substances. That number will likely change as substances are added to or removed from the list of taxable substances.
The Superfund chemical taxes will be reported on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes. More information can be found at Excise Tax on IRS.gov.