The Internal Revenue Services (IRS) issued an initial list of 101 chemicals subject to the recently reinstated Superfund excise tax under IRC Section 4661 and Section 4671. The recently passed Infrastructure Investment and Jobs Act reinstated Superfund excise taxes effective July 1, 2022, doubled the applicable tax rates, and expanded the reach of the tax. The law required the IRS to publish the initial list of taxable substances by January 1, 2022.
In addition to providing the list of taxable chemicals, Notice 2021-66 addresses petitions to modify the list, discusses the registration requirements to exempt certain sales and uses from tax, and provides the procedural rules that apply to taxpayers subject to the reinstated Superfund chemical taxes.
Petitions to Modify the List of Taxable Substances
The notice suspends Notice 89-61, which provides rules for filing a petition to request that a taxable substance be added or removed from the list. Notice 89-61 was issued when the Superfund chemical taxes were previously in effect, and the IRS intends to update the procedures.
Registration for Certain Exceptions
Superfund taxes are not imposed on any organic taxable chemical while the chemical is part of an intermediate hydrocarbon stream containing one or more organic taxable chemicals. Taxes are also not imposed on inventory exchanges of taxable chemicals. These exceptions, however, do not apply to the sale of any intermediate hydrocarbon stream unless both parties are registered by the IRS as manufacturers, producers, or importers of taxable chemicals; and the person receiving the taxable chemical has notified the manufacturer, producer, or importer of such person’s registration number.
An application for registration must be made on Form 637 under a new Activity Letter G. Until a revised Form 637 is released, applicants may use the current Form 637 by writing in Activity Letter G and providing the following information:
- (i) a list of the taxable chemicals the applicant exchanges and/or the intermediate hydrocarbon streams the applicant sells or buys; and
- (ii) a description of the applicant’s processing plants, the products produced, the handling and storage facilities, and the processes involving hydrocarbon streams, as applicable.
Applicable Procedural Rules
The IRS noted that the excise tax procedural rules under 26 C.F.R. part 40 apply to persons subject to the reinstated Superfund chemical taxes. The reinstated Superfund chemical taxes must be reported on Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return.
Request for Comments
The IRS also requests comments by January 28, 2022 on whether any issues related to the reinstated Superfund chemical taxes require clarification or additional guidance. For information or assistance, contact us. We are here to help.© 2021