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IRS unveils list of Superfund chemical excise tax rates and FAQs

Guidance aims to help taxpayers before the July 1, 2022, effective date

Posted June 28, 2022

The Internal Revenue Service (IRS) issued two news items on Friday June 24th related to the reinstated Superfund chemical excise tax imposed on certain chemicals and imported substances beginning on July 1, 2022, under section 80201 of the Infrastructure Investment and Jobs Act (IIJA):

  • IR-2022-131 — An IRS news item that announces the just-posted frequently asked questions (FAQs) about the tax. These 15 FAQs detail what the Superfund chemical excise tax is, how the tax is computed, and who may be liable for the tax.
  • IR-2022-132 — Another IRS news item that prescribes the tax rates for 121 taxable substances subject to the Superfund chemical excise tax imposed by 26 U.S.C. 4671(a) of the Internal Revenue Code.

Two Superfund excise taxes

The taxes are required under 26 U.S.C. 4611 to 4672, and procedural rules for filing, deposits, etc. are found at 26 CFR 40. The IRS explains that there are two separate Superfund chemical excise taxes:

  • A tax on the sale or use of “taxable chemicals” — 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. See 26 U.S.C. 4661 and 4662.
  • A tax on the sale or use of imported "taxable substances” — The reinstated taxes impose an excise tax on the sale or use of a taxable substance by the importer of the taxable substance. See 26 U.S.C. 4671 and 4672, along with IRS Notice 2021-66.

IRS forms

The Superfund chemical taxes will be reported on:

  • Form 720 — Quarterly Federal Excise Tax Return, and
  • Form 6627 — Environmental Taxes. (This form is to be attached to Form 720.)

To register for certain exceptions, an application for registration must be made on Form 637, Application for Registration (For Certain Excise Tax Activities), under Activity Letter G.

Be sure to review the updated form instructions.

Earlier IRS notices

Covered entities will also find helpful information in the following guidance documents provided in December and April, respectively:

• IRS Notice 2021-66 — Superfund; Initial List of Taxable Substances; Registration; Procedural Rules; Request for Comments; Suspension of Notice 89-61; and
• IRS Notice 2022-15 — Temporary Relief from Penalty for Failure to Deposit Superfund Chemical Taxes.

Historical note

The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) authorizes the Environmental Protection Agency (EPA) to compel responsible parties to clean up contaminated sites and allows the agency to conduct cleanups and then seek reimbursement from the responsible parties. In some cases, however, parties cannot be identified or may be unwilling or financially unable to perform the cleanup.

In these cases, EPA can assume responsibility for site cleanup. To fund program activities, CERCLA established a trust fund (also known as the Superfund), financed primarily by taxes. These IRS taxes were reimposed on certain chemicals and substances last year as directed by the IIJA, with several modifications, effective July 1, 2022, through December 31, 2031.

This article was written by Tricia Hodkiewicz of J. J. Keller & Associates, Inc.

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