The IRS recently released guidance (Notice 2021-66,) providing key information on the excise taxes imposed on certain chemicals and substances under Sections 4661 and 4671—often referred to as “Superfund” excise taxes.
Superfund taxes were last effective in 1995 and were imposed on the sale or use of 50 identified chemicals as well as certain substances manufactured or produced from such chemicals. The Infrastructure Investment and Jobs Act (Pub. L. No. 117-58), enacted Nov. 15, 2021, reinstated the tax at new rates, and modified applicable chemicals, including lowering the taxable threshold for substances containing the covered chemicals.
The IRS’s guidance establishes an initial list of chemicals that will be subject to the Superfund tax, including 101 new chemicals and hazardous substances, as well as the 50 that were on the list when the tax was last effective.
The guidance also provides information regarding the Infrastructure Investment and Jobs Act’s amendment to Section 4672(a)(2)(B), lowering the required percentage of taxable chemicals used to produce the substance from 50% to 20% of the weight (or the value) of the materials used to produce the substance. This amendment could have major impacts to business exposure of Superfund taxes.
The Superfund taxes are effective July 1, 2022. Pertinent businesses should consider examining for any potential exposure to the updated and amended Superfund tax list.
Dustin Stamper is a managing director in Grant Thornton’s Washington National Tax Office and leads the tax legislative affairs practice for the firm.
Washington DC, Washington DC
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