In Rev. Proc. 2022-26, issued Tuesday, the IRS prescribed the exclusive procedures for requesting an addition to, or removal from, the list of chemical substances subject to an excise tax commonly known as the Superfund tax.
The Superfund, or, as it is formally known, the Hazardous Substance Response Trust Fund, was first enacted in 1980 to finance cleanups of hazardous waste sites.
A dedicated revenue stream funding it was enacted via an excise tax on certain chemicals and substances, beginning in the mid-1980s and expiring in 1995, before being reinstated effective July 1, 2022, in modified form by the Infrastructure Investment and Jobs Act, P.L. 117-58.
Besides the tax on the sale or use of certain chemicals under Sec. 4661(a), a second Superfund excise tax under Sec. 4671 applies to the sale or use of imported taxable substances. The 151 taxable substances are listed in Sec. 4672(a)(3), as supplemented by Notice 2021-66.
The IRS also last week posted frequently asked questions (FAQs) about the Superfund taxes on its website. In a news release Friday (IR-2022-131) announcing and providing a link to the FAQs, the Service noted that the list of taxable substances would likely change as substances are added to and removed from it.
In a second news release Friday (IR-2022-132), the Service also provided tax rates per ton of 121 taxable substances.
In April, the IRS in Notice 2022-15 provided temporary relief from a penalty for failure to deposit Superfund taxes. The first quarterly deposit is due July 29, 2022.
Sec. 4672(a)(1) defines a taxable substance as one so listed by Treasury pursuant to a determination, made in consultation with the U.S. Environmental Protection Agency and U.S. Customs and Border Protection, that the substance contains more than 20% of taxable chemicals by weight (or more than 20% of the value) of the materials used to produce the substance, based on its predominant method of production. An importer or exporter of a substance may request a determination by Treasury 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)).
Rev. Proc. 2022-26 specifies that an importer, exporter, or other "interested person" may make such a request by submitting a petition to the IRS. The petition may be made by email (encryption is recommended), certified mail, or fax (the revenue procedure encourages a secure fax as the preferred of these three methods).
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 items specified in Section 6 of the revenue procedure. A separate petition is required for each substance for which a determination is sought.
The IRS noted that the determination will be a public process and that submitted information will be published in the Federal Register as part of a notice-and-comment process.
"Petitioners are strongly discouraged from submitting confidential business information or trade secrets," the IRS advised.
— To comment on this article or to suggest an idea for another article, contact Paul Bonner at Paul.Bonner@aicpa-cima.com.