Beginning July 1, 2022, a federal excise tax, the Superfund Tax, went into effect. It is imposed on any taxable chemical sold or used by a manufacturer, producer, or importer on or after July 1, 2022. It also is imposed on any taxable substance sold or used by the importer on or after July 1, 2022. It funds the Hazardous Substance Superfund Trust Fund for use in the clean-up of hazardous waste sites.
The Internal Revenue Code (Code) lists forty-two chemicals subject to the Superfund Tax upon sale or use. The tax rate ranges from $0.44 to $9.74 per ton. The list of chemicals is longer for taxable substances imported for sale or use. The Code lists fifty substances, and an IRS Noticelists 101 substances subject to tax. The Code authorizes the addition of substances to the list of taxable substances.
On June 24, 2022, in IR-2022-132, the IRS published the tax rate for 121 taxable substances. The instructions to IRS Form 6627 list all 151 taxable substances with the tax rates for 121 included. The IRS will add the tax rates for the remaining thirty taxable substances as they are developed.
The Superfund Tax is reported on IRS Form 6627, Environmental Taxes, required to be attached to the tax return made on Form 720, Quarterly Federal Excise Tax Return. Although the tax is reported on a quarterly return, companies subject to the tax generally must make semimonthly deposits for each period in which the tax liability is incurred. The tax deposit for each semimonthly period must not be less than ninety-five percent of the net tax liability incurred during the semimonthly period unless the deposit safe harbor in the regulations applies.
Under the deposit safe harbor, any company that filed a Form 720 return for the second preceding calendar quarter (look-back quarter) is considered to have met the semimonthly deposit requirement for the current quarter if: (1) the deposit for each semimonthly period in the current calendar quarter is not less than one-sixth of the net tax liability reported for the look-back quarter; each deposit is made on time; the amount of any underpayment is paid by the due date of the Form 720 return, and the company’s liability does not include any tax that was not imposed during the look-back quarter.
Under the de minimis exception, no deposit is required if the liability does not exceed $2,500 for a particular quarter. The tax can be paid when Form 720 is filed.
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