The IRS has issued Notice 2021-66 (Notice), which provides guidance on the recently reinstated Superfund excise taxes on chemicals and imported taxable substances. The taxes were recently reinstated by the Infrastructure Investment and Jobs Act (IIJA) and will be effective July 1, 2022. The taxes will directly affect manufacturers and importers of certain listed chemicals and substances.
As part of the reinstated taxes, the IIJA reinstates the Superfund chemical tax on the sale or use of imported taxable substances with several modifications. The ILJA directed Treasury to publish a list of initial taxable chemical substances before Jan. 1, 2022. Notice 2021-66 publishes the substances subject to tax. These substances have been determined by Treasury to be produced with at least 20% of the weight (or the value) of taxable chemicals. The list contains 100 substances considered taxable. Importers of these substances will be liable for tax. Treasury will provide subsequent guidance on how to add/remove substances from the initial list and has suspended previous procedures set forth in Notice 89-61.
The Notice also addresses procedural rules such as reporting and registration requirement. Tax will be reported quarterly on Form 720, Quarterly Federal Excise Tax Return, with an accompanying Form 6627, Environmental Taxes. Application for registration for certain tax-free sales and uses of taxable chemicals must be made on Form 637, Application for Registration (For Certain Excise Tax Activities).
The Treasury Department and the IRS currently request comments on whether any issues related to the reinstated Superfund chemical taxes require clarification or additional guidance. Comments should be submitted in writing by Jan. 28, 2022.
For more details and the list of chemical substances, please refer to the Notice and consult with your tax advisors.