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Reinstatement of two Superfund excise taxes

Congress reinstated two excise taxes that affect the petroleum and chemicals industries.

 

After more than 25 years, two excise taxes on chemicals and imported hazardous substances were reinstated in the Infrastructure Investment and Jobs Act (Pub. L. 117-58), effective July 1, 2022. If the Build Back Better Act (H.R. 5376), as passed the House on November 19, 2021, were enacted without modification, a third excise tax also would be reinstated. Companies should carefully review their operations to determine the impact, if any, of these taxes.

 

The Infrastructure Investment and Jobs Act (Pub.L. 117–58), which was signed into law on November 15, 2021, reinstated the Chemicals Superfund Tax and the Hazardous Substances Tax at twice the prior rates through 2031.

The proposed Build Back Better Act (H.R. 5376, as passed by the House on November 19, 2021), if enacted, would reinstate the Petroleum Superfund Tax at a rate of 16.4 cents per barrel. 

The Joint Committee on Taxation estimates these excise taxes combined would increase revenues by over $52 billion over a 10-year period

 


 

How KPMG can help

The effective date is July 2022. Companies will need to:

  • Identify and educate key stakeholders impacted by the excise tax within the organization (supply chain, tax, EPA regulatory, IT, finance)
  • Identify taxable chemicals, hazardous substances, and crude oil/ imported petroleum products
  • Identify and document exceptions to the excise tax
  • Forecast excise tax liability based on applicable rates
  • Consider filing petition with IRS to request modifications to the list of taxable substances and rate of tax on taxable substances
  • Assess supplier and consumer invoicing issues
  • Assess internal and external communications regarding excise tax information
  • Identify data sources required to track the lifecycle of affected chemicals and products, assess potential issues, and evaluate process and configuration changes to resolve issues
  • Prepare for all aspects of compliance, including filing registrations on Form 637 and filing returns on Form 720 and Form 6627

What you need to know

Read more about the two reinstated excise taxes, and the third proposed.

Read more about the two reinstated excise taxes, and the third proposed.

Superfund chemicals and hazardous substances list

See the full preliminary list in Internal Revenue Code §§ 4661, 4671, 4672; Notice 2021-66.

See the full preliminary list in Internal Revenue Code §§ 4661, 4671, 4672; Notice 2021-66.

This page does not reflect developments after [December 9, 2021]

 

Contact us

Taylor Cortright

Taylor Cortright

Managing Director, Excise Tax Practice, KPMG US

+1 202-533-6188
David Kalman

David Kalman

Managing Director, Tax, KPMG LLP

+1 267-256-7000
Michael Mehanna

Michael Mehanna

Partner, Tax, Accounting Methods & Credits, KPMG US

+1 213 955 8510
Ross Reiter

Ross Reiter

Managing Director, Tax, Accounting Methods & Credits, KPMG US

+1 267 256 2681

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