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IRS reminder: First oil spill liability tax due by January 29, 2020

IRS reminder: First oil spill liability tax

The IRS posted information on its website concerning the semi-monthly oil spill liability tax.

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The appropriations legislation enacted on December 20, 2019 (“The Further Consolidated Appropriations Act, 2020” (Pub. L. No. 116-94)) reinstated the oil spill liability tax for the period beginning on January 1, 2020, and ending on December 31, 2020. The oil spill liability tax imposes a tax of $0.09 per barrel on crude oil received at a United States refinery, and on petroleum products entered into the United States for consumption, use or warehousing.

The IRS announcement (posted January 24, 2020) reminds taxpayers to resume making semi-monthly deposits of tax. A semi-monthly period is the first 15 days of a calendar month or the portion of a calendar month following the 15th day of the month. 

The first deposit, covering the first 15 days of January, is due by January 29, 2020.

Safe harbor rules

The deposit for each semi-monthly period must not be less than 95% of the net tax liability incurred during the semi-monthly period unless a safe harbor applies. Oil spill liability taxpayers may not use the safe harbor rules to calculate semi-monthly deposits until the third calendar quarter of 2020 because the safe harbor rules require a second preceding calendar quarter (lookback quarter) in order to determine deposit amounts in the current quarter. The first calendar quarter of 2020 is the lookback quarter, for purposes of the safe harbor, for deposits due during the third calendar quarter.

 

For more information, contact a tax professional with KPMG’s Excise Tax Practice group:

Taylor Cortright | +1 (202) 533 6188 | tcortright@kpmg.com

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