Notice 2021-66: Excise taxes reimposed, list of “Superfund” taxable chemical substances

Concerning the reinstated excise taxes imposed on certain chemicals and substances

Concerning the reinstated excise taxes imposed on certain chemicals and substances

The IRS today released an advance version of Notice 2021-66 regarding the reinstated excise taxes imposed on certain chemicals and substances under sections 4661 and 4671 (often referred to as “Superfund” excise taxes).

The excise taxes are effective July 1, 2022.

Background

A provision of the “Infrastructure Investment and Jobs Act” (Pub. L. No. 117-58, enacted November 15, 2021) reinstated and modified the applicable rates of tax and other provisions related to the Superfund excise taxes. The modifications concern the method under section 4672(a)(2)(B) for determining whether a substance is a taxable substance by lowering the required percentage of taxable chemicals used to produce the substance from 50% to 20% of the weight (or the value) of the materials used to produce the substance.  The IRS was directed to issue a preliminary list of taxable substances under section 4672(a).

Notice 2021-66

Notice 2021-66 [PDF 175 KB]:

  • Provides the initial list of taxable substances under section 4672(a)
  • Addresses the registration requirements imposed by section 4662(b)(10)(C) and (c)(2)(B) to exempt certain sales and uses of taxable chemicals from tax
  • Provides the procedural rules that apply to taxpayers subject to the reinstated Superfund excise taxes
  • Suspends Notice 89-61 (as modified by Notice 95-39) which prescribed the former process for certain persons to request that certain substances be added to or removed from the list of taxable substances under section 4672(a)(3)
  • Includes a request for comments as to whether there are issues related to the reinstated Superfund excise taxes that require clarification or additional guidance

KPMG observation

  • The initial list of taxable substances includes the same hazardous substances that were previously taxable by statute or IRS determination.
  • The IRS notice provides affected taxpayers with directions to submit Form 637, Application for Registration (for Certain Excise Tax Activities)—before it is revised by the IRS—with respect to exemptions for certain intermediate hydrocarbon streams and inventory exchanges.
  • The notice clarifies that affected taxpayers will be required to make semi-monthly deposits of tax and will report the Superfund excise taxes on Form 720, Quarterly Federal Excise Tax Return, and Form 6627, Environmental Taxes.


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

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

 

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.