Effective January 1, 2019, the excise tax rates imposed under section 4121 on a producer’s sale of coal mined from coal mines in the United States have been lowered.
The funds generated under section 4121 are dedicated to the “Black Lung Disability Trust Fund.”
The rate of tax before 2019 was $1.10 for coal from underground mines, and $0.55 for coal from surface mines. The excise tax was limited to 4.4% per ton, and did not apply to lignite.
Beginning after December 31, 2018, the excise tax is reduced as follows:
Taking into account that the rates have dropped by more than 50% from 2018, taxpayers may consider evaluating current deposit methods as the safe-harbor two-quarter look-back may provide significant over-deposits of tax.
While the rates are currently lower, taxpayers need to watch for possible future legislation that may reinstate the increased rates—perhaps as part of an “extenders bill” or possibly tucked into the next tax legislation that is passed by Congress.
For more information, contact a tax professional with KPMG’s Excise Tax Practice group:
Deborah Gordon | +1 (202) 533 5965 | email@example.com
Taylor Cortright | +1 (202) 533 6188 | firstname.lastname@example.org
© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.KPMG International Cooperative (“KPMG International”) is a Swiss entity.
Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. 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 KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in 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.