IRS Proposes Regulations Regarding Superfund Tax on Chemicals, Extends Temporary Relief Related to Penalty for Failure to Deposit Excise Taxes
On March 29, 2023, the Internal Revenue Service (IRS) published a notice of proposed rulemaking (NPRM) relating to the Superfund excise taxes imposed on certain chemicals and certain imported substances, effective July 1, 2022. 88 Fed. Reg. 18446. There are two separate Superfund chemical excise taxes: a tax on the sale or use of “taxable chemicals” and a tax on the sale or use of imported “taxable substances.” The NPRM contains proposed regulations under Sections 4661, 4662, 4671, and 4672 of the Internal Revenue Code to amend the Environmental Tax Regulations (26 C.F.R. Part 52). The NPRM states that Section 4661(a) imposes an excise tax on the sale or use of “taxable chemicals” by manufacturers, producers, or importers, and that Section 4662 provides definitions and special rules for applying the Section 4661 tax. Section 4671(a) imposes an excise tax on the sale or use of “taxable substances” by importers, and Section 4672 provides definitions and special rules for applying the Section 4671 tax. The NPRM states that the proposed regulations provide guidance on the application of the reinstated Superfund chemical taxes. The proposed regulations affect manufacturers, producers, and importers that sell or use taxable chemicals and importers that sell or use taxable substances. Comments on the NRPM and requests for a public hearing are due May 30, 2023. More information on the proposed regulations will be available in our forthcoming memorandum.
Although not addressed in the NPRM, the IRS recently issued Notice 2023-28, extending the temporary relief provided in Notice 2022-15, 2022-18 I.R.B. 1043, regarding deposits of Superfund chemical taxes. According to Notice 2023-28, the extended relief is available in connection with deposits of the Superfund chemical taxes for semimonthly periods in the second, third, and fourth calendar quarters of 2023. The notice also extends the temporary relief provided in Section 3(b) of Notice 2022-15 related to the authority of the IRS to withdraw a taxpayer’s right to use the deposit safe harbor rules of Section 40.6302(c)-1(b)(2), through the second calendar quarter of 2024.
More information on the Superfund excise tax on chemicals is available in our July 13, 2022, memorandum, “Superfund Tax on Chemicals: What You Need to Know to Comply,” and our May 19, 2022, memorandum, “Reinstated Superfund Excise Tax Imposed on Certain Chemical Substances.”