Are You Current on Superfund Excise Taxes.

• Author: Levin-Epstein, Michael
• Position: Thomson Reuters business development for indirect tax vice president Senay Redda

If you're a manufacturer or importer of chemicals and unfamiliar with Superfund excise taxes, which have recently been reinstated, this interview will give you peace of mind. It's a discussion of the past, present, and future of Superfund excise taxes with Senay Redda, vice president of business development for indirect tax at Thomson Reuters. Michael Levin-Epstein, Tax Executive's senior editor, conducted the interview in May.

Michael Levin-Epstein: How would you define Superfund excise taxes, and how do they impact corporations?

Senay Redda: A Superfund excise tax is a sales or use tax on specific goods or services like a tax on fuel. In this case, it is a tax on a specific set of chemicals and substances, and the fund collected through those taxes is used to create what is called a "Superfund." The purpose of that Superfund is to clean up hazardous waste composed of those chemicals and substances.

Levin-Epstein: Could you talk about the history of excise taxes as they pertain to the Superfund?

Redda: In 1980 this tax was initially enacted as part of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), which established the Superfund program, administered by the [Environmental Protection Agency], to investigate and clean up sites contaminated with hazardous substances. In 1995 the excise taxes expired, so from a tax perspective nothing happened in the last twenty-six years. Fast forward to 2021: the Infrastructure Investment Act passed by the Biden administration in November 2021, when these taxes were reinstated, and the tax rate per tonnage, which varies by chemical, doubled their prior rates.

Levin-Epstein: How would you advise companies to take the appropriate action once they know what the actual rates are today?

Redda: The list of chemicals and amended tax rates are published in Internal Revenue Code Section 4661, and in December 2021 the Internal Revenue Service published Notice 2021-66, which includes an initial list of substances. But the IRS will continue to provide guidance on any changes. Substances are defined as any substance composed of twenty percent (more than twenty percent of the weight or value) of the constituent chemicals. So, companies have a pretty formidable task ahead, given [that] it has been a generation since they last dealt with these taxes, and it's not just the taxes that they have to manage. They have to understand how to identify and track these forty-two chemicals...