Superfund Chemical Excise Tax: Revived after Quarter Century

The Infrastructure Investment and Jobs Act signed by President Biden on November 15, 2021 reinstated the so-called Superfund Chemical Excise Tax (“SCET”) on Taxable Chemicals and Taxable Substances. The SCET is in effect for the period July 1, 2022 through December 31, 2031.

Taxable Chemicals

• The SCET is imposed on any manufacturer, producer, or importer of Taxable Chemicals in the United States at rates ranging from $0.48 to $9.74 per ton.
• The list of Taxable Chemicals and corresponding SCET rates can be found under IRC Section 4661(b). There are 42 chemicals on this list.

Taxable Substances

• The SCET is imposed on any importer selling or using Taxable Substances in the United States.
• The list of Taxable Substances includes the original list of 50 chemicals found under IRC Section 4672(a)(3) and an additional 101 chemicals published by the IRS. The IRS has authority to update the list of Taxable Substances in the future.

Taxpayers must make semi-monthly deposits of the SCET with the IRS and report SCET to the IRS on a quarterly basis using Form 6627, Environmental Taxes, which is attached to Form 720, Quarterly Federal Excise Tax Return.

Taxpayers may be able to claim a refund or credit for SCETs paid within their supply chain. In addition, taxpayers may be able to claim a refund or exemption of SCETs in cases where Taxable Chemicals or Taxable Substances are exported. Other SCET exemptions exist for taxpayers using Taxable Chemicals or Taxable Substances for certain purposes (e.g., qualified fertilizer, qualified animal feed, etc.).

Thank you to Mike Smith, who contributed to this post.