The Inflation Reduction Act of 2022, which President Biden signed into law on August 16, 2022, reinstates Superfund excise taxes on crude oil and imported petroleum products for the first time since 1995. The changes are effective from January 1, 2023 to December 31, 2032.
Superfund Excise Tax on Sale and Import of Oil
The new law reinstates the IRC Section 4611 Hazardous Substance Superfund financing tax on crude oil and imported petroleum products and increases the tax rate from 9.7 cents per barrel to 16.4 cents per barrel, indexed to inflation. The reinstatement and rate increase was originally included in the Build Back Better Act, which passed in the House of Representatives in November 2021, before being included in the Inflation Reduction Act.
Superfund Excise Taxes Fully Reinstated
Congress has now fully reinstated the Superfund taxes on oil and chemicals. In December 2020, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 extended the 9-cents-per-barrel oil spill liability tax that funds the Federal Oil Spill Tax Liability Trust Fund until December 31, 2025.
Additionally, in November 2021, Congress reinstated the Superfund tax on chemicals in the Infrastructure Investment and Jobs Act. That includes IRC Section 4661, which imposes a per-ton tax on the sale of the chemicals, and IRC Section 4671, which imposes a tax on certain chemicals sold or used by an importer at the rate set by Section 4661. The changes became effective July 1, 2022 and will expire December 31, 2031.
What Does this Mean for Oil Importers?
The reinstatement of the Section 4611 Superfund excise taxes will impose a significant cost on oil imports. Taxpayers that have not been subject to Superfund excise taxes might be unfamiliar with the new tax liabilities and reporting requirements. Additionally, the January 1, 2023 effective date gives taxpayers little time to determine how the information requirements could affect their tax compliance program.
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