In addition to the reinstatement of the federal superfund excise tax on chemicals and substances that went into effect on July 1, 2022, the Hazardous Substance Superfund excise tax went into effect on January 1, 2023 as part of the Inflation Reduction Act of 2022.
Some highlights on the petroleum products tax are as follows:
Imposition of the Tax
Tax is imposed on imported (1) crude oil and (2) petroleum products when they are entered into the U.S. for consumption, use, or warehousing.
As of the date of this alert, the IRS has not provided a list of products that are subject to the additional tax. However, petroleum products generally include crude oil, crude oil condensate, natural and refined gasoline, refined and residual oil, and any other hydrocarbons product derived from crude oil or natural gasoline that enters the U.S. in liquid form.
Tax Rates
Starting January 1, 2023, the tax rate on domestic crude oil and imported petroleum products is the sum of the Oil Spill Liability Trust Fund financing rate (petroleum oil spill tax rate) and the Hazardous Substance Superfund financing rate (petroleum Superfund tax rate):
- The petroleum oil spill tax rate is $0.09 per barrel
- The petroleum Superfund tax rate is $0.164 per barrel for 2023 (rate is indexed annually for inflation)
How to Report
Report this tax quarterly on both:
Tax is imposed on domestic crude oil when it is received at a U.S. refinery. Tax is reported on the lines for IRS Nos. 18 and 53.
Tax is imposed on imported petroleum products when they are entered into the U.S. for consumption, use, or warehousing. The tax is reported on the lines for IRS Nos. 16 and 21.
How to Pay
Deposit payments with the Electronic Federal Tax Payment System (EFTPS).
Additional Considerations
The chemical industry is concerned with the potential overlap of some of the chemicals taxed as of January 1, 2023 that also were on the first listing that went into effect on July 1, 2022. Some of the potential chemicals to overlap could include benzene, xylene, and toluene. Importers and distributors are currently seeking clarification from the IRS, but as of the date of this publication, the IRS has provided limited guidance and information.
If you have any questions or need assistance, please reach out to the State & Local Tax Team at FORVIS or submit the Contact Us form below.