Guidance for Computing and Reporting Superfund Tax on Chemicals

“Superfund” sounds like a music festival where everyone wears hazmat suits and the headliner is a band called
The Excise Tax Experience. In real life, it’s a U.S. tax regime tied to funding hazardous substance cleanupsand
if your business manufactures, produces, or imports certain chemicals (or imports certain chemical substances),
you may have a quarterly filing obligation that feels a lot less like a festival and a lot more like spreadsheets.

This guide walks through how to compute and report the Superfund chemical excise taxes in a practical, audit-friendly way:
how to identify taxable chemicals vs. taxable imported substances, measure the right quantity, apply the correct rate,
handle key exceptions, make deposits, and file the right formswithout turning your accounting team into full-time chemists.

What “Superfund tax on chemicals” means (and why it matters)

The Superfund chemical excise taxes are federal excise taxes imposed under the Internal Revenue Code on:
(1) the sale or use of certain taxable chemicals by manufacturers, producers, and importers; and
(2) the sale or use of certain taxable substances by importers (generally imported substances made using taxable chemicals).
The rules were reinstated effective July 1, 2022, and they remain a live compliance item for covered businesses.

Why should you care? Because excise taxes come with their own rhythm:
quarterly returns, potential semimonthly deposits, specific forms and schedules, and penalty exposure if you treat it like
“just another line item.” The good news is that once you build a repeatable process, most quarters become routine.

Step 1: Confirm you’re the taxpayer (manufacturer, producer, or importer)

Your first job is to determine whether your company is the person responsible for the tax. For taxable chemicals, the tax
generally applies to the sale or use of a taxable chemical by the manufacturer, producer, or importer.
For taxable substances, the tax generally applies to the sale or use of a taxable substance by the importer.

“Sale” vs. “use” (don’t ignore internal consumption)

Excise tax liability can arise even if you never “sell” the chemical to anyone else. If you manufacture a taxable chemical and
then use it internally (for example, as a feedstock in another process, or in a way treated as a taxable use),
you may still have a taxable event. In practice, that means your plant and your accounting system need to agree on what counts as
“finished and used,” not just “shipped and invoiced.”

Step 2: Classify what you havetaxable chemicals vs. taxable substances

Taxable chemicals (the “named list” approach)

Taxable chemicals are the specific chemicals listed in the Code’s taxable chemicals list (commonly discussed as a list of 42 chemicals).
If you manufacture, produce, or import one of these chemicals, you start from the assumption that the Superfund chemical excise tax applies,
unless an exception or special rule changes the result.

In the real world, classification usually looks like this:

• Map your products to chemical names used in the tax list (watch synonyms and trade names).
• Confirm chemical identity using CAS numbers, SDS sheets, and product specifications.
• Confirm the taxable unit (typically tons) and how your systems record quantity (pounds, kilograms, short tons, metric tons).

Taxable substances (imported substances made using taxable chemicals)

Taxable substances are generally imported substances that are listed as taxable, including a statutory list and substances added through IRS
determinations. A key concept: a substance can be treated as taxable if taxable chemicals make up more than a specified share of the materials used
to produce it (based on the predominant production method). In other words, the tax can follow the chemistry upstream.

Practically, if you import a chemical product that is not itself one of the “named” taxable chemicals, you still need to check whether it appears
on the IRS’s taxable substances list (and whether a tax rate has been prescribed for it).

Step 3: Measure the taxable quantity (the part where units try to prank you)

Superfund chemical excise taxes are typically computed on a per-ton basis for taxable chemicals. Your calculation is only as good as your quantity,
so treat measurement like a controlled substance (pun intended): restricted access, documented conversions, and consistent methods.

Common quantity pitfalls

• Short ton vs. metric ton: U.S. excise tax reporting often aligns with U.S. measures. If your operations track metric tons, document your conversion
  methodology and apply it consistently.
• Concentration and mixtures: If you’re tracking solutions (e.g., aqueous mixtures), ensure you’re measuring the taxable chemical component when needed,
  not just total mixture weightdepending on how your product is classified and sold.
• Timing mismatches: Production date vs. shipment date vs. invoice date can create quarter-end confusion. Tie taxable events to a clear accounting rule,
  and apply it consistently.

Step 4: Apply the tax rate (and show your math like it’s middle school again)

For taxable chemicals, the computation concept is straightforward:

Tax = Taxable quantity (tons) × Applicable per-ton rate

Rates vary by chemical. Some are relatively small per ton, while others are meaningfully largerso small classification errors can become expensive.
Here are a few illustrative examples of chemical rates you may see in practice (always confirm the current rate table for the quarter you’re filing):

Example 1: Domestic manufacturer sale of a taxable chemical

Suppose you manufacture butane and sell 2,000 short tons in the quarter. If the applicable rate is $0.44 per ton:

• Taxable quantity: 2,000 tons
• Rate: $0.44/ton
• Excise tax: 2,000 × 0.44 = $880

That number may look smalluntil you multiply it across multiple plants, multiple taxable chemicals, and multiple quarters. The math is easy; the data hygiene is the real job.

Example 2: Importer first sale or use of an imported taxable chemical

Now assume you import a taxable chemical and then sell it in the U.S. The tax is generally imposed on the first sale or use in the United States by the importer
(not necessarily at the border). That means your customs entry team and your tax team should be friends, not strangers who wave awkwardly in the hallway.

Step 5: Know the big exceptions and special rules (where most surprises live)

Intermediate hydrocarbon streams (tax pauses… until it doesn’t)

For certain organic taxable chemicals, there are special rules when the chemical exists as part of an intermediate hydrocarbon stream.
Generally, the tax may not apply to the organic taxable chemical while it remains part of that intermediate streambut if it is isolated, extracted,
removed, or ceases to be part of the stream, the law can treat that event as a taxable use.

Translation: if your refinery/petrochemical process relies on intermediate streams, you need a documented trigger point that tells accounting when the tax “turns on.”

Inventory exchanges (special treatment, but not automatic)

Inventory exchanges can have special treatment so that the exchange itself isn’t treated as a taxable sale in certain cases, and liability may attach differently based on who receives the chemical.
These rules are technical and often depend on meeting specific requirements.

Registration matters (Form 637 and activity letter G)

Certain tax-free sales or exchanges (including participation in tax-free sales of intermediate hydrocarbon streams and certain inventory exchanges) generally require appropriate IRS registration.
If you’re relying on these exceptions operationally, treat registration and documentation as part of your controlsnot as an afterthought.

Step 6: Reportingwhat to file, when to file, and what attaches to what

The core filing: Form 720 (Quarterly Federal Excise Tax Return)

Superfund chemical excise taxes are generally reported on Form 720, filed quarterly. The due dates follow the standard quarterly excise return schedule:

• Q1 (Jan–Mar): due April 30
• Q2 (Apr–Jun): due July 31
• Q3 (Jul–Sep): due October 31
• Q4 (Oct–Dec): due January 31

The attachment: Form 6627 (Environmental Taxes)

For Superfund chemical excise tax computation and reporting detail, you generally attach Form 6627 to Form 720. This is where you break out the tax based on
taxable chemicals and imported taxable substances, rather than trying to jam chemistry into a single number and hoping the IRS appreciates your minimalist art.

Practical workflow tip: build an internal quarterly package that includes (1) Form 6627 computation detail, (2) tie-out to operational volumes, (3) deposit reconciliation,
(4) support for exemptions/registrations, and (5) a management sign-off.

Step 7: Deposits and paymentsquarterly filing does not always mean quarterly paying

Many excise taxes require semimonthly deposits depending on liability levels and the specific tax. Form 720 instructions include deposit rules and common thresholds
(including situations where no deposit is required and the tax can be paid with the return).

What a “good” deposit process looks like

• Calendar the deposit periods (first half and second half of each month).
• Use a consistent liability recognition rule (what counts as a taxable event, and on what date).
• Reconcile deposits to the quarterly return every quarterno exceptions.
• Pay electronically when required (commonly through EFTPS) and keep proof of payment.

If your tax exposure is small, you may fall under exceptions where deposits are not required (and payment can accompany the quarterly return).
But don’t guessapply the rules deliberately and document the result.

Step 8: Imported taxable substancesthe “rate table + backup plan” universe

Use the IRS taxable substances list and prescribed rates when available

The IRS publishes a list of taxable substances and, for many substances, prescribed tax rates. That list can change as substances are added or removed through IRS determinations.
Your import compliance process should include a quarterly (or even monthly) check of updates, especially if you import specialty polymers, resins, or chemical intermediates.

If no rate is prescribed: the 10% appraised value default

If a substance is treated as taxable but the IRS has not prescribed a tax rate for it, the law provides a default method that can apply:
10% of the appraised value at the time of importation. This is the “break glass in case of missing rate” ruleand it’s usually a strong incentive to
get a proper determination when a substance is material.

Requesting an IRS determination (so you can stop living in “default method” land)

The IRS provides procedures to request a determination to add a substance to (or remove a substance from) the taxable substances list.
If you import substances that are borderline, newly developed, or not clearly addressed, a determination request may be a strategic moveespecially if the default method would overstate tax.

Example 3: Taxable substance computed from taxable chemical content (conceptual)

Assume you import a taxable substance whose prescribed tax is computed based on the taxable chemicals used in its production (as though those chemicals were sold for use in making the substance).
If the computation indicates that 0.95 tons of a taxable chemical effectively “sit inside” your imported quantity, your tax could look like:

• Effective taxable chemical quantity: 0.95 tons
• Taxable chemical rate (example acetylene): $9.74/ton
• Tax: 0.95 × 9.74 = $9.25

This is why imported substances can feel more complex: you’re not only tracking what you imported, but also the chemistry of how it was produced.

Step 9: Documentation that makes your future self say “thank you”

Excise tax audits tend to focus on two themes: how you classified items and how you measured quantity.
Build a documentation set that supports both.

Recommended documentation checklist

• Product classification memo (product name, CAS number, why it matches a taxable chemical/substance or why it doesn’t).
• Quantity support (production reports, inventory movement, bills of lading, scale tickets, and conversion worksheets).
• Import support (customs entry documents, commercial invoices, and broker summaries that tie to your tax calculation).
• Rate support (the applicable rate table or prescribed rate reference used for the quarter).
• Exemption support (certificates, export documentation, and any required registrations like Form 637).
• Deposit reconciliation (how deposits roll into the quarterly Form 720 totals).

Step 10: Common mistakes (and how to dodge them gracefully)

• “We don’t sell chemicals, so we’re not impacted.”
  If you import taxable chemicals or use them internally, you may still have a taxable event.
• Unit drift.
  One team tracks kilograms, another uses metric tons, and the tax return expects tons. Pick a standard and force alignment.
• Forgetting quarter-end cutoffs.
  A shipment on the last day of the quarter can swing liability. Use a consistent rule and document it.
• Assuming the taxable substances list never changes.
  It can change, and new determinations can affect liability. Build periodic review into your process.
• Skipping registration when relying on special rules.
  If you depend on a tax-free sale/exchange rule that requires registration, treat the registration like a gatenot a suggestion.

Final thoughts: Make it boring (because boring is compliant)

The best Superfund tax process is the one that becomes unremarkable: predictable calculations, clean data, documented classifications,
timely deposits (when required), and a quarterly filing package that anyone on your team can pick up and understand.
If your current workflow feels like a chemistry experiment conducted in the dark, start by tightening classification and units.
Everything else gets easier once those foundations are solid.

Important note: This article is educational and not legal or tax advice. Superfund chemical excise tax rules are technical and fact-specific.
Consider working with a qualified tax advisor for your specific operations and product mix.

Field Notes: Real-World Experiences With Superfund Chemical Excise Tax (What Companies Commonly Run Into)

You can read the rules all day and still get surprised the first time you try to run Superfund chemical excise tax through a real business.
The “experience” isn’t usually dramaticit’s more like a slow realization that the tax touches teams that don’t typically hang out together:
procurement, plant operations, logistics, customs brokers, finance, and tax. When those teams share data cleanly, the tax becomes routine.
When they don’t, quarter-end becomes a scavenger hunt where everyone insists their spreadsheet is the “source of truth.”

Experience #1: The naming problem (a.k.a. “Our system calls it WHAT?”)

Many businesses learn quickly that the taxable chemical list speaks one language and ERP item masters speak another. A taxable chemical might be stored under
an internal product name, a customer-facing trade name, or a shorthand code that made sense in 2009 and has never been questioned since. The best teams respond
by creating a controlled mapping file: internal SKU → chemical identity (CAS) → tax classification → documentation link. That mapping becomes the cornerstone
for consistency across quartersand it saves a lot of time when staff changes happen.

Experience #2: Unit conversions become a quarterly drama until you standardize them

Another very common pattern: operations measure in pounds or kilograms; finance wants standard costs; tax needs tons. If conversion rules are not centralized,
people start doing “helpful” conversions in different places, rounding differently, and producing different totals that are all “close.” Unfortunately, excise tax
compliance is allergic to “close.” The fix that works in practice is boring and effective: define approved conversion factors, lock them in one place, document them,
and make every report pull from the same conversion logic. Once companies do that, the quarter-to-quarter variance finally reflects business reality, not math style.

Experience #3: Imports force you to connect customs data to tax reporting

Companies that import taxable chemicals or taxable substances often discover that customs entry data doesn’t naturally flow into excise tax reporting. Customs records may
focus on tariff classification, declared value, entry dates, and broker summarieswhile tax reporting needs product identity, taxable status, and the “first sale or use” timing
inside the U.S. Businesses that do this well typically build a bridge report that ties import entries to internal receipts and subsequent dispositions (sale/use), with a clear rule
for how the taxable event is recognized. Once that bridge exists, the tax team stops chasing documents and starts reviewing exceptions, which is where their attention is actually needed.

Experience #4: Special rules feel “optional” until you need them

Intermediate hydrocarbon stream rules and inventory exchange rules can sound nicheuntil your business model relies on them. Then they stop being a footnote and become
an operational requirement. Companies that have a smooth experience here usually do two things: (1) they confirm whether registration is required for the intended tax-free treatment,
and (2) they embed the documentation into the business process (for example, requiring a registration check and a documentation package before executing certain exchanges).
The companies that struggle often treat it as a year-end cleanup exercise, which is not the vibe you want when the IRS asks how you applied a specific exception in a specific month.

Experience #5: The “we’ll fix it next quarter” approach gets expensive fast

A practical lesson many teams learn: it’s easier to fix classification and data flow early than to unwind it later. If you miss a taxable chemical classification for two quarters,
you’re not just dealing with a simple true-upyou may be dealing with deposit rules, amended filings, and internal reporting adjustments. The teams with the best experience treat the
first few quarters as a process-building phase: they run parallel calculations, reconcile to operational data, stress-test edge cases (returns, internal use, quarter-end shipments),
and document decisions. After that, the work becomes predictable and the surprises largely disappear.

The takeaway from these real-world patterns is simple: Superfund chemical excise tax compliance is less about “doing tax” and more about building a repeatable data workflow.
Once your classification map is stable, your units are standardized, your import bridge is built, and your exceptions are documented, the tax becomesdelightfullyboring.
And in compliance land, boring is the highest compliment.