IRS Proposed Rule on Revived Superfund Chemical Taxes
On March 29, 2023, the U.S. Internal Revenue Service (IRS) published a Proposed Rule to amend the Environmental Tax Regulations, 25 C.F.R. part 52, specifically those provisions governing the chemical excise taxes used to fund the Hazardous Substance Response Trust Fund established pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA)—known as the Superfund Chemical Tax. Because this is the first time the tax will be applied in over 25 years, its effects may not be well understood by affected industry taxpayers, and the IRS’s Proposed Rule offers critical guidance. Companies engaged in the manufacturing, import, or sale of taxable chemicals should evaluate the Proposed Rule and consider submitting comments by the May 30, 2023, deadline.
U.S. Federal Energy Regulatory Commission Requires Interstate Natural Gas Pipelines to Recalculate Rates
On Jan. 12, the Federal Energy Regulatory Commission (FERC) issued data requests to four interstate pipelines that are proposing incremental recourse rates in pending Natural Gas Act (NGA) Section 7 certificate applications.1 This action was significant because it appears to be FERC’s first step toward responding to tax law changes in the Law to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018, also known as the Tax Cuts and Jobs Act of 2017 (2017 Tax Act).
FERC permits pipelines and public utilities to recover their actual or potential tax expenses in their regulated rates. The 2017 Tax Act reduces the corporate tax rate to 21 percent and allows certain investments to receive bonus depreciation treatment. FERC asked each pipeline to 1) explain how the 2017 Tax Act impacts its proposed project cost of service and the resulting initial recourse rate proposal; 2) provide an adjusted cost of service and recalculated initial incremental recourse rates; and 3) provide all supporting work papers and formulas.2 (more…)
Energy-Related Provisions in the Final Tax Bill
On December 20, 2017, the United States Congress passed legislation known as the Tax Cuts and Jobs Act (the Tax Act), the first comprehensive reform of the U.S. tax code since 1986. The legislation is expected to be signed by President Trump and enacted into law. The changes will be effective for taxable years beginning after December 31, 2017, unless otherwise noted below.
The following summary analyzes certain aspects of the Tax Act likely to affect the energy industry, particularly publicly traded partnerships or master limited partnerships (MLPs).
For a complete list of Sidley resources summarizing the major changes to the U.S. tax code generally and with respect to particular industries and subject matters, as well as links to register for upcoming Sidley webinars on tax reform, please click here to access our Tax Reform Developments and Insights webpage.