IRS Form 6627 – Environmental Taxes – In today’s environmentally conscious world, businesses and individuals involved in certain industries must navigate a range of federal taxes designed to fund cleanup efforts and discourage harmful practices. One key document in this landscape is IRS Form 6627, which plays a crucial role in calculating and reporting environmental taxes. Whether you’re a refinery operator, chemical manufacturer, or importer dealing with ozone-depleting substances, understanding Form 6627 is essential for compliance. This article breaks down what IRS Form 6627 entails, who needs to file it, how to compute the taxes, and recent updates for 2026.
What Is IRS Form 6627 and Its Purpose?
IRS Form 6627, titled “Environmental Taxes,” is an attachment to Form 720 (Quarterly Federal Excise Tax Return). It is used to calculate specific environmental taxes imposed under various sections of the Internal Revenue Code. The primary purpose of this form is to figure taxes on activities and products that could harm the environment, with proceeds often supporting programs like the Hazardous Substance Superfund (commonly known as Superfund).
These taxes target pollution sources and encourage sustainable practices. For instance, they cover the production or importation of substances linked to environmental degradation, ensuring that those responsible contribute to remediation costs. Filing Form 6627 helps the IRS collect funds for initiatives addressing oil spills, chemical hazards, and ozone layer protection.
Key taxes reported on Form 6627 include:
- Taxes on petroleum products, including domestic crude oil and imported petroleum.
- Taxes on taxable chemicals (excluding ozone-depleting chemicals or ODCs).
- Taxes on imported chemical substances.
- Taxes on ODCs and products using them.
- Floor stocks taxes on held ODCs.
If you’re searching for “what is IRS Form 6627,” this form is not a standalone return but must be attached to Form 720 when applicable.
Who Must File IRS Form 6627?
Not everyone needs to file Form 6627—it’s targeted at specific entities involved in environmentally impactful activities. According to IRS guidelines, filing requirements depend on the type of tax:
- For Petroleum Taxes: The operator of a refinery receiving crude oil must report domestic crude oil taxes. For imported petroleum products, the importer is responsible.
- For Chemical Taxes (Non-ODCs): Manufacturers, producers, or importers who sell or use taxable chemicals must file.
- For Imported Chemical Substances: Importers of substances listed by the IRS are liable.
- For ODCs and Related Products: Manufacturers, importers, or sellers of ozone-depleting chemicals, as well as those dealing in products using ODCs, need to report. This includes floor stocks taxes on inventory held at the start of the year.
- Superfund Chemical Excise Taxes: Entities dealing with taxable chemicals must report quarterly, using Form 6627 alongside Form 720.
If your business involves any of these, check the IRS’s list of taxable substances and rates, which is updated periodically. Small businesses or those below certain thresholds may qualify for exemptions—consult the instructions for details.
Key Sections of IRS Form 6627
Form 6627 is divided into parts corresponding to different tax categories. Here’s a breakdown based on the latest revision (January 2026):
Part I: Tax on Petroleum (IRS Nos. 16 and 53)
This section covers the Hazardous Substance Superfund financing rate on domestic crude oil and imported petroleum products. For 2026, the rate is $0.18 per barrel, adjusted for inflation. Filers enter the number of barrels and multiply by the rate to compute the tax.
Part II: Tax on Chemicals (Other Than ODCs)
Here, you report taxes on taxable chemicals. The form lists applicable rates, and you calculate based on tons sold or used.
Part III: Tax on Imported Chemical Substances
Importers use this part to figure taxes on substances derived from taxable chemicals. Rates are prescribed by the IRS, and importers can use these directly.
Part IV: Tax on ODCs and Imported Taxable Products
This includes taxes on ozone-depleting chemicals (under IRC sections 4681 and 4682) and imported products using ODCs. Calculations involve base tax amounts, with potential reductions for certain uses.
Part V: Floor Stocks Tax on ODCs
Applied to inventory held on January 1, this tax ensures existing stocks are taxed similarly to new production.
The form requires detailed entries in columns for quantities, rates, and tax amounts, with totals carried over to Form 720.
How to File IRS Form 6627: Step-by-Step Guide?
Filing IRS Form 6627 involves attaching it to your quarterly Form 720. Here’s how to do it:
- Gather Information: Collect data on quantities of taxable items (e.g., barrels of oil, tons of chemicals).
- Download the Form: Get the latest version from the IRS website (e.g., Form 6627 Rev. January 2026).
- Complete Each Part: Use the instructions to fill in applicable sections. For example, in Part I, multiply barrels by $0.18.
- Calculate Totals: Sum taxes from all parts and transfer to Form 720.
- Deposit Taxes: Superfund chemical taxes require semi-monthly deposits.
- File Electronically or by Mail: Submit with Form 720 by the quarterly deadline (last day of the month following the quarter’s end).
For “how to file IRS Form 6627,” always refer to the official instructions to avoid penalties.
Recent Updates and Changes for 2026
The IRS regularly updates Form 6627 to reflect legislative changes and inflation adjustments. Key updates for 2026 include:
- An increase in the Section 4611 Hazardous Substance Superfund financing rate to $0.18 per barrel.
- Continued emphasis on Superfund chemical excise taxes, reinstated under the Infrastructure Investment and Jobs Act.
- No extension of expired oil spill liability taxes (IRS Nos. 18 and 21), so they are not applicable.
Stay informed by checking IRS announcements, such as Revenue Procedure 2025-32.
Common Mistakes to Avoid When Filing Form 6627
To ensure accurate reporting on environmental taxes:
- Don’t overlook floor stocks taxes if you hold ODC inventory.
- Use the correct rates—importers can rely on IRS-prescribed rates for chemical substances.
- Verify quantities match supporting records to avoid audits.
- File on time to prevent interest and penalties.
Where to Find More Resources on IRS Form 6627?
For the most current information, visit the IRS website. Download Form 6627 at irs.gov/pub/irs-pdf/f6627.pdf and instructions at irs.gov/instructions/i6627. If you’re dealing with complex calculations, consider consulting a tax professional specializing in excise taxes.
Understanding and complying with IRS Form 6627 not only helps avoid penalties but also contributes to environmental protection efforts. By staying updated on these environmental taxes, businesses can operate responsibly while meeting federal requirements.