IRS Instruction 6627 – IRS Forms, Instructions, Pubs 2026 – In today’s regulatory landscape, businesses and individuals dealing with petroleum products, chemicals, and ozone-depleting substances must navigate complex tax obligations. IRS Instruction 6627 provides essential guidance for completing Form 6627, which calculates various environmental taxes. This form is crucial for compliance with federal excise taxes aimed at funding environmental protection initiatives like the Superfund. Whether you’re a manufacturer, importer, or refinery operator, understanding these instructions can help avoid penalties and ensure accurate reporting. This article breaks down the key aspects of IRS Instruction 6627, including who must file, taxes covered, and recent updates for 2026.
What Is Form 6627 and Its Purpose?
Form 6627 is an attachment to Form 720, the Quarterly Federal Excise Tax Return, used to report and calculate environmental taxes. Its primary purpose is to impose taxes on activities that potentially harm the environment, such as the production or importation of hazardous substances. These taxes support programs like the Hazardous Substance Superfund and efforts to phase out ozone-depleting chemicals (ODCs).
According to the latest IRS guidelines, Form 6627 covers taxes on domestic crude oil, imported petroleum products, taxable chemicals (excluding ODCs), imported chemical substances, ODCs, imported products using ODCs, and floor stocks of ODCs. The instructions, revised in January 2026, detail how to compute these taxes accurately.
Who Must File Form 6627?
Not everyone needs to file Form 6627—it’s targeted at specific entities involved in environmentally impactful activities. Here’s a breakdown:
- Petroleum-Related Entities: Refinery operators receiving domestic crude oil, users of crude oil before it reaches a refinery, and importers or entry persons for petroleum products used, consumed, or warehoused.
- Chemical Manufacturers and Importers: Producers, manufacturers, or importers of taxable chemicals (non-ODCs) who sell or use them; importers of taxable chemical substances.
- ODC Handlers: Manufacturers or importers of ODCs who sell or use them; importers of products containing ODCs; and holders of ODCs for sale or manufacturing use on January 1, 2026 (for floor stocks tax).
- General Rule: If you’re liable for any environmental taxes under Internal Revenue Code sections 4611, 4661, 4671, or 4681, you must attach Form 6627 to your Form 720.
If your activities don’t trigger these taxes, no filing is required. Always consult Publication 510, Excise Taxes, for additional details.
Types of Environmental Taxes Covered in Instruction 6627
IRS Instruction 6627 outlines several categories of environmental taxes, each with specific rates and calculation methods for 2026. Below are the main types:
Petroleum Taxes (IRS Nos. 16 and 53)
These taxes fund the Hazardous Substance Superfund with a financing rate of $0.18 per barrel.
- Applies to domestic crude oil received at U.S. refineries or used before receipt.
- Imported petroleum products entered for consumption, use, or warehousing.
- For fractional barrels, calculate proportionally (e.g., gallons / 42 × $0.18).
- Note: Oil spill liability taxes (IRS Nos. 18 and 21) expired after December 31, 2025, and are not reported unless extended by legislation.
Taxable Chemicals (Other Than ODCs) and Imported Chemical Substances (IRS No. 17)
- Manufacturers or importers pay taxes on selling or using listed chemicals.
- For imported substances, use conversion factors to equivalent chemical tax rates or IRS-prescribed rates per ton. If undetermined, apply 10% of the appraised entry value.
- The list of taxable substances is updated regularly; see Notice 2025-41 and Notice 2025-51 for 60 new additions effective January 1, 2026.
Ozone-Depleting Chemicals (ODCs, IRS No. 98)
ODCs are taxed under section 4681 to discourage their use. Rates for 2026 are per pound and include the ozone-depletion factor:
- CFC-11 and CFC-12: $19.30
- Halon-1301: $193.00
- Methyl chloroform: $1.925
- Full list available in the instructions.
- Elections allow taxing mixtures at the time of sale or use rather than manufacture.
Tax on Imported Products Using ODCs (IRS No. 19)
- Applies to products where ODCs were used in manufacturing.
- Calculate using exact ODC weight, IRS table method, or 1% of entry value if weight is unknown.
Floor Stocks Tax on ODCs
- Imposed on ODCs held on January 1, 2026, exceeding de minimis thresholds (e.g., 400 lbs for most ODCs).
- 2026 rates: CFC-11 at $0.45 per pound, up to Halon-1301 at $4.50.
- Reported on Form 720 for the second quarter of 2026, due June 30, 2026.
How to Complete Form 6627 Step by Step?
Filling out Form 6627 involves six parts, each corresponding to a tax type:
- Part I: Enter barrels for petroleum taxes and multiply by $0.18.
- Part II: Reserved.
- Part III: List imported chemical substances, tons, conversion factors, rates, and compute tax.
- Part IV: Detail ODCs, quantities, and apply per-pound rates.
- Part V: For imported ODC products, provide product details, ODC weight or value, and tax.
- Part VI: Report floor stocks holdings and tax.
Use continuation sheets if space is insufficient. Attach the completed form to your quarterly Form 720.
Example Calculation: Petroleum Tax
If you receive 1,000 barrels of domestic crude oil: Tax = 1,000 × $0.18 = $180.
Example: Imported Chemical Substance
For 5 tons of a substance with a conversion factor of 0.8 and rate of $5.00 per ton: Tax = 5 × 0.8 × $5.00 = $20.
Filing Requirements and Deadlines
Form 6627 is filed quarterly with Form 720. For floor stocks, it’s specifically for the second quarter (due June 30, 2026). Electronic filing is encouraged for efficiency. Download the latest form from IRS.gov.
Recent Changes in IRS Instruction 6627 for 2026
Key updates include:
- Superfund financing rate increased to $0.18 per barrel (from $0.17 in 2024).
- Expiration of oil spill liability taxes after 2025.
- Addition of 60 new taxable imported chemical substances.
- Increased ODC tax rates due to statutory adjustments.
- Polyoxymethylene added to taxable substances list.
- No section 4611 tax on exported crude oil per court acquiescence.
Stay updated via IRS.gov/Form6627 for future developments.
Penalties for Non-Compliance
Failure to file or pay environmental taxes can result in penalties, including interest on underpayments. While specific penalty amounts aren’t detailed in the instructions, general excise tax penalties apply under IRC sections. Accurate record-keeping is essential to avoid audits.
Tips for Compliance with Environmental Taxes
- Review the full list of taxable substances in the Superfund chemical excise taxes page.
- Use IRS tools like e-filing for Form 720 to streamline the process.
- Consult a tax professional if dealing with complex imports or mixtures.
- Track thresholds for floor stocks to determine if filing is needed.
By following IRS Instruction 6627, you can ensure compliance and contribute to environmental protection efforts. For the most current information, visit the official IRS website.