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Tax

Resources and information around tax policies that are vital to capital investment and the competitiveness of the U.S. recycled materials industry.

Helpful Tax Information

US tax policies, such as bonus depreciation allowances and incentives, are vital to capital investment and the competitiveness of the U.S. scrap recycling industry.

The enactment of the 2017 Tax Cuts and Jobs Act represented the first major tax reform since the 1980s. These tax reforms were largely focused on reforming the corporate and business tax codes that over the past 30 years had become outdated as compared with other emerging and developed nations.

Most of these tax reforms will have a profound impact on the scrap recycling industry.

Below is a list of the major tax reforms that ReMA worked hard to secure:

  • A move to territorial system with base erosion rules
  • Lowers corporate tax rate permanently to 21 percent in 2018
  • Establishes of a 20 percent deduction for pass-through businesses
  • Provides full and immediate expensing of capital investments for five years
  • Increases Section 179 Expensing Cap from $500,000 to $1 million
  • Retains trade and tax incentives (IC-DISC)
  • Enacts repatriation of foreign-source income at 15.5 percent and 8 percent (illiquid)
  • Limits net-interest expensing to 30 percent of earnings before for four years (Interest, taxes, depreciation (EBIT) and amortization (EBITA))
  • Abolishes corporate alternative minimum tax
  • Retains interest charge-domestic international sales corporation (IC-DISC)
  • Eliminates Domestic Production Tax Credit (Section 199) After 2018

Congress passed the American Jobs Creation Act in 2004 (“Jobs Creation Act”). Title I of the Jobs Creation Act had two purposes: first, it repealed the Exclusion for Extraterritorial Income (ETI) as required by a decision of the World Trade Organization (WTO) and second, it added § 199 to the Internal Revenue Code (IRC) of 1986. Section 199 was intended, in part, to compensate U.S. exporters for the tax benefits they would lose as a result of the repeal of the exclusion for ETI and also to encourage certain businesses to create jobs. Unfortunately, the Internal Revenue Service (IRS) has interpreted § 199 in a manner that effectively vitiates the ability of scrap recyclers to claim the deduction, despite the fact that the scrap recycling industry is, and has been for decades, one of the United States largest net exporters, subjecting a large number of recyclers to huge deficiency assessments upon audit.

White Paper

Recycling Investment Saves Energy (RISE) allows taxpayers to claim accelerated deprecation for the purchase of machinery or equipment used to collect, distribute or recycle a variety of commodities such as scrap plastic, scrap glass, textiles, scrap rubber, scrap ferrous and nonferrous metals, or electronic scrap.

RISE FAQs

The following information is not intended to be tax advice, it is provided for guidance purposes only. You should consult your tax preparer and/or tax attorney for advice appropriate to your individual situation.

RISE allows taxpayers to claim accelerated deprecation for the purchase of machinery or equipment used to collect, distribute or recycle a variety of commodities such as scrap plastic, scrap glass, textiles, scrap rubber, scrap ferrous and nonferrous metals, or electronic scrap.

Accelerated depreciation is a very common incentive often used by federal and state governments to spur manufacturing, production or certain purchasing behaviors, or to achieve certain policies:

  1. RISE provides a purchaser of “qualified reuse and recycling property,” (which is just a fancy term for eligible recycling machinery or equipment) with the option to depreciate 50% of the cost of that machinery or equipment in the first year.
  2. Only qualified reuse and recycling property that is used exclusively to process materials (including sorting) and that has a useful life of at least five (5) years is eligible for the 50% accelerated depreciation allowance under RISE. Rolling stock, real estate, and buildings are not eligible for the depreciation allowance under RISE.
  3. In order to use the bonus depreciation under RISE, eligible machinery or equipment must be placed into service after August 31st, 2008. However, that same equipment must not have been ordered prior to August 31st.
  4. However, the economic stimulus package passed earlier this year also contains a 50% accelerated depreciation, but requires that in order to be eligible, that equipment must have been purchased in 2008 and placed into service by December 31st, 2008.
  5. RISE is purely voluntary. Some recycling equipment purchasers, based on their own tax situation, may elect not to use the accelerated depreciation schedule. Instead, they may elect to straight-line depreciate machinery or equipment equally over five years or more.
View HR (6049) Bill Summary

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