SERVICE ADDS TEXANOL BENZYL PHTHALATE TO TAXABLE SUBSTANCES LIST.

Notice 94-92

INTERNAL REVENUE SERVICE

TAX ON CERTAIN IMPORTED SUBSTANCES (TEXANOL BENZYL PHTHALATE); NOTICE OF DETERMINATION

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice.

SUMMARY: This notice announces a determination, under Notice 89-61, that the list of taxable substances in section 4672(a)(3) will be modified to include texanol benzyl phthalate.

EFFECTIVE DATE: This modification is effective April 1, 1994.

FOR FURTHER INFORMATION CONTACT: Tyrone J. Montague, Office of Assistant Chief Counsel (Passthroughs and Special Industries), (202) 622-3130 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

BACKGROUND

Under section 4672(a), an importer or exporter of any substance may request that the Secretary determine whether such substance should be listed as a taxable substance. The Secretary shall add such substance to the list of taxable substances in section 4672(a)(3) if the Secretary determines that taxable chemicals constitute more than 50 percent of the weight, or more than 50 percent of the value, of the materials used to produce such substance. This determination is to be made on the basis of the predominant method of production. Notice 89-61, 1989-1 C.B. 717, sets forth the rules relating to the determination process.

DETERMINATION

On August 19, 1994, the Secretary determined that texanol benzyl phthalate should be added to the list of taxable substances in section 4672(a)(3), effective April 1, 1994.

The rate of tax prescribed for texanol benzyl phthalate, under section 4671(b)(3), is $5.79 per ton. This is based upon a conversion factor for xylene of 0.28, a conversion factor for toluene of 0.24, a conversion factor for chlorine of 0.19, a conversion factor for methane of 0.17, a conversion factor for propylene of 0.44, and a conversion factor for sodium hydroxide of 0.09.

The petitioner is Monsanto Company, a manufacturer and exporter of this substance. No material comments were received on this petition. The following information is the basis for the determination.

HTS NUMBER: 3812.20.00.00

CAS NUMBER: 16883-83-3.

Texanol benzyl phthalate is derived from the taxable chemicals xylene, toluene, chlorine, methane, propylene, and sodium hydroxide. Texanol benzyl phthalate is a liquid produced predominantly by the reaction of texanol (2,2,4-trimethyl-1, 3-pentanediol monoisobutyrate) and phthalic anhydride to produce a monoester, the sodium salt of which (produced by reaction with sodium hydroxide) is reacted with benzyl chloride.

The stoichiometric material consumption formula for texanol benzyl phthalate is: (xylene + (toluene) + (chlorine) + 4(methane) + 4(propylene) + (sodium hydroxide) + 4(oxygen) -----> (texanol benzyl phthalate) + (hydrochloric acid) + 5(hydrogen) + (isobutyl alcohol) + (sodium chloride) + 2(water)

Texanol benzyl phthalate has been determined to be a taxable substance because a review of its stoichiometric material consumption formula shows that, based on the predominant method of production, taxable chemicals constitute 80.8 percent by weight of the materials used in its production.

                                   Dale D. Goode,