SERVICE ADDS NYLON 6/6 TO TAXABLE SUBSTANCES LIST.
Notice 95-29; 1995-1 C.B. 307
- Institutional AuthorsTreasury Department Internal Revenue Service
- Code Sections
- Subject Areas/Tax Topics
- Index Termstoxics, imported, definitions and rules
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 60 F.R. 19113
- Tax Analysts Electronic Citation1995 TNT 75-25
Notice 95-29
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 nylon 6/6.
EFFECTIVE DATE: This modification is effective July 1, 1990.
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 that substance should be listed as a taxable substance. The Secretary shall add the 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 the substance. This determine is to be made on the basis of the predominant method of production. Notice 89-61, 1989-1 CB 717, sets forth the rules relating to the determination process.
Determination
The petitioner is Monsanto Company, a manufacturer and exporter of this substance. Written comments were received on this petition.
On March 31, 1995, the Secretary determined that nylon 6/6 should be added to the list of taxable substances in section 4672(a)(3), effective July 1, 1990.
The rate of tax prescribed for nylon 6/6, under section 4671(b)(3), is $5.65 per ton. This is based upon a conversion factor for methane of 0.40, a conversion factor for benzene of 0.47, a conversion factor for nitric acid of 0.41, a conversion factor for butadiene of 0.28, and a conversion factor for ammonia of 0.20.
The following information is the basis for the determination.
HTS number: 3908.10.00.00
CAS number: 52349-42-5
Nylon 6/6 is derived from the taxable chemicals methane, benzene, nitric acid, ammonia, and butadiene. Nylon 6/6 is a powdered solid produced predominantly by the reaction of adipic acid with hexamethylene diamine. The adipic acid is derived from benzene via hydrogenation to cyclohexane, which is oxidized using air and nitric acid in a two-step process. The hexamethylene diamine is made by the reaction of butadiene with hydrogen cyanide (derived from ammonia and from methane in natural gas).
The stoichiometric material consumption formula for nylon 6/6 is:
9 (methane) + 10 (water) + 2 (benzene) + 4.66 (nitric acid) +
4 (ammonia) + 6 (oxygen) + 2 (butadiene) ----> 2 (nylon 6/6)
Nylon 6/6 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 67.4 percent by weight of the materials used in its production.
Dale D. Goode,
Federal Register Liaison Officer,
Assistant Chief Counsel
(Corporate)
- Institutional AuthorsTreasury Department Internal Revenue Service
- Code Sections
- Subject Areas/Tax Topics
- Index Termstoxics, imported, definitions and rules
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 60 F.R. 19113
- Tax Analysts Electronic Citation1995 TNT 75-25
