IRS ADDS POLYBUTYLENE AND POLYBUTYLENE/ETHYLENE TO TAXABLE SUBSTANCES LIST.

Notice 95-40

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice.

SUMMARY: This notice announces determinations, under Notice 89-61, that the list of taxable substances in section 4672(a)(3) will be modified to include polybutylene and polybutylene/ethylene.

EFFECTIVE DATE: This modification is effective July 1, 1990.

FOR FURTHER INFORMATION CONTACT: Ruth Hoffman, 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 the 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 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 May 16, 1995, the Secretary determined that polybutylene and polybutylene/ethylene should be added to the list of taxable substances in section 4672(a)(3), effective July 1, 1990.

The rate of tax prescriber for polybutylene/ethylene, under section 4671(b)(3), is $4.86 per ton. This is based upon a combined conversion factor for butylene and ethylene of 0.999.

The petitioner is Pecten Chemicals, a manufacturer and exporter of these substances. No material comments were received on these petitions. The following information is the basis for the determinations.

Polybutylene

     HTS number: 3902.90.00.10

The stoichiometric material consumption formula for polybutylene is:

n (butylene) --> (polybutylene)

Polybutylene 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 100 percent by weight of the materials used in its production.

Polybutylene/Ethylene

     HTS number: 3902.90.00.10

The stoichiometric material consumption formula for polybutylene/ethylene is:

n (butylene) + m (ethylene) ---> (polybutylene/ethylene)

Polybutylene/ethylene has been determined to be a taxable substance because a review of is stoichiometric material consumption formula shows that, based on the predominant method of production, taxable chemicals constitute 100 percent by weight of the materials used in its production.

                                   Dale D. Goode,