TEREPHTHALIC ACID AND POLYBUTENE ARE ADDED TO LIST OF TAXABLE TOXIC SUBSTANCES.

Notice 94-11

This notice announces a determination, under Notice 89-61, 1989-1 C.B. 717, that the list of taxable substances in section 4672(a)(3) of the Internal Revenue Code will be modified to include terephthalic acid and polybutene. This modification is effective January 1, 1991.

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 sets forth the rules relating to the determination process.

DETERMINATION

On December 10, 1993, the Secretary determined that terephthalic acid and polybutene should be added to the list of taxable substances in section 4672(a)(3), effective January 1, 1991.

The rate of tax prescribed for terephthalic acid, under section 4671(b)(3), is $6.47 per ton before January 1, 1992, and $3.11 per ton for imported terephthalic acid first sold or used after December 31, 1991. This is based upon a conversion factor for xylene of 0.639.

The rate of tax prescribed for polybutene, under section 4671(b)(3), is $4.87 per ton. This is based upon a conversion factor for butylene of 1.00.

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

TEREPHTHALIC ACID

HTS number: 2917.36.00.00

The stoichiometric material consumption formula for terephthalic acid is:

  C8H10 (xylene) + 3 O2 (oxygen) -----> C8H6O4 (terephthalic acid)

POLYBUTENE

HTS number: 3902.20.50.00

The stoichiometric material consumption formula for polybutene is:

        n(C4H8) isobutylene) -----> (C4H8)n (polyisobutylene)

The principal author of this notice is Tyrone J. Montague of the Office of Assistant Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice contact Tyrone J. Montague on (202) 622-3130 (not a toll-free call).