Ozone-Depleting Chemicals Tax -- Temporary and Proposed Regulations Under Sections 4681 and 4682

 CC:PS-73-89                                                                                              [4830-01]

 ACTION: Final and temporary regulations.

 SUMMARY: This document contains temporary regulations relating to the tax on chemicals that deplete the ozone layer and on products containing such chemicals. These temporary regulations reflect changes to the law made by the Omnibus Budget Reconciliation Act of 1989. These temporary regulations affect manufacturers and importers of ozone-depleting chemicals, manufacturers of rigid foam insulation, and importers of products containing or manufactured with ozone- depleting chemicals. In addition, these temporary regulations affect persons, other than manufacturers and importers of ozone-depleting chemicals, holding such chemicals for sale or for use in further manufacture on January 1, 1990, and on subsequent tax-increase dates. The text of the temporary regulations set forth in this document also serves as the text of the proposed regulations for the notice of proposed rulemaking on this subject in the Proposed Rules section of this issue of the Federal Register.

 EFFECTIVE DATES: These regulations are effective January 1, 1990. Section 52.4682-3T(f)(2)(ii) provides, however, that listings preceded by a double asterisk (**) in the Imported Products Table set forth in section 52.4682-3T(f)(6) are effective October 1, 1990. In addition, section 52.6302(c)-2T (relating to use of Government depositaries) is effective July 1, 1990, for deposits relating to the calendar quarter beginning July 1, 1990.

 FOR FURTHER INFORMATION CONTACT: Ruth Hoffman, 202-566-4475 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

PAPERWORK REDUCTION ACT

These regulations are being issued without prior public notice procedures pursuant to the Administrative Procedure Act (5 U.S.C. 553). For this reason, the requirements for collecting information contained in these regulations have been reviewed and, pending receipt and evaluation of public comments, approved by the Office of Management and Budget (OMB) under control number 1545-1153. The estimated average annual burden per recordkeeper is 0.5 hour. The estimated average annual burden per respondent is 0.4 hour.

 These estimates are an approximation of the average time expected to be necessary for a collection of information. They are based on such information as is available to the Internal Revenue Service. Individual respondents and recordkeepers may require more or less time, depending on their particular circumstances.

 For further information concerning this collection of information, and where to submit comments on this collection of information, the accuracy of the estimated burden, and suggestions for reducing this burden, please refer to the preamble to the cross-referencing notice of proposed rulemaking published in the Proposed Rules section of this issue of the Federal Register.

BACKGROUND

 This document contains amendments to the Environmental Tax Regulations (26 CFR Part 52) relating to sections 4681 and 4682 of the Internal Revenue Code. These sections were added to the Code by the Omnibus Budget Reconciliation Act of 1989, Public Law No. 101-239.

NEED FOR TEMPORARY REGULATIONS

 Immediate guidance is needed on the tax imposed with respect to ozone-depleting chemicals. Therefore, good cause is found to dispense with the public notice requirement of 5 U.S.C. 553(b) and the delayed effective date requirement of 5 U.S.C. 553(d).

PREVIOUS NOTICES

 Notices 90-8, 1990-5 I.R.B. 14, and 90-9, 1990-5 I.R.B. 21, provided initial guidance on the taxes imposed with respect to ozone- depleting chemicals. Notice 90-35, 1990-20 I.R.B. 9, informed taxpayers that the first payment of tax under section 4681 would be due April 30, 1990, that taxpayers would avoid interest charges if the amount of the tax was deposited by that date, that no return of taxes imposed under sections 4681 and 4682 would be due until 30 days after the date of publication of temporary regulations, and that no penalty would be imposed on account of failure to file or failure to pay the tax under section 4681 before the due date for filing the return, as extended.

 These temporary regulations generally incorporate the rules provided in the Notices, but also include a number of changes and additions to those rules. The new provisions in the temporary regulations include: (1) a rule providing that the loss or destruction of ozone-depleting chemicals or imported taxable products is not treated as a taxable use of such chemicals or products; (2) a rule under which the tax on an imported taxable product may be deferred until an article incorporating that product is sold; (3) a revised Imported Products Table; and (4) rules for filing returns, paying tax, and making deposits.

 Except as provided in section I of Notice 90-9 (relating to reliance on the Imported Products Table contained in the Notice), the rules in the Notices are superseded by these temporary regulations. The Internal Revenue Service will, however, grant relief under section 7805(b) to a taxpayer adversely affected by the retroactive application of any change from the rules described in the Notices, but only if a request for such relief is submitted before January 1, 1991.

EXPLANATION OF PROVISIONS

IN GENERAL

 Section 4681 imposes a tax on an ozone-depleting chemical (ODC) when the ODC is sold or used by its manufacturer or importer. That section also imposes a tax on an imported product containing or manufactured with ODCs when the product is sold or used by its importer.

 Section 4682(h) imposes a floor stocks tax on ODCs that are held for sale or for use in further manufacture on January 1 of 1990, 1991, 1992, 1993, or 1994 by any person other than the manufacturer or importer of the ODC.

SALE OR USE

 The terms "sale" and "use" are defined in section 52.4681-lT(c)(6) and (7). Under section 52.4681-lT(c)(7)(ii), loss, destruction, warehousing, or packaging is not a use. In addition, section 52.4682-1T(b)(2)(iii) permits manufacturers and importers of ODCs to elect to treat the sale or use of mixtures containing ODCs as the first sale or use of the ODCs contained in the mixture.

OZONE-DEPLETING CHEMICALS

 Section 4682(a)(2) lists the chemicals that are subject to tax. The listed chemicals, which also were identified as ozone-depleting under the Montreal Protocol, are CFC-11, CFC-12, CFC-113, CFC-114, CFC-115, Halon-1211, Halon-1301, and Halon-2402.

 Under section 4682(d)(1), there is no tax on ODCs that are recovered in the United States as part of a recycling process (and not as part of the original manufacturing process). Section 4682(d)(2) provides that there is no tax on ODCs used or sold for use as a feedstock. Section 4682(d)(3) provides that some ODCs may be exported tax free. Section 4682(g) provides a phase-in of tax on Halons and on ODCs used or sold for use in the manufacture of rigid foam insulation. Under the phase-in rule, no tax is imposed in 1990, and tax is imposed at a reduced rate of approximately $0.25 per pound in 1991, 1992, and 1993. Sales to State and local governments, to the Federal Government, and to nonprofit educational organizations are NOT exempt from the tax.

EXEMPTION FOR ODCs USED AS A FEEDSTOCK

 Section 4682(d) provides an exemption from the tax imposed under section 4681 for ODCs used or sold for use as a feedstock. Under section 52.4682-1T(c)(3), an ODC is used as a feedstock only if the ODC is entirely consumed in the manufacture of another chemical (within the meaning of 40 CFR 82.3(s) (relating to the definition of production in connection with regulations on the protection of atmospheric ozone)).

 Section 52.4682-2T(a) sets forth rules relating to tax-free sales of ODCs for use as a feedstock. Under these rules, the buyer must certify to the supplier that the ODCs will be used as a feedstock, but a submission to the Internal Revenue Service is not required. Section 52.4682-2T(d) sets forth the form of the certificate to be used to support tax-free sales of ODCs for use as a feedstock.

ODCs USED IN THE MANUFACTURE OF RIGID FOAM INSULATION

 Under section 4682(g), ODCs used or sold for use in the manufacture of rigid foam insulation are not taxed in 1990 and are taxed at a reduced rate in 1991, 1992, and 1993. Section 52.4682-lT(d)(3) provides that the term "rigid foam" means any closed cell polymeric foam (whether or not rigid) in which chlorofluorocarbons are used to fill voids within the polymer. The term "rigid foam insulation" means any rigid foam that is designed for use as thermal insulation. The design of a product, and not the manner in which it is actually used, determines whether the product is rigid foam insulation.

 Section 52.4682-2T(a) and (d) sets forth rules and certification requirements relating to tax-free and tax-reduced sales under the phase-in provision. In all material respects, these rules and certification requirements are the same as those applicable to tax- free sales for use as a feedstock.

IMPORTED TAXABLE PRODUCTS

 Section 4681 imposes a tax on an imported product containing or manufactured with ODCs when the product is sold or used by its importer. Section 4681(b)(2) provides that the tax imposed on an imported product is based on the weight of the ODCs used in its manufacture (ODC weight). Section 52.4682-3T(f)(6) sets forth an Imported Products Table (Table) that contains an exclusive list of the products subject to the tax. The Table, which is based on information supplied by industry representatives, identifies products that are subject to tax by name and Harmonized Tariff Schedule heading. In addition, Table ODC weights are provided for most products. These weights are used to compute the tax when the importer cannot determine the weight of the ODCs actually used in the product's manufacture.

 In some cases, no Table ODC weight is provided because information is not currently available. If an importer cannot determine the weight of ODCs actually used in the manufacture of a product for which no Table ODC weight is provided, the tax is determined under section 4681(b)(2) and section 52.4682-3T(e)(4). Section 4681(b)(2) provides that the tax in such cases is determined under rules similar to those of section 4671(b)(2) (relating to the default tax rate for purposes of the Superfund), and section 52.4682-3T(e)(4) prescribes a rate of one percent of the entry value of the product.

 Section 52.4682-3T(f)(7) grants the Commissioner the authority to modify the initial Table set forth in the regulations. If the Commissioner determines that the Table should be modified, a revenue procedure providing a superseding Table will be published. Manufacturers may request modifications by following the procedures described in the regulations.

 ODCs used in the manufacture of protective packaging are neither incorporated into the protected product nor released into the atmosphere during its manufacture. Accordingly, section 52.4682-3T(d)(3) provides that such ODCs are not treated as ODCs used in the manufacture of the protected product. Although it may be appropriate to treat protective packaging as a separate product that is used during the shipment and storage of the protected product, this rule presents significant administrative difficulties and is not included in the temporary regulations. The Internal Revenue Service invites public comment on whether and how protective packaging should be taxed under section 4681.

FLOOR STOCKS TAX

 Section 4682(h) imposes floor stocks taxes on January 1 of 1990, 1991, 1992, 1993, and 1994. Section 52.4682-4T(b)(l) provides that these taxes apply only to ODCs that are held (other than by the manufacturer or importer of the ODC) for sale or for use in further manufacture on the date the floor stocks tax is imposed. For this purpose, an ODC may be held for sale or for use in further manufacture without regard to the type or size of the container in which it is stored.

 Section 52.4682-4T(b)(2) identifies ODCs on which the floor stocks tax is not imposed. These include ODCs that have been recycled or reclaimed and ODCs that have been incorporated, before the date on which the tax is imposed, into a mixture or into a manufactured article in which the ODCs will be used for their intended purpose.

 ODCs that have been incorporated into a mixture include all ODCs that have been mixed with other ingredients, even if that mixture is held for sale in bulk quantities. For floor stocks taxes imposed after 1990, however, the mixture exemption does not apply unless the other ingredients contribute to the purpose for which the mixture will be used.

 An ODC has been incorporated into a manufactured article in which it will be used for its intended purpose if, as in the case of ODCs contained in the cooling coils of an air conditioner, it is used for its intended purpose within the article. On the other hand, an ODC is not exempt from the floor stocks tax if it will not be used for its intended purpose within the article into which it is incorporated. For example, CFC-12 that will be used to charge an air conditioner is not exempt from the floor stocks tax solely because it is contained in a 14-ounce can.

 Under section 52.4682-4T(e) the tax is imposed on ODCs held by a person only if the tax is imposed on a date on which the person holds at least a specified amount of ODCs to which the tax would otherwise apply. For 1990, 1992, and 1993, the amount specified is 400 pounds. In determining whether this 400-pound threshold is met, Halons and ODCs that will be used in the manufacture of rigid foam insulation are disregarded. For 1991, the amount specified is also 400 pounds, but only Halons and ODCs that will be used in the manufacture of rigid foam insulation are taken into account. In 1994, the tax is imposed only if the person holds at least 200 pounds of ODCs that will be used in the manufacture of rigid foam insulation or at least 20 pounds of Halons.

 Section 52.4682-4T(c) provides that the person holding ODCs on the date the floor stocks tax is imposed is liable for the tax. Section 52.4682-4T(f) requires inventories of ODCs that a person (other than the manufacturer of (sic) importer of the ODCs) holds for sale or for use in further manufacture. Inventories of such ODCs must be taken by the person holding the ODCs on January 1 of 1990, 1991, 1992, 1993, and 1994.

GENERAL REQUIREMENTS FOR FILING RETURNS, PAYING TAX, AND USING GOVERNMENT DEPOSITARIES

 Sections 6011 (relating to requiring returns), 6071 (relating to time for filing returns), and 6302(c) (relating to use of Government depositaries), authorize the Secretary to prescribe regulations imposing rules for filing returns and making deposits of tax. These temporary regulations revise and amend the provisions of the Environmental Tax Regulations relating to procedural rules so that such provisions also apply under sections 4681 and 4682.

 Under section 52.6011(a)-1T, any person liable for the taxes imposed under sections 4681 or 4682 must file Form 720 (or other form designated by the Commissioner subsequent to publication of these regulations) to report that liability. The procedures relating to filing are provided in the instructions to the form. Section 52.6071(a)-2T(a)(1) provides that the return must be filed by the last day of the second month following the end of a calendar quarter. Importers of products that neither contain nor are manufactured with ODCs are not required to file a return reporting tax imposed under section 4681 with respect to such products.

 Persons required by regulations to file a Form 720 on an earlier date than the date provided in these temporary regulations in order to report other taxes do not file two Forms 720 but instead file one Form 720 with respect to all excise taxes reportable on Form 720 on or before the date provided under section 4681. This rule allows persons filing a Form 720 with respect to taxes imposed by section 4681 or 4682 to defer filing their Form 720 until two months after the end of the calendar quarter, even if such persons must also report on their Form 720 excise taxes with respect to which the Form 720 is ordinarily filed one month after the end of the calendar quarter (e.g. Superfund taxes). However, this rule does not extend the time for making deposits or paying any other excise tax. Thus, a person that must make an additional deposit of excise taxes to pay any balance due at the time for filing the Form 720 for that quarter must make the required deposit on or before the date the Form 720 for such excise taxes would ordinarily be filed; the payment is due at that time even though the Form 720 may, under the above rule, be filed a month later.

 Under section 52.6302(c)-2T(b), semimonthly deposits of tax are required to be made by all persons liable for the tax imposed under section 4681. The deposit for each semimonthly period is due on or before the last day of the second following semimonthly period. Section 52.6302(c)-2T(c) provides a safe harbor. In general, a taxpayer is considered to have met the semimonthly deposit requirement if the deposit for each semimonthly period is not less than 1/6 of the total tax liability under section 4681 for the second preceding quarter, and any underpayment for the current quarter is deposited by the due date of the return. This safe harbor rule is modified to take into account predictable increases in tax liability due to increases in the base tax amount or due to the phase-in of tax on Halons and ODCs used in the manufacture of rigid foam insulation. For example, for the first two calendar quarters of 1991, the safe harbor will be based on the taxpayer's tax liability for the second preceding calendar quarter, but calculated as if Halons and ODCs used in the manufacture of rigid foam insulation had been subject to tax for such preceding calendar quarters.

 Under section 4682(h)(3), the floor stocks tax must be paid by April 1 of each year in which the tax is imposed. The full amount of the floor stocks tax for any year in which the tax is imposed must be deposited by April 1 of such year, and must be reported on the Form 720 (or other form designated by the Commissioner subsequent to the publication of these regulations) for the first calendar quarter of such year.

SPECIAL RULES FOR RETURNS AND PAYMENTS OF TAX UNDER SECTION 4681 FOR THE FIRST AND SECOND CALENDAR QUARTERS OF 1990. FIRST CALENDAR QUARTER OF 1990.

 Section 52.6071(a)-2T(a)(3) provides that the Form 720 reporting tax imposed under section 4681 for the first calendar quarter of 1990 is due April 30, 1990, but the due date is extended (without application) until October 9, 1990. No penalty will be imposed on account of failure to file the return before the date for filing, as extended.

 The payment of tax for the first calendar quarter of 1990 is due April 30, 1990. No penalty will be imposed on account of failure to pay the tax imposed under section 4681 for the first calendar quarter of 1990 before the date for filing the return, as extended. Interest on any underpayment of such tax will be imposed from April 30, 1990.

SECOND CALENDAR QUARTER OF 1990.

 Section 52.6071(a)-2T(a)(4) provides that the Form 720 reporting tax imposed under section 4681 for the second calendar quarter of 1990 is due September 7, 1990, but the due date is extended (without application) until October 9, 1990. No penalty will be imposed on account of failure to file the return before the date for filing, as extended.

 The payment of tax for the second calendar quarter of 1990 is due September 7, 1990. No penalty will be imposed on account of failure to pay the tax imposed under section 4681 for the second calendar quarter of 1990 before the date for filing the return, as extended. Interest on any underpayment of such tax will be imposed from September 7, 1990.

SPECIAL RULE FOR RETURNS UNDER SECTION 4682 FOR 1990.

 Section 52.6071(a)-3T(a) provides that the Form 720 reporting floor stocks tax imposed under section 4682 on January 1, 1990, is due April 30, 1990, but the due date is extended (without application) until October 9, 1990. No penalty will be imposed on account of failure to file the return before the date for filing, as extended.

 The payment of tax is due on April 1, 1990.

SPECIAL RULE FOR DEPOSITS RELATING TO THE FIRST THREE SEMIMONTHLY PERIODS OF THE THIRD CALENDAR QUARTER OF 1990.

 Section 52.6302(c)-2T(b)(3) provides that the deposit of tax relating to section 4681 liability for the first three semimonthly periods of the third calendar quarter of 1990 is due September 27, 1990.

SPECIAL ANALYSES

 It has been determined that these rules are not major rules as defined in Executive Order 12291. Therefore, a Regulatory Impact Analysis is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to these regulations, and therefore, a final Regulatory Flexibility Analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking that cross-references to these regulations will be submitted to the Administrator of the Small Business Administration for comment on their impact on small business.

DRAFTING INFORMATION

 The principal author of these regulations is Ruth Hoffman, Office of Assistant Chief Counsel (Passthroughs and Special Industries). However, personnel from other offices of the Internal Revenue Service and Treasury Department participated in their development.

LIST OF SUBJECTS

26 CFR Part 52

 Excise taxes, Petroleum, Chemicals.

26 CFR Part 602

 Reporting and recordkeeping requirements.

Treasury Decision 8311

ADOPTION OF AMENDMENTS TO THE REGULATIONS

Accordingly, Title 26, Parts 52 and 602 of the Code of Federal Regulations are amended as follows:

Paragraph 1. The heading for Part 52 is revised to read as follows:

PART 52 -- ENVIRONMENTAL TAXES

Par. 2. The authority for Part 52 is revised to read as follows:

Authority: 26 U.S.C. 7805. Section 52.4682-3T also issued under 26 U.S.C. 4682(c)(2); sections 52.6011(a)-1T and 52.6011(a)-2T also issued under 26 U.S.C. 6011(a); sections 52.6071(a)-1, 52.6071(a)-2T, and 52.6071(a)-3T also issued under 26 U.S.C. 6071(a); section 52.6091-1T also issued under 26 U.S.C. 6091; section 52.6101-1T also issued under 26 U.S.C. 6101; section 52.6109(a)-1T also issued under 26 U.S.C. 6109(a); sections 52.6302(c)-1, and 52.6302(c)-2T also issued under 26 U.S.C. 6302(a).

Par. 3. New sections 52.4681-0T, 52.4681-1T, 52.4682-1T, 52.4682-2T, 52.4682-3T, and 52.4682-4T are added to read as follows.

Section 52.4681-0T Table of Contents (temporary).

This section lists captions contained in sections 52.4681-1T, 52.4682-1T, 52.4682-2T, 52.4682-3T, and 52.4682-4T.

SECTION 52.4681-1T TAXES IMPOSED WITH RESPECT TO OZONE-DEPLETING CHEMICALS (TEMPORARY).

 (a) Taxes imposed

(a) TAXES IMPOSED. Sections 4681 and 4682 impose the following taxes with respect to ozone-depleting chemicals (ODCs):

(1) TAX ON ODCs. Section 4681(a)(1) imposes a tax on ODCs that are sold or used by the manufacturer or importer thereof. Except as otherwise provided in section 52.4682-1T (relating to the tax on ODCs), the amount of the tax is equal to the product of --

(i) The weight (in pounds) of the ODC;

(ii) The base tax amount (determined under section 4681(b)(1)(B) or (C)) for the calendar year in which the sale or use occurs; and

(iii) The ozone-depletion factor (determined under section 4682(b)) for the ODC.

(2) TAX ON IMPORTED TAXABLE PRODUCTS. Section 4681(a)(2) imposes a tax on imported taxable products that are sold or used by the importer thereof. Except as otherwise provided in section 52.4682-3T (relating to the tax on imported taxable products), the tax is computed by reference to the weight of the ODCs used as materials in the manufacture of the product. The amount of tax is equal to the tax that would have been imposed on the ODCs under section 4681(a)(1) if the ODCs had been sold in the United States on the date of the sale or use of the imported product. The weight of such ODCs is determined under section 52.4682-3T.

(3) FLOOR STOCKS TAX -- (i) IMPOSITION OF TAX. Section 4682(h) imposes a floor stocks tax on ODCs that --

(A) Are held by any person other than the manufacturer or importer of the ODC on a date specified in paragraph (a)(3)(ii) of this section; and

(B) Are held on such date for sale or for use in further manufacture.

(ii) DATES ON WHICH TAX IMPOSED. The floor stocks tax is imposed on January 1 of 1990, 1991, 1992, 1993, and 1994.

(iii) AMOUNT OF TAX. Except as otherwise provided in section 52.4682-4T (relating to floor stocks tax), the amount of the floor stocks tax is equal to the excess of --

(A) The tax that would be imposed on the ODC under section 4681(a)(1) if a sale or use of the ODC by its manufacturer or importer occurred on the date the floor stocks tax is imposed (the tentative tax amount), over

(B) The sum of the taxes previously imposed on the ODC under sections 4681 and 4682.

(b) CROSS-REFERENCES -- (1) TAX ON ODCs. Additional rules relating to the tax on ODCs are contained in sections 52.4682-1T and 52.4682-2T.

(2) TAX ON IMPORTED TAXABLE PRODUCTS. Additional rules relating to the tax on imported taxable products are contained in section 52.4682-3T.

(3) FLOOR STOCKS TAX. Additional rules relating to the floor stocks tax are contained in section 52.4682-4T.

(4) FILING RETURNS, PAYING TAX, AND MAKING DEPOSITS. Rules requiring returns reporting the taxes imposed under sections 4681 and 4682 are contained in sections 52.6011(a)-1T and 52.6011(a)-2T. Rules relating to the time for filing such returns are contained in sections 52.6071(a)-2T and 52.6071(a)-3T. Rules relating to the use of Government depositaries in connection with taxes imposed under section 4681 are contained in section 52.6302(c)-2T.

(c) DEFINITIONS OF GENERAL APPLICATION. The following definitions set forth the meaning of certain terms for purposes of the regulations under sections 4681 and 4682:

(1) OZONE-DEPLETING CHEMICAL. The term "ozone-depleting chemical" (ODC) means any chemical listed in section 4682(a)(2).

(2) UNITED STATES. The term "United States" has the meaning given such term by section 4612(a)(4). Under section 4612(a)(4) --

(i) The term "United States" means the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, any possession of the United States, the Commonwealth of the Northern Mariana Islands, and the Trust Territory of the Pacific Islands; and

(ii) The term includes --

(A) Submarine seabed and subsoil that would be treated as part of the United States (as defined in paragraph (c)(2)(i) of this section) under the principles of section 638 relating to continental shelf areas; and

(B) Foreign trade zones of the United States.

(3) MANUFACTURE. MANUFACTURER. The term "manufacture" when used with respect to any ODC or imported product includes its production, and the term "manufacturer" includes a producer.

(4) ENTRY INTO UNITED STATES FOR CONSUMPTION, USE, OR WAREHOUSING -- (i) IN GENERAL. Except as otherwise provided in this paragraph (c)(4), the term "entered into the United States for consumption, use, or warehousing" when used with respect to any goods means --

(A) Brought into the customs territory of the United States (the customs territory) if applicable customs law requires that the goods be entered into the customs territory for consumption, use, or warehousing;

(B) Admitted into a foreign trade zone for any purpose if like goods brought into the customs territory for such purpose would be entered into the customs territory for consumption, use, or warehousing; or

(C) Imported into any other part of the United States (as defined in paragraph (c)(2) of this section) for any purpose if like goods brought into the customs territory for such purpose would be entered into the customs territory for consumption, use, or warehousing.

(ii) ENTRIES DESCRIBED IN TWO OR MORE PROVISIONS. In the case of any goods with respect to which entries are described in two or more provisions of paragraph (c)(4)(i) of this section, only the first such entry is taken into account. Thus, if the admission of goods into a foreign trade zone is an entry into the United States for consumption, use, or warehousing, the subsequent entry of such goods into the customs territory will not be treated as an entry into the United States for consumption, use, or warehousing.

(iii) CERTAIN IMPORTED PRODUCTS NOT ENTERED FOR CONSUMPTION, USE, OR WAREHOUSING. Imported products that are entered into the United States for consumption, use, or warehousing do not include any imported products that --

(A) Are entered into the customs territory under Harmonized Tariff Schedule (HTS) heading 9801, 9802, 9803, or 9813;

(B) Would, if entered into the customs territory, be entered under any such heading; or

(C) Are brought into the United States by an individual if the product is brought in for use by the individual and is not expected to be used in a trade or business other than a trade or business of performing services as an employee.

(5) IMPORTER. The term "importer" means the person that first sells or uses goods after their entry into the United States for consumption, use, or warehousing (within the meaning of paragraph (c)(4) of this section).

(6) SALE. The term "sale" means the transfer of title or of substantial incidents of ownership (whether or not delivery to or payment by, the buyer has been made) for consideration which may include money, services, or property. The determination as to the time a sale occurs shall be made under applicable local law.

(7) USE -- (i) IN GENERAL. Except as otherwise provided in regulations under sections 4681 and 4682, ODCs and imported taxable products are used when --

(A) Used as a material in the manufacture of an article, whether by incorporation into such article, chemical transformation, release into the atmosphere, or otherwise; or

(B) Put into service in a trade or business or for production of income.

(ii) LOSS, DESTRUCTION, PACKAGING, WAREHOUSING, AND REPAIR. The loss, destruction, packaging, warehousing, or repair of ODCs and imported taxable products is not a use of the item lost, destroyed, packaged, warehoused, or repaired.

(iii) CROSS-REFERENCES TO EXCEPTIONS. For exceptions to the rule contained in paragraph (c)(7)(i) of this section, see --

(A) section 52.4682-1T(b)(2)(iii) (relating to the mixture election);

(B) section 52.4682-3T(c)(2) (relating to the election to treat entry of an imported taxable product as use); and

(C) section 52.4682-3T(c)(3) (relating to treating sale of an article incorporating an imported taxable product as the first sale or use of the product).

(8) POUND. The term "pound" means a unit of weight that is divided into 16 ounces.

(d) EFFECTIVE DATE. The regulations under sections 4681 and 4682 are effective as of January 1, 1990, and apply to --

(1) ODCs that the manufacturer or importer thereof first sells or uses after December 31, 1989;

(2) Imported taxable products that the importer thereof first sells or uses after December 31, 1989; and

(3) ODCs held for sale or for use in further manufacture by any person other than the manufacturer or importer thereof on January 1 of 1990, 1991, 1992, 1993, or 1994.

SECTION 52.4682-1T OZONE-DEPLETING CHEMICALS (TEMPORARY).

(a) OVERVIEW. This section provides rules relating to the tax imposed on ozone-depleting chemicals (ODCs) under section 4681, including rules for identifying taxable ODCs and determining when the tax is imposed and rules prescribing special treatment for certain ODCs (i.e., ODCs used as feedstocks, ODCs used in the manufacture of rigid foam insulation, and Halons). See section 52.4681-1T(a)(1) and (c) for general rules and definitions relating to the tax on ODCs.

(b) TAXABLE ODCs; TAXABLE EVENT -- (1) TAXABLE ODCs -- (i) IN GENERAL. Except as provided in paragraphs (c) through (g) of this section, an ODC is taxable if --

(A) It is listed in section 4682(a)(2) on the date it is sold or used by its manufacturer or importer; and

(B) It is manufactured in the United States or entered into the United States for consumption, use, or warehousing.

(ii) STORAGE CONTAINERS. An ODC described in paragraph (b)(1)(i) of this section is taxable without regard to the type or size of storage container in which the ODC is held.

(2) TAXABLE EVENT -- (i) IN GENERAL. The tax on an ODC is imposed when the ODC is first sold or used (as defined in section 52.4681-1T(c)(6) and (7)) by its manufacturer or importer.

(ii) MIXTURES. Except as otherwise provided in paragraph (b)(2)(iii) of this section, the creation of a mixture containing two or more ingredients is treated as a use of the ODCs contained in the mixture. Thus, except as otherwise provided in paragraph (b)(2)(iii) of this section --

(A) The tax on the ODCs contained in mixtures created after December 31, 1989, is imposed when the mixture is created and not on any subsequent sale or use of the mixture; and

(B) No tax is imposed under section 4681 on the ODCs contained in mixtures created before January 1, 1990.

(iii) MIXTURE ELECTION -- (A) IN GENERAL. A manufacturer or importer may elect to treat the sale or use of mixtures containing ODCs as the first sale or use of the ODCs contained in the mixtures. If an election under this paragraph (b)(2)(iii) applies to a mixture sold or used after December 31, 1989 (including any such mixture created before January 1, 1990), the tax on the ODCs contained in the mixture is imposed on the date of such sale or use.

(B) APPLICABILITY OF ELECTION. The only election permitted under this paragraph (b)(2)(iii) is an election for the first calendar quarter beginning after December 31, 1989, and all subsequent periods. Any such election applies to all mixtures sold or used by the manufacturer or importer after December 31, 1989 (including any such mixture created before January 1, 1990). Except as provided in section 52.6071(a)-2T(a)(3), the election may be revoked only with the consent of the Commissioner.

(C) MAKING THE ELECTION. An election under this paragraph (b)(2)(iii) shall be made in accordance with the instructions for the return on which the manufacturer or importer reports liability for tax under section 4681.

(c) ODCs USED AS A FEEDSTOCK -- (1) EXEMPTION FROM TAX. No tax is imposed on an ODC if the manufacturer or importer of the ODC --

(i) Uses the ODC as a feedstock in the manufacture of another chemical; or

(ii) Sells the ODC in a qualifying sale (as defined in section 52.4682-2T) for use as a feedstock.

(2) EXCESS PAYMENTS -- (i) IN GENERAL. Under section 4682(d)(2), a credit or refund is allowed to a person if --

(A) The person uses an ODC as a feedstock; and

(B) The amount of any tax paid with respect to the ODC under section 4681 or 4682 was not determined under section 4682(d)(2).

(ii) PROCEDURAL RULES. See section 6402 and the regulations thereunder for rules relating to claiming a credit or refund of tax paid with respect to ODCs that are used as a feedstock. A credit against the income tax is not allowed for the amount determined under section 4682(d)(2).

(3) DEFINITION. An ODC is used as a feedstock only if the ODC is entirely consumed in the manufacture of another chemical (within the meaning of 40 CFR 82.3(s) (relating to the definition of production in connection with regulations on the protection of atmospheric ozone)). Thus, the transformation of an ODC into one or more new compounds (such as the transformation of CFC-113 into chlorotrifluoroethylene (CTFE or 1113) or of CFC-113 into CFC-115 and CFC-116)) is treated as use as a feedstock. On the other hand, the ODCs used in a mixture (including an azeotrope such as R-500 or R- 502) are not used as a feedstock.

(4) QUALIFYING SALE. A sale of ODCs for use as a feedstock is a qualifying sale if the requirements of section 52.4682-2T(b)(1) are satisfied with respect to such sale.

(d) ODCs USED IN THE MANUFACTURE OF RIGID FOAM INSULATION -- (1) PHASE-IN OF TAX -- (i) IN GENERAL. The amount of tax imposed on an ODC is determined under section 4682(g) if the manufacturer or importer of the ODC --

(A) Uses the ODC during 1990, 1991, 1992, or 1993 in the manufacture of rigid foam insulation; or

(B) Sells the ODC in a qualifying sale (as defined in section 52.4682-2T) during 1990, 1991, 1992, or 1993.

(ii) AMOUNT OF TAX. Under section 4682(g), ODCs described in paragraph (d)(1)(i) of this section are not taxed if sold or used during 1990 and are taxed at a reduced rate if sold or used during 1991, 1992, or 1993.

(2) EXCESS PAYMENTS -- (i) IN GENERAL. Under section 4682(g)(3), a credit against income tax or a refund is allowed to a person if --

(A) The person uses an ODC during 1990, 1991, 1992, or 1993 in the manufacture of rigid foam insulation; and

(B) The amount of any tax paid with respect to the ODC under section 4681 or 4682 was not determined under section 4682(g).

(ii) PROCEDURAL RULES -- (A) The amount determined under section 4682(g)(3) shall be treated as a credit described in section 34(a) (relating to credits for gasoline and special fuels) unless a claim for refund has been filed.

(B) See section 6402 and the regulations thereunder for rules relating to claiming a credit or refund of the tax paid with respect

to ODCs that are used in the manufacture of rigid foam insulation.

(3) DEFINITION -- (i) RIGID FOAM INSULATION. The term "rigid foam insulation" means any rigid foam that is designed for use as thermal insulation in buildings, equipment, appliances, tanks, railcars, trucks, or vessels, or on pipes, including any such rigid foam actually used for purposes other than insulation. Information such as test reports on R-values and advertising material reflecting R-value claims for a particular rigid foam may be used to show that such rigid foam is designed for use as thermal insulation.

(ii) RIGID FOAM -- (A) IN GENERAL. The term "rigid foam" means any closed cell polymeric foam (whether or not rigid) in which chlorofluorocarbons are used to fill voids within the polymer.

(B) EXAMPLES OF RIGID FOAM PRODUCTS. Rigid foam includes extruded polystyrene foam, polyisocyanurate foam, spray and pour-in- place polyurethane foam, polyethylene foam, phenolic foam, and any other product that the Commissioner identifies as rigid foam in a pronouncement of general applicability. The form of a product identified under this paragraph (d)(3)(ii)(B) does not affect its character as rigid foam. Thus, such products are rigid foam whether in the form of a board, sheet, backer rod, or wrapping, or in a form applied by spraying, pouring, or frothing.

(4) USE IN MANUFACTURE. An ODC is used in the manufacture of rigid foam insulation if it is incorporated into such product or is expended as a propellant or otherwise in the manufacture or application of such product.

(5) QUALIFYING SALE. A sale of an ODC for use in the manufacture of rigid foam insulation is a qualifying sale if the requirements of section 52.4682-2T(b)(2) are satisfied with respect to such sale.

(e) HALONS; PHASE-IN OF TAX. The amount of tax imposed on Halon- 1211, Halon-1301, or Halon-2402 (Halon) is determined under section 4682(g) if the manufacturer or importer of the Halon sells or uses the Halon during 1990, 1991, 1992, or 1993. Under section 4682(g), Halons are not taxed if sold or used during 1990 and are taxed at a reduced rate if sold or used during 1991, 1992, or 1993.

(f) RECYCLING. [Reserved]

(g) EXPORTS. [Reserved]

SECTION 52.4682-2T QUALIFYING SALES (TEMPORARY).

(a) IN GENERAL -- (1) SPECIAL RULES APPLICABLE TO CERTAIN SALES. Special rules apply to sales of ODCs in the following cases:

(i) Under section 4682(d)(2), section 52.4682-1T(c), and section 52.4682-4T(d)(2)(i) (relating to ODCs used as a feedstock), ODCs sold in qualifying sales are not taxed.

(ii) Under section 4682(g), section 52.4682-1T(d), and section 52.4682-4T(d)(2)(ii) (relating to ODCs used in the manufacture of rigid foam insulation), ODCs sold in qualifying sales are not taxed in 1990 and are taxed at a reduced rate in 1991, 1992, and 1993.

(2) QUALIFYING SALES. A sale of ODCs is not a qualifying sale unless the requirements of this section are satisfied. Although submission of a document to the Internal Revenue Service is not required to establish that a sale of ODCs is a qualifying sale, the registration certificates required by this section shall be made available for inspection by internal revenue agents and officers.

(b) REQUIREMENTS FOR QUALIFICATION -- (1) USE AS A FEEDSTOCK. A sale of ODCs is a qualifying sale for purposes of sections 52.4682-lT(c) and 52.4682-4T(d)(2)(i) if the manufacturer or importer of the ODCs --

(i) Obtains a registration certificate in substantially the form set forth in paragraph (d)(2) of this section from the purchaser of the ODCs; and

(ii) Relies on the certificate in good faith.

(2) USE IN THE MANUFACTURE OF RIGID FOAM INSULATION. A sale of ODCs is a qualifying sale for purposes of sections 52.4682-lT(d) and 52.4682-4T(d)(2)(ii) if the manufacturer or importer of the ODCs --

(i) Obtains a registration certificate in substantially the form set forth in paragraph (d)(3) of this section from the purchaser of the ODCs; and

(ii) Relies on the certificate in good faith.

(c) GOOD FAITH RELIANCE -- (1) IN GENERAL. The requirements of paragraph (b) of this section are not satisfied with respect to a sale of ODCs and the sale is not a qualifying sale if at the time of the sale --

(i) The manufacturer or importer has reason to believe that the purchaser will use the ODCs other than for the purpose set forth in the certificate; or

(ii) The Internal Revenue Service has notified the manufacturer or importer that the purchaser's right to provide a certificate has been withdrawn.

(2) WITHDRAWAL OF RIGHT TO PROVIDE A CERTIFICATE. The Internal Revenue Service may withdraw the right of a purchaser to provide a certificate to its supplier if such purchaser uses the ODCs to which its certification applies other than for the purpose set forth in such certificate. The Internal Revenue Service may notify the supplier to whom the purchaser provided the certificate that the purchaser's right to provide a certificate has been withdrawn.

(d) REGISTRATION CERTIFICATE -- (1) IN GENERAL. This paragraph (d) sets forth the form of the registration certificates that satisfy the requirements of paragraph (b)(1) and (2) of this section. The registration certificate shall consist of a statement executed and signed by the purchaser under penalties of perjury. A certificate may apply to a single purchase or may cover purchases for up to four years from its effective date. A new certificate must be given to the supplier if any information on the current certificate changes. The certificate may be included as part of any business records normally used to document a sale.

(2) CERTIFICATE RELATING TO ODCS USED AS A FEEDSTOCK -- (i) ODCS THAT WILL BE RESOLD FOR USE BY THE SECOND PURCHASER AS A FEEDSTOCK. If the purchaser will resell the ODCs to a second purchaser for use by such second purchaser as a feedstock, the certificate provided by the purchaser must be in substantially the following form:

CERTIFICATE OF PURCHASER OF CHEMICALS THAT WILL BE RESOLD FOR USE BY THE SECOND PURCHASER AS A FEEDSTOCK

(To support tax-free sales under section 4682(d)(2) of the Internal Revenue Code.)

Effective Date _______

Expiration Date _______

The undersigned purchaser ("Purchaser") hereby certifies under penalties of perjury that the following percentage of ozone-depleting chemicals purchased from

______________________________ (name and address of seller)

will be resold by Purchaser to persons (Second Purchasers) that certify to Purchaser that they are purchasing the ozone-depleting chemicals for use as a feedstock (as defined in section 52.4682-1T(c)(3) of the Environmental Tax Regulations).

 PRODUCT                  PERCENTAGE

____ All shipments to Purchaser at the following location(s).

____

____ All shipments to Purchaser under the following Purchaser account number(s):

_____

____ All shipments to Purchaser under the following purchase order(s):

_____

_____ One or more shipments to Purchaser identified as follows:

_____

Purchaser will not claim a credit or refund under section 4682(d)(2)(B) of the Internal Revenue Code for any ozone-depleting chemicals covered by this certificate.

Purchaser understands that any use by Purchaser of the ozone- depleting chemicals to which this certificate applies other than for the purpose set forth in this certificate may result in the withdrawal by the Internal Revenue Service of Purchaser's right to provide a certificate.

Purchaser will retain the business records needed to document the sales covered by this certificate and will make such records available for inspection by Government officers. Purchaser also will retain and make available for inspection by Government officers the certificates of its Second Purchasers.

Purchaser has not been notified by the Internal Revenue Service that its right to provide a certificate has been withdrawn. In addition, the Internal Revenue Service has not notified Purchaser that the right to provide a certificate has been withdrawn from any Second Purchaser who will purchase ozone-depleting chemicals to which this certificate applies.

Purchaser understands that the fraudulent use of this certificate may subject Purchaser and all parties making such fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

_______________________________________________________ Signature of Purchaser or agent representing Purchaser

_______________________________________________________ Title

_______________________________________________________ Name of Purchaser

_______________________________________________________ Address

_______________________________________________________ Taxpayer Identification Number

(ii) ODCS THAT WILL BE USED BY THE PURCHASER AS A FEEDSTOCK. If the purchaser will use the ODCs as a feedstock, the certificate provided by the purchaser must be in substantially the following form:

CERTIFICATE OF PURCHASER OF CHEMICALS THAT WILL BE USED BY THE PURCHASER AS A FEEDSTOCK

(To support tax-free sales under section 4682(d)(2) of the Internal Revenue Code.)

Effective Date _____

Expiration Date _____

The undersigned purchaser ("Purchaser") hereby certifies under penalties of perjury that the following percentage of ozone-depleting chemicals purchased from

_____________________________ (name and address of seller)

will be used by Purchaser as a feedstock (as defined in section 52.4682-1T(c)(3) of the Environmental Tax Regulations).

 PRODUCT                  PERCENTAGE

____ All shipments to Purchaser at the following location(s).

____

____ All shipments to Purchaser under the following Purchaser account number(s):

_____

____ All shipments to Purchaser under the following purchase order(s):

_____

_____ One or more shipments to Purchaser identified as follows:

_____

Purchaser will not claim a credit or refund under section 4682(d)(2)(B) of the Internal Revenue Code for any ozone-depleting chemicals covered by this certificate.

Purchaser understands that any use of the ozone-depleting chemicals to which this certificate applies other than for the purpose set forth in this certificate may result in the withdrawal by the Internal Revenue Service of Purchaser's right to provide a certificate.

Purchaser will retain the business records needed to document the sales covered by this certificate and will make such records available for inspection by Government officers. Purchaser also will retain and make available for inspection by Government officers the certificates of its Second Purchasers.

Purchaser has not been notified by the Internal Revenue Service that its right to provide a certificate has been withdrawn.

Purchaser understands that the fraudulent use of this certificate may subject Purchaser and all parties making such fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

_______________________________________________________ Signature of Purchaser or agent representing Purchaser

_______________________________________________________ Title

_______________________________________________________ Name of Purchaser

_______________________________________________________ Address

_______________________________________________________ Taxpayer Identification Number

(3) CERTIFICATE RELATING TO ODCs USED IN THE MANUFACTURE OF RIGID FOAM INSULATION -- (i) ODCS THAT WILL BE RESOLD TO A SECOND PURCHASER FOR USE BY THE SECOND PURCHASER IN THE MANUFACTURE OF RIGID FOAM INSULATION. If the purchaser will resell the ODCs to a second purchaser for use by such second purchaser in the manufacture of rigid foam insulation, the certificate provided by the purchaser must be in substantially the following form:

CERTIFICATE OF PURCHASER OF CHEMICALS THAT WILL BE RESOLD FOR USE BY THE SECOND PURCHASER IN THE MANUFACTURE OF RIGID FOAM INSULATION

(To support tax-free or tax-reduced sales under section 4682(g) of the Internal Revenue Code.)

Effective Date ____

Expiration Date ____

The undersigned purchaser ("Purchaser") hereby certifies under penalties of perjury that the following percentage of ozone-depleting chemicals purchased from

________________________________ (name and address of seller)

will be resold by Purchaser to persons (Second Purchasers) that certify to Purchaser that they are purchasing the ozone-depleting chemicals for use in the manufacture of rigid foam insulation (as defined in section 52.4682-1T(d)(3) and (4) of the Environmental Tax Regulations).

 PRODUCT                  PERCENTAGE

____ All shipments to Purchaser at the following location(s):

____

____ All shipments to Purchaser under the following Purchaser account number(s):

____

____ All shipments to Purchaser under the following purchase order(s):

____

____ One or more shipments to Purchaser identified as follows:

____

Purchaser will not claim a credit or refund under section 4682(g)(3) of the Internal Revenue Code for any ozone-depleting chemicals covered by this certificate.

Purchaser understands that any use by Purchaser of the ozone- depleting chemicals to which this certificate applies other than for the purpose set forth in this certificate may result in the withdrawal by the Internal Revenue Service of Purchaser's right to provide a certificate.

Purchaser will retain the business records needed to document the sales covered by this certificate and will make such records available for inspection by Government officers. Purchaser also will retain and make available for inspection by Government officers the certificates of its Second Purchasers.

Purchaser has not been notified by the Internal Revenue Service that its right to provide a certificate has been withdrawn. In addition, the Internal Revenue Service has not notified Purchaser that the right to provide a certificate has been withdrawn from any Second Purchaser who will purchase ozone-depleting chemicals to which this certificate applies.

Purchaser understands that the fraudulent use of this certificate may subject Purchaser and all parties making such fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

______________________________________________________ Signature of Purchaser or agent representing Purchaser

_____________________________ Title

__________________________________ Name of Purchaser

________________________ Address

_____________________________ Taxpayer Identification Number

(ii) ODCS THAT WILL BE USED BY THE PURCHASER IN THE MANUFACTURE OF RIGID FOAM INSULATION. If the purchaser will use the ODCs in the manufacture of rigid foam insulation, the certificate provided by the purchaser must be in substantially the following form:

CERTIFICATE OF PURCHASER OF CHEMICALS THAT WILL BE USED BY THE PURCHASER IN THE MANUFACTURE OF RIGID FOAM INSULATION

(To support tax-free or tax-reduced sales under section 4682(g) of the Internal Revenue Code.)

Effective Date ____

Expiration Date ____

The undersigned purchaser ("Purchaser") hereby certifies under penalties of perjury that the following percentage of ozone-depleting chemicals purchased from

__________________________________ (name and address of seller)

will be used by Purchaser in the manufacture of rigid foam insulation (as defined in section 52.4682-1T(d)(3) and (4) of the Environmental Tax Regulations).

 PRODUCT                  PERCENTAGE

____ All shipments to Purchaser at the following location(s):

____

____ All shipments to Purchaser under the following Purchaser account number(s):

____

____ All shipments to Purchaser under the following purchase order(s)

____

____ One or more shipments to Purchaser identified as follows:

____

Purchaser will not claim a credit or refund under section 4682(g)(3) of the Internal Revenue Code for any ozone-depleting chemicals covered by this certificate.

Purchaser understands that any use by Purchaser of the ozone- depleting chemicals to which this certificate applies other than in the manufacture of rigid foam insulation may result in the withdrawal by the Internal Revenue Service of Purchaser's right to provide a certificate.

Purchaser will retain the business records needed to document the use in the manufacture of rigid foam insulation of the ozone- depleting chemicals to which this certificate applies and will make such records available for inspection by Government officers.

Purchaser has not been notified by the Internal Revenue Service that its right to provide a certificate has been withdrawn.

Purchaser understands that the fraudulent use of this certificate may subject Purchaser and all parties making such fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.

______________________________________________________ Signature of Purchaser or agent representing Purchaser

_____________________________ Title

__________________________________ Name of Purchaser

________________________ Address

_____________________________ Taxpayer Identification Number

SECTION 52.4682-3T IMPORTED TAXABLE PRODUCTS (TEMPORARY).

(a) OVERVIEW; REFERENCES TO TABLES -- (1) OVERVIEW. This section provides rules relating to the tax imposed on imported taxable products under section 4681, including rules for identifying imported taxable products, determining the weight of the ozone-depleting chemicals (ODCs) used as materials in the manufacture of such products, and computing the amount of tax on such products. See section 52.4681-1T(a)(2) and (c) for general rules and definitions relating to the tax on imported taxable products.

(2) REFERENCES TO TABLES. When used in this section --

(i) The term "Imported Products Table" (Table) refers to the initial Table set forth in paragraph (f)(6) of this section and any superseding Table issued under paragraph (f)(7) of this section; and

(ii) The term "current Imported Products Table" (current Table) used with respect to a product refers to the Table in effect on the date such product is first sold or used by the importer thereof.

(b) IMPORTED TAXABLE PRODUCTS -- (1) IN GENERAL. Except as provided in paragraph (b)(2) of this section, the term "imported taxable product" means any product that --

(i) Is entered into the United States for consumption, use, or warehousing; and

(ii) Is listed in the current Table.

(2) EXCEPTIONS -- (i) IN GENERAL. A product is not treated as an imported taxable product if --

(A) The product is listed in Part I of the current Table and the adjusted tax with respect to the product is de minimis (within the meaning of paragraph (b)(2)(ii) of this section); or

(B) The product is listed in Part II of the current Table, the adjusted tax with respect to the product is de minimis (within the meaning of paragraph (b)(2)(ii) of this section), and the ODCs used as materials in the manufacture of the product were not used for purposes of refrigeration or air conditioning, creating an aerosol or foam, or manufacturing electronic components.

(ii) DE MINIMIS ADJUSTED TAX. The adjusted tax with respect to a product is de minimis if such tax is less than one/tenth of one percent of the importer's cost of acquiring such product. The term "adjusted tax" means the tax that would be imposed under section 4681 on the ODCs used as materials in the manufacture of such product if such ODCs were sold in the United States and the base tax amount were $1.00.

(c) TAXABLE EVENT -- (1) IN GENERAL. Except as otherwise provided in paragraph (c)(2) and (3) of this section, the tax on an imported taxable product is imposed when the product is first sold or used (as defined in section 52.4681-1T(c)(6) and (7)) by its importer.

(2) ELECTION TO TREAT IMPORTATION AS USE -- (i) IN GENERAL. An importer may elect to treat the entry of products into the United States as the use of such products. In the case of imported taxable products to which an election under this paragraph (c)(2) applies --

(A) Tax is imposed on the products on the date of entry (as determined under paragraph (c)(2)(ii) of this section) if the products are entered into the United States after the election becomes effective;

(B) Tax is imposed on the products on the date the election becomes effective if the products were entered into the United States after December 31, 1989, and before the election becomes effective; and

(C) No tax is imposed if the products were entered into the United States before January 1, 1990.

(ii) DATE OF ENTRY. The date of entry is determined by reference to customs law. If the actual date is unknown, the importer may use any reasonable and consistent method to determine the date of entry, provided that such date is within 10 business days of arrival of products in the United States.

(iii) APPLICABILITY OF ELECTION. An election under this paragraph (c)(2) applies to all imported taxable products that are held (and have not been used) by the importer at the time the election becomes effective and all imported taxable products that are entered into the United States by the importer after the election becomes effective. An election under this paragraph (c)(2) becomes effective at the beginning of the first calendar quarter to which the election applies. Except as provided in section 52.6071(a)-2T(a)(3) and (4), the election may be revoked only with the consent of the Commissioner.

(iv) MAKING THE ELECTION. An election under this paragraph (c)(2) shall be made in accordance with the instructions for the return on which the importer is required to report liability for tax under section 4681.

(3) TREATING THE SALE OF AN ARTICLE INCORPORATING AN IMPORTED TAXABLE PRODUCT AS THE FIRST SALE OR USE OF SUCH PRODUCT -- (i) IN GENERAL. In the case of articles to be sold, an importer may treat the sale of an article manufactured or assembled in the United States as the first sale or use of an imported taxable product incorporated in such article, but only if the importer --

(A) Has consistently treated the sale of similar articles as the first sale or use of similar imported taxable products; and

(B) Has not made an election under paragraph (c)(2) of this section.

(ii) SIMILAR ARTICLES AND IMPORTED TAXABLE PRODUCTS. An importer may establish any reasonable criteria for determining whether articles or imported taxable products are similar for purposes of this paragraph (c)(3).

(iii) ESTABLISHMENT OF CONSISTENT TREATMENT. An importer has consistently treated the sale of similar articles as the first sale or use of similar imported taxable products only if such treatment is reflected in the computation of tax on the importer's returns for all prior calendar quarters in which such treatment would affect tax liability.

(iv) EXAMPLE. The following example illustrates the application of this paragraph (c)(3):

EXAMPLE. (A) An importer of printed circuits and other electronic components uses those products in assembling television receivers in the United States and also uses the printed circuits in assembling VCRs in the United States. Under the importer's criteria for determining similarity, printed circuits are similar to other printed circuits, but not to the other electronic components. In addition, television receivers are similar to other television receivers, but not to VCRs. The importer has not made an election under paragraph (c)(2) of this section.

(B) Under this paragraph (c)(3), the importer may treat the sale of the television receivers as the first sale or use of the imported printed circuits incorporated into the television receivers. In that case, the tax on the printed circuits would be imposed when the television receivers are sold rather than when the printed circuits are used in assembling the television receivers.

(C) The importer may treat the sale of the television receivers as the first sale or use of the printed circuits incorporated into the television receivers even if the sale of the television receivers is not treated as the first sale or use of the other electronic components incorporated into the television receivers and even if the sale of VCRs is not treated as the first sale or use of the printed circuits incorporated into the VCRs. Under paragraph (c)(3)(i)(A) of this section, however, the importer must have consistently treated the sale of television receivers as the first sale or use of printed circuits incorporated into the receivers. Thus, in the case of television receivers that were assembled before January 1, 1990, and sold after December 31, 1989, the importer must have treated the sale of the television receivers as the first sale or use of the printed circuits incorporated into the television receivers when reporting tax under section 4681 with respect to such printed circuits.

(d) ODCs USED AS MATERIALS IN THE MANUFACTURE OF IMPORTED TAXABLE PRODUCTS -- (1) ODC WEIGHT. The tax imposed on an imported taxable product under section 4681 is computed by reference to the weight of the ODCs used as materials in the manufacture of the product (ODC weight). The ODC weight of a product includes the weight of ODCs used as materials in the manufacture of any components of the product.

(2) ODCs USED AS MATERIALS IN THE MANUFACTURE OF A PRODUCT. Except as provided in paragraph (d)(3) of this section, an ODC is used as a material in the manufacture of a product if the ODC is --

(i) Incorporated into the product;

(ii) Released into the atmosphere in the process of manufacturing the product; or

(iii) Otherwise used in the manufacture of the product (but only to the extent the cost of the ODC is properly allocable to the product).

(3) PROTECTIVE PACKAGING. ODCs used in the manufacture of the protective material in which a product is packaged are not treated as ODCs used as materials in the manufacture of such product.

(4) EXAMPLE. The provisions of this paragraph (d) may be illustrated by the following example:

EXAMPLE. A, a manufacturer located outside the United States, uses ODCs as a solvent to clean the printed circuits it manufactures and as a coolant in the air-conditioning system of the factory in which the printed circuits are manufactured. The ODCs used as a solvent are released into the atmosphere, and, under paragraph (d)(2)(ii) of this section, are used as materials in the manufacture of the printed circuits. The ODCs used as a coolant in the air-conditioning system are also used in the manufacture of the printed circuits. Under paragraph (d)(2)(iii) of this section, these ODCs are used as materials in the manufacture of the printed circuits only to the extent the cost of the ODCs is properly allocable to the printed circuits.

(e) METHODS OF DETERMINING ODC WEIGHT; COMPUTATION OF TAX -- (1) IN GENERAL. This paragraph (e) sets forth the methods to be used for determining the ODC weight of an imported taxable product and a method to be used in computing the tax when the ODC weight cannot be determined. The amount of tax is computed separately for each imported taxable product and the method to be used in determining the ODC weight or otherwise computing the tax is separately determined for each such product. Thus, an importer may use one method in computing the tax on some imported taxable products and different methods in computing the tax on other products. For example, an importer of telephone sets may compute the tax using the exact method described in paragraph (e)(2) of this section for determining the ODC weight of telephone sets supplied by one manufacturer and using the Table method described in paragraph (e)(3) of this section for telephone sets supplied by other manufacturers that have not provided sufficient information to allow the importer to use the exact method.

(2) EXACT METHOD. If the importer determines the weight of each ODC used as a material in the manufacture of an imported taxable product and supports that determination with sufficient and reliable information, the ODC weight of the product is the weight so determined. Representations by the manufacturer of the product to the importer as to the weight of the ODCs used as materials in the manufacture of the product may be sufficient and reliable information for this purpose. Thus, a letter to the importer signed by the manufacturer may constitute sufficient and reliable information if the letter adequately identifies the product and states the weight of each ODC used as a material in the product's manufacture.

(3) TABLE METHOD -- (i) IN GENERAL. If the ODC weight of an imported taxable product is not determined using the exact method described in paragraph (e)(2) of this section and the current Table specifies the Table ODC weight of the product, the ODC weight of the product is the Table ODC weight. In computing the amount of tax, the Table ODC weight shall not be rounded.

(ii) SPECIAL RULES -- (A) ARTICLES ASSEMBLED IN THE UNITED STATES. An importer that assembles finished articles in the United States may compute the amount of tax imposed on the imported taxable products incorporated into the finished article by using the Table ODC weight specified for the article instead of the Table ODC weights specified for the components. For example, if an importer uses 600 imported camcorder subassemblies to manufacture 100 camcorders, the importer may compute the amount of tax on the subassemblies by using the Table ODC weight specified for camcorders. Thus, the tax imposed on the 600 subassemblies is equal to the tax that would be imposed on 100 camcorders.

(B) COMBINATION METHOD. This paragraph (e)(3)(ii)(B) applies to an imported taxable product if the current Table specifies weights for two or more ODCs with respect to the product and the importer of the product can determine the weight of any such ODC (and of any ODC used as a substitute for such ODC) and can support such determination with sufficient and reliable information. In determining the ODC weight of any such product, the importer may replace the weight specified in the Table for such ODC with the weight of such ODC and its substitutes (as determined by the importer). For example, if an importer has sufficient and reliable information to determine the amount of CFC-12 included in a product as a coolant (and to determine that no ODCs have been used as substitutes for CFC-12) but cannot determine the amount of CFC-113 used in manufacturing the product's electronic components, the importer may use the weight specified in the Table for CFC-113 and the actual weight determined by the importer for CFC-12 in determining the ODC weight of the product.

(C) ODCs USED IN THE MANUFACTURE OF RIGID FOAM INSULATION. In computing the tax using the method described in this paragraph (e)(3), any ODC for which the Table specifies a weight followed by an asterisk (*) shall be treated as an ODC used in the manufacture of rigid foam insulation (as defined in section 52.4682-1T(d)(3) and (4)).

(4) VALUE METHOD. If the importer cannot determine the ODC weight of an imported taxable product under the exact method described in paragraph (e)(2) of this section and the Table ODC weight of the product is not specified, the tax imposed on the product under section 4681 is one percent of the entry value of the product.

(5) ADJUSTMENT FOR PRIOR TAXES -- (i) IN GENERAL. If any manufacture with respect to an imported taxable product occurred in the United States or the product incorporates a taxed component or a taxed chemical was used in its manufacture, the product's ODC weight (or value) attributable to manufacture within the United States or to taxed components or taxed chemicals shall be disregarded in computing the tax on such product using a method described in paragraph (e)(2), (3), or (4) of this section.

(ii) TAXED COMPONENT. The term "taxed component" means any component that previously was subject to tax as an imported taxable product or that would have been so taxed if section 4681 had been in effect for periods before January 1, 1990.

(iii) TAXED CHEMICAL. The term "taxed chemical" means any ODC that previously was subject to tax.

(f) IMPORTED PRODUCTS TABLE -- (1) IN GENERAL. This paragraph (f) contains rules relating to the Imported Products Table (Table) and sets forth the initial Table. The Table lists all the products that are subject to the tax on imported taxable products and specifies the Table ODC weight of each product for which such a weight has been determined.

(2) APPLICABILITY OF INITIAL TABLE -- (i) IN GENERAL. Except as provided in paragraph (f)(2)(ii) of this section, the Table contained in paragraph (f)(6) of this section is effective on January 1, 1990, and will remain in effect until superseded by a revenue procedure issued under paragraph (f)(7) of this section.

(ii) TREATMENT OF CERTAIN PRODUCTS. Products included in a listing that is preceded by a double asterisk (**) in the initial Table shall not be treated as imported taxable products until October 1, 1990.

(3) IDENTIFICATION OF PRODUCTS -- (i) IN GENERAL. Each listing in the Table identifies a product by name and includes only products that are described by that name. Most listings identify a product by both name and Harmonized Tariff Schedule (HTS) heading. In such cases, a product is included in that listing only if the product is described by that name and the rate of duty on the product is determined by reference to that HTS heading. For example, the Table lists "radios -- 8527.19" and "radio combinations -- 8527.31" Therefore, a radio entered under HTS heading 8527.19 is not included within the listing for radio combinations.

(ii) ELECTRONIC ITEMS NOT LISTED BY SPECIFIC NAME -- (A) IN GENERAL. Part II of the Table contains a listing for electronic items that are not included within any other listing in the Table. An imported product is included in this listing only if the product is a component whose operation involves the use of nonmechanical amplification or switching devices such as tubes, transistors, and integrated circuits or more than 15 percent of the cost of the product is attributable to such components. Such components do not include passive electrical devices such as resistors and capacitors.

(B) CERTAIN ITEMS NOT INCLUDED. Items such as screws, nuts, bolts, plastic parts, and similar specially fabricated parts that may be used to construct an electronic item are not themselves included in the listing for electronic items.

(4) RULES FOR LISTING PRODUCTS. Products are listed in the Table in accordance with the following rules:

(i) LISTING IN PART I. A product is listed in Part I of the Table if the Commissioner has determined that --

(A) The ODC weight of the product is not de minimis when the product is produced using the predominant method of manufacturing the product; and

(B) None of the ODCs used as materials in the manufacture of the product under the predominant method are used for purposes of refrigeration or air conditioning, creating an aerosol or foam, or manufacturing electronic components.

(ii) LISTING IN PART II. A product is listed in Part II of the Table if the Commissioner has determined that the ODCs used as materials in the manufacture of the product under the predominant method are used for purposes of refrigeration or air conditioning, creating an aerosol or foam, or manufacturing electronic components.

(iii) LISTING IN PART III. A product is listed in Part III of the Table if the Commissioner has determined that the product is not an imported taxable product and the product would otherwise be included within a listing in Part II of the Table. For example, floppy disk drive units are listed in Part III because they are not imported taxable products and they would, but for their listing in Part III, be included within the Part II listing for electronic items not specifically identified.

(5) TABLE ODC WEIGHT. The Table ODC weight of a product is the weight, determined by the Commissioner, of the ODCs that are used as materials in the manufacture of the product under the predominant method of manufacturing. The Table ODC weight is given in pounds per single unit of product unless otherwise specified.

(6) INITIAL TABLE. The initial Table is set forth below:

 IMPORTED PRODUCTS TABLE

(g) REQUESTS FOR MODIFICATION OF TABLE -- (1) IN GENERAL. Any manufacturer or importer of a product may request that the Commissioner modify the Table in any of the following respects:

(i) Adding a product to the Table and specifying its Table ODC weight.

(ii) Removing a product from the Table.

(iii) Changing or specifying the Table ODC weight of a product.

(2) FORM OF REQUEST. The Commissioner will consider a request for modification that includes the following:

(i) The name, address, taxpayer identifying number, and principal place of business of the requester.

(ii) For each product with respect to which a modification is requested:

(A) The name of the product;

(B) The HTS heading or subheading;

(C) The type of modification requested;

(D) The Table ODC weight that should be specified for the product if the request relates to adding a product or changing or specifying its Table ODC weight; and

(E) The data supporting the request.

(3) PUBLIC NOTICE AND COMMENTS -- (i) IN GENERAL. Before considering requests for modification received during a calendar quarter, the Commissioner will --

(A) Publish a notice in the Federal Register summarizing such requests; and

(B) Solicit written comments on the proposed modifications.

(ii) FORM OF COMMENTS. The Commissioner will consider written comments on a proposed modification if the comments include--

(A) The name, address, taxpayer identifying number, and principal place of business of the commenter;

(B) An identification of the proposed modification to which the comments relate;

(C) An identification of incorrect statements and supporting data in the request for modification; and

(D) The data supporting each of the commenter's claims that the request contains incorrect information.

(4) ADDRESS. The address for submission of requests and comments under this paragraph (g) is: Internal Revenue Service, Attn: CC:CORP:T:R (Imported Products Table), Room 4429, Washington, D.C. 20224.

(5) PUBLIC INSPECTION AND COPYING. Requests and comments submitted under this paragraph (g) will be available in the Internal Revenue Service Freedom of Information Reading Room for public inspection and copying.

SECTION 52.4682-4T FLOOR STOCKS TAX (TEMPORARY).

(a) OVERVIEW. This section provides rules for identifying ozone- depleting chemicals (ODCs) that are subject to the floor stocks tax imposed by section 4682(h)(1), determining the person that is liable for the tax, and computing the amount of the tax. See section 52.4681-1T(a)(3) and (c) for general rules and definitions relating to the floor stocks tax.

(b) ODCS SUBJECT TO FLOOR STOCKS TAX -- (1) ODCS THAT ARE HELD FOR SALE OR FOR USE IN FURTHER MANUFACTURE -- (i) IN GENERAL. The floor stocks tax is imposed only on an ODC that is held for sale or for use in further manufacture on the date the tax is imposed. This paragraph (b)(l) provides rules for identifying ODCs held for sale or for use in further manufacture.

(ii) HELD FOR SALE. For purposes of determining whether an ODC is held for sale, the term "sale" shall have the meaning set forth in section 52.4681-1T(c)(6). ODCs held for sale include ODCs that will be sold in connection with the provision of services or in connection with the sale of a manufactured article and, in such cases, include ODCs that will be sold without the statement of a separate charge for those ODCs.

(iii) HELD FOR USE IN FURTHER MANUFACTURE. An ODC is held for use in further manufacture if --

(A) The ODC will be used as a material (within the meaning of paragraph (b)(l)(iv) of this section) in the manufacture of an article; and

(B) Such article will be held for sale.

(iv) USE AS MATERIAL -- (A) IN GENERAL. Except as provided in paragraph (b)(l)(iv)(B) of this section, an ODC will be used as a material in the manufacture of an article if the ODC will be --

(1) Incorporated into the article; or

(2) Released into the atmosphere in the process of manufacturing the article.

(B) ODCS USED IN EQUIPMENT. An ODC is not used as a material in the manufacture of an article if the ODC is (or will be) contained in equipment used in such manufacture and the ODC will be used for its intended purpose without being released from such equipment. Thus, ODCs that are (or will be) used as coolants in a factory's air- conditioning system are not used as materials in the manufacture of articles produced in the factory.

(v) STORAGE CONTAINERS. The floor stocks tax is imposed on an ODC without regard to the type or size of the storage container in which the ODC is held. Thus, the tax may apply to an ODC whether it is in a 14-ounce can or a 30-pound tank.

(vi) EXAMPLES. The provisions of this paragraph (b)(l) may be illustrated by the following examples:

EXAMPLE 1. A, a manufacturer of air conditioners, holds an ODC for use in air conditioners that it will manufacture and sell. A holds the ODC for use in further manufacture.

EXAMPLE 2. B, a manufacturer of electronic components, holds an ODC for use as a solvent to clean printed circuits that it will sell to computer manufacturers. B holds the ODC for use in further manufacture.

EXAMPLE 3. C, an automobile dealer, holds an ODC for use in charging air conditioners installed in automobiles that it sells to retail customers. C does not hold the ODC for use in further manufacture. C does, however, hold the ODC for sale, even if the customers are not separately charged for ODCs used in the automobile air conditioners.

EXAMPLE 4. D operates an air-conditioning repair service and holds an ODC for use in repairing air conditioners for its customers. D holds the ODC for sale even if the customers are not separately charged for ODCs used in the repairs.

EXAMPLE 5. E, a grocery-store chain, holds an ODC for use in its refrigeration units. E does not hold the ODC for sale or for use in further manufacture.

EXAMPLE 6. F, a bank, holds an ODC for use in its fire extinguishers to protect the computer system. F does not hold the ODC for sale or for use in further manufacture.

(2) NONTAXABLE ODCS -- (i) MIXTURES -- (A) TAX IMPOSED ON JANUARY 1, 1990. In the case of the floor stocks tax imposed on January 1, 1990, the tax is not imposed on an ODC that has been mixed with any other ingredients. For example, the tax is not imposed on the ODCs contained in the refrigerants commonly known in the industry as R-500 and R-502. As another example, the tax is not imposed on the ODCs contained in automotive products used for checking for leaks because such products are a mixture of ODCs and small amounts of dyes and oils.

(B) TAXES IMPOSED AFTER 1990. In the case of the floor stocks tax imposed on January 1 of 1991, 1992, 1993, or 1994, the tax is not imposed on an ODC that has been mixed with any other ingredients, but only if it is established that such ingredients contribute to the accomplishment of the purpose for which the mixture will be used. Thus, the tax is not imposed on the mixtures described in the examples in paragraph (b)(2)(i)(A) of this section because the ingredients mixed with the ODCs contribute to the accomplishment of the purpose for which the mixture will be used. On the other hand, a mixture is not exempt from tax under this paragraph (b)(2)(i)(B) if it contains only an ODC and an inert ingredient that does not contribute to the accomplishment of the purpose for which the mixture will be used.

(ii) MANUFACTURED ARTICLES. The floor stocks tax is not imposed on an ODC that is contained in a manufactured article in which the ODC will be used for its intended purpose without being released from such article. For example, the tax is not imposed on the ODCs contained in the cooling coils of a refrigerator even if the refrigerator is held for sale. However, the tax is imposed on a can of ODC used to recharge an air conditioning unit because the ODC must be expelled from the can in order to be used. Similarly, beginning in 1991, the tax is imposed on the Halon-1211, Halon-1301, or Halon-2402 contained in a fire extinguisher held for sale because such ODCs must be expelled from the fire extinguisher in order to be used.

(iii) RECYCLED ODCS. The floor stocks tax is not imposed on ODCs that have been reclaimed or recycled. For example, the tax is not imposed on an ODC that is held for use in further manufacture after being used as a solvent and recycled.

(iv) ODCS HELD BY THE MANUFACTURER OR IMPORTER. The floor stocks tax is not imposed on ODCs held by their manufacturer or importer.

(c) PERSON LIABLE FOR TAX -- (1) IN GENERAL. The person liable for the floor stocks tax on an ODC is the person that holds the ODC on a date on which the tax is imposed. The person who holds the ODC is the person who has title to the ODC (whether or not delivery to such person has been made) as of the first moment of such date. The person who has title at such time is determined under applicable local law.

(2) SPECIAL RULE. Each business unit that has, or is required to have, its own employer identification number is treated as a separate person for purposes of the floor stocks tax. For example, a chain of automotive parts stores that has one employer identification number is one person for purposes of the floor stocks tax, and a parent corporation and subsidiary corporation that each have a different employer identification number are two persons for purposes of the floor stocks tax.

(d) COMPUTATION OF TAX -- (1) IN GENERAL -- (i) TENTATIVE TAX AMOUNT. Section 52.4681-1T(a)(3) provides that the amount of the floor stocks tax on an ODC is determined by reference to a tentative tax amount. The tentative tax amount is the amount of tax that would be imposed on the ODC under section 4681(a)(1) if a sale of the ODC by the manufacturer or importer had occurred on the date the floor stocks tax is imposed. This paragraph (d) provides rules for determining the tentative tax amount and the amount of the floor stocks tax.

(ii) FLOOR STOCKS TAX IMPOSED ON JANUARY 1, 1990. The floor stocks tax imposed on January 1, 1990, is equal to the tentative tax amount. Thus, except as provided in paragraph (d)(2) or (3) of this section, the amount of the floor stocks tax imposed on January 1, 1990, is as follows:

 ODC                                   Tax per pound

(A) The tentative tax amount is determined, except as provided in paragraph (d)(2) or (3) of this section, by reference to the rate of tax prescribed in section 4681(b)(1)(B) and the ozone-depletion factors prescribed in section 4682(b).

(B) The amount of the floor stocks tax on an ODC is equal to the amount by which the tentative tax amount exceeds the amount of taxes previously imposed on the ODC.

(2) QUALIFYING SALES -- (i) ODCS USED AS A FEEDSTOCK. In the case of an ODC that was sold in a qualifying sale for purposes of section 52.4682-1T(c) (relating to use as a feedstock), the tentative tax amount is zero.

(ii) ODCS USED IN THE MANUFACTURE OF RIGID FOAM INSULATION. In the case of an ODC that was sold in a qualifying sale for purposes of section 52.4682-1T(d) (relating to use in the manufacture of rigid foam insulation) the tentative tax amount is determined under section 4682(g) for purposes of computing the floor stocks tax imposed on the ODC on January 1 of 1990, 1991, 1992 or 1993. For purposes of computing the floor stocks tax imposed on the ODC on January 1, 1990, the tentative tax amount is zero.

(iii) ODCS SOLD BEFORE JANUARY 1, 1990. An ODC that was sold by its manufacturer or importer before January 1, 1990, shall be treated, for purposes of this paragraph (d)(2), as--

(A) An ODC that was sold in a qualifying sale for purposes of section 52.4682-1T(c) if the ODC will be used as a feedstock (within the meaning of section 52.4682-1T(c)(3); and

(B) An ODC that was sold in a qualifying sale for purposes of section 52.4682-1T(d) if the ODC will be used in the manufacture of rigid foam insulation (within the meaning of section 52.4682-1T(d)(3) and (4)).

(3) HALONS. In the case of Halon-1211, Halon-1301, or Halon-2402 (Halon), the tentative tax amount is determined under section 4682(g) for purposes of computing the floor stocks tax imposed on the Halon on January 1 of 1990, 1991, 1992, or 1993. For purposes of computing the floor stocks tax imposed on the Halon on January 1, 1990, the tentative tax amount is zero.

(e) DE MINIMIS EXCEPTION -- (1) 1990, 1992, and 1993. In the case of the floor stocks tax imposed on January 1 of 1990, 1992, or 1993, a person is liable for the tax only if, on the date the tax is imposed, the person holds at least 400 pounds of ODCs that are not described in paragraph (d)(2) or (3) of this section and are otherwise subject to the tax.

(2) 1991. In the case of the floor stocks tax imposed on January 1, 1991, a person is liable for the tax only if, on such date, the person holds at least 400 pounds of ODCs that are described in paragraph (d)(2)(ii) or (3) of this section and are otherwise subject to the tax.

(3) 1994. In the case of the floor stocks tax imposed on January 1, 1994, a person is liable for the tax only if, on such date, the person holds--

(i) At least 200 pounds of ODCs that are described in paragraph (d)(2)(ii) of this section and are otherwise subject to the tax; or

(ii) At least 20 pounds of ODCs that are described in paragraph (d)(3) of this section and are otherwise subject to the tax.

(4) EXAMPLES. The following examples illustrate the rules of this paragraph (e):

EXAMPLE 1. On January 1, 1990, A holds 300 pounds of ODCs for sale. A is not liable for the floor stocks tax imposed on January 1, 1990.

EXAMPLE 2. On January 1, 1990, B holds for sale 250 pounds of CFC-12 and 250 pounds of CFC-113. None of the ODCs are described in paragraph (d)(2) or (3) of this section. Thus, B holds at least 400 pounds of ODCs that are taken into account under paragraph (e)(l) of this section and is liable for the floor stocks tax imposed on January 1, 1990, on the ODCs held for sale.

EXAMPLE 3. On January 1, 1990, C holds 700 pounds of ODCs. C will use 500 pounds of these ODCs in the manufacture of rigid foam insulation (as defined in section 52.4682-1T(d)(3) and (4)). The remainder of the ODCs are not described in paragraph (d)(2) or (3) of this section. Under paragraph (e)(l) of this section, ODCs that will be used in the manufacture of rigid foam insulation are disregarded in determining whether the de minimis exemption is applicable in 1990. Thus, C holds only 200 pounds of ODCs that are taken into account under paragraph (e)(l) of this section and is not liable for the floor stocks tax imposed on January 1, 1990.

EXAMPLE 4. The facts are the same as in Example 3, except that the ODCs are held on January 1, 1991. Under paragraph (e)(2) of this section, the 500 pounds of ODCs that will be used in the manufacture of rigid foam insulation are taken into account in determining whether the de minimis exemption is applicable in 1991. The remaining 200 pounds of ODCs are not taken into account because the base tax amount does not increase in 1991. Nevertheless, C holds at least 400 pounds of ODCs that are taken into account under paragraph (e)(2) of this section and is liable for the floor stocks tax imposed on January 1, 1991.

(f) INVENTORY. If, on the date on which the floor stocks tax is imposed, a person holds ODCs that are held for sale or for use in further manufacture and that were not manufactured or imported by such person, the following rules apply:

(1) The person shall prepare an inventory of all such ODCs that the person holds on the date on which the tax is imposed.

(2) The inventory shall be taken as of the first moment of the date on which the tax is imposed, but work-back or work-forward inventories will be acceptable if supported by adequate commercial records of receipt, use, and disposition of ODCs held for sale or for use in further manufacture.

(3) The person must maintain records of the inventory and make such records available for inspection and copying by internal revenue agents and officers. Records of the inventory are not to be filed with the Internal Revenue Service.

(g) TIME FOR PAYING TAX. The floor stocks tax imposed under section 4682(h) shall be paid without assessment or notice on or before April 1 of the year in which the tax is imposed. See section 52.6151(a)-1T(b) for the rules relating to paying the floor stocks tax.

Par. 4. Sections 52.6011(a)-1 and 52.6011(a)-2 are removed and new sections 52.6011(a)-1T and 52.6011(a)-2T are added to read as follows.

SECTION 52.6011(A)-1T RETURNS (TEMPORARY).

(a) IN GENERAL. Liability for tax imposed under chapter 38 shall be reported on Form 720, quarterly Federal Excise Tax Return, (or any other form designated by the Commissioner subsequent to publication of these regulations for reporting such liability). Except as provided in paragraph (b) of this section, a return shall be made for a period of one calendar quarter. A return shall be filed for the first calendar quarter in which the person incurs liability for tax imposed under chapter 38 (but not before the calendar quarter ending June 30, 1981), and for each subsequent calendar quarter, whether or not liability was incurred under chapter 38 during such quarter, until the person has filed a final return in accordance with section 52.6011(a)-2T.

(b) MONTHLY AND SEMIMONTHLY RETURNS -- (1) REQUIREMENT. If the district director determines that any person that is required under the provisions of sections 52.6302(c)-1 and 52.6302(c)-2T to make deposits of taxes has failed to make those deposits, that person shall be required, if so notified in writing by the district director, to make a return on Form 720 (or other form furnished by the district director for use in lieu of Form 720) for a monthly or semimonthly period. Every person so notified by the district director shall make a return for the calendar month or semimonthly period (as defined in section 52.6302(c)-1(b)) in which the notice is received and for each calendar month or semimonthly period thereafter until the person has filed a final return (as defined in section 52.6011(a)-2T) or until the person is notified (as provided in paragraph (b)(2) of this section) to make returns on the basis of a different return period.

(2) CHANGE OF REQUIREMENT. The district director may, at his or her discretion, notify any person in writing to make returns on the basis of any return period that the person may be required to use under paragraphs (a) or (b)(l) of this section.

(c) CROSS REFERENCE. For provisions relating to the time to file returns, see sections 52.6071(a)-1, 52.6071(a)-2T, and 52.6071(a)-3T. For provisions relating to the place for filing returns, see section 52.6091-lT. For provisions relating to use of Government depositories, see sections 52.6302(c)-1 and 52.6302(c)-2T.

SECTION 52.6011(a)-2T FINAL RETURNS (TEMPORARY).

(a) IN GENERAL. Any person that is required by section 52.6011(a)-1T to make a return and that permanently ceases the operations with respect to which the person incurred liability for tax shall make a final return in accordance with the instructions applicable to the return. A person that only temporarily has ceased to incur liability for tax shall not make a final return but shall continue to file returns in accordance with section 52.6011(a)-lT.

(b) STATEMENT TO ACCOMPANY FINAL RETURN. A statement must be attached to each final return. This statement must include --

(1) The address at which the business records relating to returns required under this part will be maintained. (2) The name of the person maintaining such records. (3) The name and address of any person to whom the business has been transferred and the date of transfer, if the reason for filing a final return is the transfer of the business.

Par. 5. Section 52.6071(a)-1 is amending by inserting "or section 52.6011(a)-1T" after "section 52.6011(a)-1" wherever it appears.

Par. 6. New sections 52.6071(a)-2T and 52.6071(a)-3T are added to read as follows.

SECTION 52.6071(a)-2T TIME FOR FILING RETURNS UNDER SECTION 4681 (TEMPORARY).

(a) QUARTERLY RETURNS -- (1) IN GENERAL. Except as provided in paragraph (a)(2), (3), and (4) of this section, each quarterly return required by section 52.6011(a)-1T(a) relating to tax imposed under section 4681 shall be filed on or before the last day of the second calendar month following the quarter for which such return is made.

(2) SPECIAL RULE. Except as otherwise provided in paragraph (a)(3)(ii) and (a)(4)(ii) of this section, only one quarterly Form 720 shall be filed for a calendar quarter. If a person is also required to report liability for other excise taxes for the quarter on a Form 720 and such Form 720 would otherwise be due on or before a date earlier than the date provided in paragraph (a)(l) of this section, the person shall file only one Form 720 on or before the filing date provided by paragraph (a)(l) of this section. This rule does not extend the time for making deposits or paying any other excise tax.

(3) RETURNS FOR THE FIRST CALENDAR QUARTER OF 1990 -- (i) IN GENERAL. The Form 720 reporting liability for tax imposed under section 4681 for the first calendar quarter of 1990 shall be filed on or before April 30, 1990. However, the date for filing is extended (without application) until October 9, 1990. Extension of the filing date does not extend the date on which the payment of tax is due. The payment of tax for the first calendar quarter of 1990 is due on April 30, 1990.

(ii) SPECIAL RULE FOR PERSONS REQUIRED TO FILE A RETURN REPORTING LIABILITY FOR TAXES OTHER THAN TAXES IMPOSED UNDER SECTION 4681 -- (A) IN GENERAL. If a person was required to file Form 720 for the first calendar quarter of 1990 to report liability for tax imposed under section 4681 and filed Form 720 for the first calendar quarter of 1990 without reporting section 4681 liability, the person must file a supplemental Form 720 for that quarter on or before October 9, 1990. In addition, a person may file a supplemental Form 720 to make or change an election under sections 52.4682-1T(b)(2)(iii) or 52.4682-3T(c)(2) or to reflect consistent treatment for purposes of section 52.4682-3T(c)(3).

(B) FILING INSTRUCTIONS. The supplemental Form 720 shall be marked "SUPPLEMENTAL -- 1st QUARTER 1990" at the top. Except as otherwise provided in paragraph (a)(3)(ii)(C) of this section, only the liability for tax under section 4681 (IRS No. 19) for the first calendar quarter of 1990 shall be reported on this form. Part II of the supplemental Form 720 shall be completed as follows. Enter the amount from IRS No. 19 on Line 1 and again on Line 3. Do not make any adjustments on Line 2. Enter the amount from Line 3 on Line 4(a)F and again on Line 4(b). Enter any amount already paid relating to section 4681 liability for the first quarter of 1990 on Line 4(c). If the amount on Line 3 exceeds the amount on Line 4(c), pay the balance with the return.

(C) EXCEPTION. Any person that is required by section 52.6071(a)-3T(a)(2) to file a supplemental Form 720 to report liability for floor stocks tax shall file one combined supplemental Form 720 for the first calendar quarter of 1990 to report the taxes imposed by both sections 4681 and 4682. In the case of a combined supplemental Form 720, Part II shall be completed as follows. Enter the total of IRS No. 19 and IRS No. 20 on Line 1 and again on Line 3. Do not make any adjustments on Line 2. Enter the amount from IRS No. 20 on Line 4(a)A and the amount from IRS No. 19 on Line 4(a)F. Enter the amount from Line 3 on Line 4(b). Enter any amount already paid relating to sections 4681 and 4682 liability for the first quarter of 1990 on Line 4(c). If the amount on Line 3 exceeds the amount on Line 4(c), pay the balance with the return.

(4) RETURNS FOR THE SECOND CALENDAR QUARTER OF 1990 -- (i) IN GENERAL. The Form 720 reporting liability for tax imposed under section 4681 for the second calendar quarter of 1990 shall be filed on or before September 7, 1990. However, the date for filing is extended (without application) until October 9, 1990. Extension of the filing date does not extend the date on which payment of tax is due. The payment of tax for the second calendar quarter of 1990 is due on September 7, 1990.

(ii) SPECIAL RULE FOR PERSONS REQUIRED TO FILE A RETURN REPORTING LIABILITY FOR TAXES OTHER THAN TAXES IMPOSED UNDER SECTION 4681 -- (A) IN GENERAL. If a person was required to file Form 720 for the second calendar quarter of 1990 to report liability for tax imposed under section 4681 and filed Form 720 for the second calendar quarter of 1990 without reporting section 4681 liability, the person must file a supplemental Form 720 for that quarter on or before October 9, 1990. In addition, a person may file a supplemental Form 720 to make or change an election under section 52.4682-3T(c)(2) or to reflect consistent treatment for purposes of section 52.4682-3T(c)(3).

(B) FILING INSTRUCTIONS. The supplemental Form 720 shall be marked "SUPPLEMENTAL -- 2nd QUARTER 1990" at the top. Only the liability for tax under section 4681 (IRS No. 19) for the second calendar quarter of 1990 shall be reported on this form. Part II of the supplemental Form 720 shall be completed as follows. Enter the amount from IRS No. 19 on Line 1 and again on Line 3. Do not make any adjustments on Line 2. Enter the amount from Line 3 on Line 4(a)F and again on Line 4(b). Enter any amount already paid relating to section 4681 liability for the second quarter of 1990 on Line 4(c). If the amount on Line 3 exceeds the amount on Line 4(c), pay the balance with the return.

(b) MONTHLY AND SEMIMONTHLY RETURNS -- (1) MONTHLY RETURNS. Each monthly return required by section 52.6011(a)-1T(b) relating to tax imposed under section 4681 shall be filed not later than the last day of the month following the month for which it is made.

(2) SEMIMONTHLY RETURNS. Each semimonthly return required by section 52.6011(a)-1T(b) relating to tax imposed under section 4681 shall be filed not later than the last day of the semimonthly period following the semimonthly period for which it is made.

(c) CROSS REFERENCES. For provisions relating to timely mailing treated as timely filing and paying, see section 7502. For provisions relating to time for performance of acts where last day for performance falls on Saturday, Sunday, or legal holiday, see section 7503. For provisions relating to time and place for paying tax shown on the return, see section 52.6151(a)-lT.

SECTION 52.6071(a)-3T. TIME FOR FILING RETURNS UNDER SECTION 4682(h) (TEMPORARY).

(a) RETURN REPORTING LIABILITY FOR FLOOR STOCKS TAX IMPOSED ON JANUARY 1, 1990 -- (1) IN GENERAL. The Form 720 reporting liability for floor stocks tax imposed on January 1, 1990, under section 4682(h) shall be filed on or before April 30, 1990. However, the date for filing is extended (without application) until October 9, 1990. This Form 720 is for the first calendar quarter of 1990. In the case of a person not otherwise required to file Form 720 for such calendar quarter, the return shall be marked "FINAL -- FLOOR STOCKS" at the top. Extension of the filing date does not extend the date on which the payment of tax is due. The payment of tax for 1990 is due on April 1, 1990.

(2) SPECIAL RULE FOR PERSONS REQUIRED TO FILE A RETURN REPORTING LIABILITY FOR TAXES OTHER THAN TAXES IMPOSED UNDER SECTION 4682 -- (i) IN GENERAL. If a person was required to file Form 720 for the first calendar quarter of 1990 to report liability for floor stocks tax imposed under section 4682(h) and filed Form 720 for the first calendar quarter of 1990 without reporting section 4682 liability, the person must file a supplemental Form 720 for that quarter on or before October 9, 1990.

(ii) FILING INSTRUCTIONS. The supplemental Form 720 shall be marked "SUPPLEMENTAL -- 1st QUARTER 1990" at the top. Only the liability for tax under section 4682 (IRS No. 20) for the first calendar quarter of 1990 shall be reported on this form. Part II of the supplemental Form 720 shall be completed as follows. Enter the amount from IRS No. 20 on Line 1 and again on Line 3. Do not make any adjustments on Line 2. Enter the amount from Line 3 on Line 4(a)A and again on Line 4(b). Enter any amount already paid relating to section 4682 liability for 1990 on Line 4(c). If the amount on Line 3 exceeds the amount on Line 4(c), pay the balance with the return.

(b) RETURNS FOR FLOOR STOCKS TAX IMPOSED IN 1991, 1992, 1993, AND 1994 -- (1) IN GENERAL. Each return required by section 52.6011(a)-1T reporting floor stocks tax imposed under section 4682(h) shall be filed on or before May 31 of the year the tax is imposed. Each of these returns will be a return for the first calendar quarter of the year in which the tax is imposed. In the case of a person not otherwise required to file Form 720 (or other return on which this floor stocks tax is reported), the return shall be marked "FINAL -- FLOOR STOCKS" at the top.

(2) SPECIAL RULE. Only one quarterly Form 720 shall be filed for a calendar quarter. If a person is also required to report liability for other excise taxes for the quarter on a Form 720 and such Form 720 would otherwise be due on or before a date earlier than the date provided in paragraph (b)(1) of this section, the person shall file only one Form 720 on or before the date provided in paragraph (b)(1) of this section. This rule does not extend the time for making deposits or paying any other excise tax.

(c) CROSS REFERENCE. For provisions relating to timely mailing treated as timely filing and paying, see section 7502. For provisions relating to time for performance of acts where last day for performance falls on Saturday, Sunday, or legal holiday, see section 7503. For provisions relating to time and place for paying floor stocks tax shown on the return, see section 52.6151(a)-1T(b).

Par. 7. Section 52.6091-1 is removed and new section 52.6091-1T is added to read as follows.

SECTION 52.6091-1T PLACE FOR FILING RETURNS (TEMPORARY).

(a) QUARTERLY RETURNS. Quarterly returns shall be filed in accordance with the instructions applicable to the return. (b) Monthly and semimonthly returns. Monthly and semimonthly returns required by section 52.6011(a)-1T(b) shall be filed in accordance with the instructions of the district director requiring such filing.

Par. 8. New sections 52.6101-1T and 52.6109(a)-1T are added to read as follows.

SECTION 52.6101-1T PERIOD COVERED BY RETURNS (TEMPORARY).

See section 52.6011(a)-1T for the rules relating to the period covered by the return.

SECTION 52.6109(A)-1T IDENTIFYING NUMBERS (TEMPORARY).

Every person required by section 52.6011(a)-1T to make a return shall provide the identifying number required by the instructions applicable to the return.

Par. 9. Section 52.6151-1 is removed and new section 52.6151(a)- 1T is added to read as follows.

SECTION 52.6151(a)-1T TIME AND PLACE FOR PAYING TAX SHOWN ON RETURN (TEMPORARY).

(a) IN GENERAL. Except as provided in paragraph (b) of this section, the tax shall be paid at the time prescribed in sections 52.6071(a)-1 and 52.6071(a)-2T for filing the return, and at the place prescribed in section 52.6091(a)-1T for filing the return.

(b) FLOOR STOCKS TAX IMPOSED UNDER SECTION 4682(h). For each year in which tax is imposed under section 4682(h), the tax shall be paid on or before April 1 of that year. The payment shall be accompanied by Form 8109, Federal Tax Deposit Coupon (or any other form designated by the Commissioner for making deposits) and deposited in accordance with the instructions applicable to that form. For years in which the tax is reported on Form 720 and deposits are accompanied by Form 8109, mark the boxes on Form 8109 for "720" and "1st Quarter."

(c) CROSS REFERENCE. For provisions relating to use of Government depositories, see sections 52.6302(c)-1 and 52.6302(c)-2T.

Par. 10. New section 52.6302(c)-2T is added to read as follows.

SECTION 52.6302(c)-2T USE OF GOVERNMENT DEPOSITORIES UNDER SECTION 4681 (TEMPORARY).

(a) OVERVIEW. This section provides rules relating to deposits of tax imposed under section 4681. The provisions of this section shall not apply to taxes for the month or the semimonthly period in which the taxpayer receives notice from the district director that returns are required under section 52.6011(a)-1T(b), or for any subsequent month or semimonthly period for which such a return is required.

(b) SEMIMONTHLY DEPOSITS -- (1) IN GENERAL. Except as provided in paragraph (b)(3) of this section, each person required by section 52.6011(a)-1T(a) to file a return shall make deposits of the tax imposed under section 4681 for a semimonthly period (as defined in paragraph (b)(2) of this section) on or before the last day of the second following semimonthly period.

(2) SEMIMONTHLY PERIOD. The term "semimonthly period" means the first 15 days of a calendar month or the portion of a calendar month following the 15th day of the month.

(3) SPECIAL RULE FOR DEPOSITS RELATING TO THE FIRST THREE SEMIMONTHLY PERIODS OF THE THIRD CALENDAR QUARTER OF 1990. The deposit of tax imposed under section 4681 for the first three semimonthly periods of the third calendar quarter of 1990 is due on or before September 27, 1990.

(c) SAFE HARBOR RULES -- (1) PERSONS ELIGIBLE. The provisions of this paragraph (c) apply only to persons that reported liability for tax under section 4681 for the second preceding calendar quarter.

(2) IN GENERAL. Except as otherwise provided in paragraph (c)(3) of this section, a person will be considered to have complied with the semimonthly deposit requirement if the deposit for the semimonthly period is not less than 1/6 (16.67 percent) of the total tax liability under section 4681 for the second preceding calendar quarter, and the person deposits any underpayment for the current calendar quarter on or before the last day of the second calendar month following the end of the quarter.

(3) SPECIAL RULE -- (i) APPLICABILITY. The safe harbor rule of paragraph (c)(2) is modified for semimonthly periods during the first and second quarters following the effective date of --

(A) An increase in the base tax amount under section 4681(b); or

(B) A change in the treatment of ODCs that are described in section 4682(g)(1).

(ii) RULE. With respect to semimonthly periods during such calendar quarters, a person will be considered to have complied with the semimonthly deposit requirement only if the deposit for the semimonthly period is not less than 1/6 (16.67 percent) of the tax liability the person would have had under section 4681 for the second preceding calendar quarter if the increased base tax amount or the change in treatment had been in effect for such preceding calendar quarter.

(d) REMITTANCE OF DEPOSITS. Each deposit shall be accompanied by Form 8109, Federal Tax Deposit Coupon (or any other form designated by the Commissioner for making deposits) and remitted in accordance with the instructions applicable to that form.

(e) EFFECTIVE DATE. This section is effective as of July 1, 1990, for deposits relating to the tax imposed under section 4681 for quarters beginning after June 30, 1990.

Par. 11. The authority for Part 602 continues to read as follows:

Authority: 26 U.S.C. 7805

Par. 12. Section 602.101(c) is revised by inserting in the appropriate places in the table "52.4682-1T(b)(2)(iii) . . . 1545-1153", "52.4682-2T(b) . . . 1545-1153", "52.4682-2T(d) . . . 1545-1153", "52.4682-3T(c)(2) . . . 1545-1153", "52.4682-3T(g) . . . 1545-1153", and "52.4682-4T(f) . . . 1545-1153".