IRS ADDS POLY 1,4 BUTYLENETEREPHTHALATE TO TAXABLE SUBSTANCES LIST.

Notice 95-59

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice.

SUMMARY: This notice announces a determination, under Notice 89-61, that the list of taxable substances in section 4672(a)(3) will be modified to include poly 1,4 butyleneterephthalate.

EFFECTIVE DATE: This modification is effective April 1, 1991.

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

SUPPLEMENTARY INFORMATION:

BACKGROUND

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

DETERMINATION

On October 12, 1995, the Secretary determined that poly 1,4 butyleneterephthalate should be added to the list of taxable substances in section 4672(a)(3), effective April 1, 1995.

The rate of tax prescribed for poly 1,4 butyleneterephthalate, under section 4671(b)(3), is $3.92 per ton. This is based upon a conversion factor for acetylene of 0.1186, a conversion factor for methane of 0.2920, and a conversion factor for xylene of 0.4816.

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

HTS number: 3907.91.00

CAS number: 26062-94-2

Poly 1,4 butyleneterephthalate is derived from the taxable chemicals acetylene, methane, and xylene and is a solid produced predominantly by the melt polycondensation process.

The stoichiometric material consumption formula for this substance is:

176 (acetylene) + 702 (methane) + 175 (xylene) + 352 Kr (hydrogen) + 701 (oxygen) + 350 (water) + 0.08 (tetra iso-propyl titanate) (poly 1,4 butyleneterephthalate) + 0.08 (titanium) + 0.32 (isopropanol) + 350 (methanol) + 700 (water) + 702 (hydrogen)

Poly 1,4 butyleneterephthalate has been determined to be a taxable substance because a review of its stoichiometric material consumption formula shows that, based on the predominant method of production, taxable chemicals constitute 53.8 percent by weight of the materials used in its production.

                                   Dale D. Goode,