IRS ADDS ETHANOLAMINES, ISOPROPANOLAMINES, TOLUENE DIISOCYANATE, AND CHLORINATED POLYETHYLENE TO TAXABLE SUBSTANCES LIST.

Notice 95-43

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice.

SUMMARY: This notice announces determinations, under Notice 89-61, that the list of taxable substances in section 4672(a)(3) will be modified to include monoethanolamine, diethanolamine, triethanolamine, monoisopropanolamine, diisopropanolamine, triisopropanolamine, toluene diisocyanate, and chlorinated polyethylene.

EFFECTIVE DATE: This modification is effective April 1, 1992.

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

SUPPLEMENTARY INFORMATION:

BACKGROUND

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

DETERMINATION

On July 10, 1995, the Secretary determined that monoethanolamine, diethanolamine, triethanolamine, monoisopropanolamine, diisopropanolamine, triisopropanolamine, toluene diisocyanate, and chlorinated polyethylene should be added to the list of taxable substances in section 4672(a)(3), effective April 1, 1992.

The rate of tax prescribed for monoethanolamine, under section 4671(b)(3), is $3.63 per ton. This is based upon a conversion factor for ethylene of 0.59 and a conversion factor for ammonia of 0.29.

The rate of tax prescribed for ethanolamine, under section 4671(b)(3), is $3.85 per ton. This is based upon a conversion factor for ethylene of 0.70 and a conversion factor for ammonia of 0.17.

The rate of tax prescribed for triethanolamine, under section 4671(b)(3), is $3.96 per ton. This is based upon a conversion factor for ethylene of 0.75 and a conversion factor for ammonia of 0.12.

The rate of tax prescribed for monoisopropanolamine, under section 4671(b)(3), is $6.66 per ton. This is based upon a conversion factor for propylene of 0.62, a conversion factor for chlorine of 1.00, a conversion factor for sodium hydroxide of 1.20, and a conversion factor for ammonia of 0.23.

The rate of tax prescribed for diisopropanolamine, under section 4671(b)(3), is $7.08 per ton. This is based upon a conversion factor for propylene of 0.70, a conversion factor for chlorine of 1.10, a conversion factor for sodium hydroxide of 1.30, and a conversion factor for ammonia of 0.13.

The rate of tax prescribed for triisopropanolamine, under section 4671(b)(3), is $7.49 per ton. This is based upon a conversion factor for propylene of 0.74, a conversion factor for chlorine of 1.20, a conversion factor for sodium hydroxide of 1.40, and a conversion factor for ammonia of 0.10.

The rate of tax prescribed for toluene diisocyanate, under section 4671(b)(3), is $4.90 per ton. This is based upon a conversion factor for toluene of 0.53, a conversion factor for nitric acid of 0.7, and a conversion factor for chlorine of 0.8.

The rate of tax prescribed for chlorinated polyethylene, under section 4671(b)(3), is $5.05 per ton. This is based upon a conversion factor for ethylene of 0.65 and a conversion factor for chlorine of 0.70.

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

MONOETHANOLAMINE

HTS number: 2922.11.00.00

CAS number: 141-43-5

Monoethanolamine is derived from the taxable chemicals ethylene and ammonia and is a liquid produced predominantly by reacting ethylene oxide and aqueous ammonia.

The stoichiometric material consumption formula for this substance is:

2 (ethylene)+ 2 (ammonia)+ (oxygen) -----> 2 (monoethanolamine)

Monoethanolamine 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 73.7 percent by weight of the materials used in its production.

DIETHANOLAMINE

HTS number: 2922.12.00.00

CAS number: 111-42-2

Diethanolamine is derived from the taxable chemicals ethylene and ammonia and is a solid produced predominantly by reacting ethylene oxide and aqueous ammonia.

The stoichiometric material consumption formula for this substance is:

2 (ethylene)+ (ammonia)+ (oxygen) -----> (diethanolamine)

Diethanolamine 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 chemical's constitute 69.5 percent by weight of the materials used in its production.

TRIETHANOLAMINE

HTS number: 2922.13.00.00

CAS number: 102-71-6

Triethanolamine is derived from the taxable chemicals ethylene and ammonia and is a liquid produced predominantly by reacting ethylene oxide and aqueous ammonia.

The stoichiometric material consumption formula for this substance is:

6 (ethylene)+ 2 (ammonia) + 3 (oxygen) -----> 2 (triethanolamine)

Triethanolamine has been determined to be a taxable substance because a review of its stoichiometric material consumption formula shows that, based on the predominant method of production, taxable chemicals constitute 67.7 percent by weight of the materials used in its production.

MONOISOPROPANOLAMINE

HTS number: 2922.19.60.00

CAS number: 78-96-6

Monoisopropanolamine is derived from the taxable chemicals propylene, chlorine, sodium hydroxide, and ammonia and is a liquid produced predominantly by the reaction of propylene oxide and ammonia.

The stoichiometric material consumption formula for this substance is:

2 (propylene)+ 2 (chlorine) + 2 (sodium hydroxide) + (ammonia) -----> (monoisopropanolamine) + (propylene dichloride) + 2 (sodium chloride) + (water)

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

DIISOPROPANOLAMINE

HTS number: 2922.19.60.00

CAS number: 110-97-4

Diisopropanolamine is derived from the taxable chemicals propylene, chlorine, sodium hydroxide, and ammonia and is a solid produced predominantly by the reaction of propylene oxide and ammonia.

The stoichiometric material consumption formula for this substance is:

3 (propylene) + 2 (chlorine) + 2 (sodium hydroxide) + (ammonia) -----> (diisopropanolamine) + (propylene dichloride) + 2 (sodium chloride) + (hydrogen)

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

TRIISOPROPANOLAMINE

HTS number: 2922.19.60.00

CAS number: 122-20-3

Triisopropanolamine is derived from the taxable chemicals propylene, chlorine, sodium hydroxide, and ammonia and is a solid produced predominantly by the reaction of propylene oxide and ammonia.

The stoichiometric material consumption formula for this substance is:

4 (propylene) + 3 (chlorine) + 4 (sodium hydroxide) + (ammonia) + -----> (triisopropanolamine) + (propylene dichloride) + 4 (sodium chloride) + (water) + (hydrogen)

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

TOLUENE DIISOCYANATE

HTS number: 2929.10.15.00

CAS number: 584-84-9

Toluene diisocyanate is derived from the taxable chemicals toluene, nitric acid, and chlorine and is a liquid produced predominantly by the phosgenation of primary amines.

The stoichiometric material consumption formula for this substance is:

(toluene) + 2 (nitric acid) + 2 (chlorine) + 2 (carbon monoxide) + 6 (hydrogen) -----> (toluene diisocyanate) + 6 (water) + 4 (hydrogen chloride)

Toluene diisocyanate 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 84 percent by weight of the materials used in its production.

CHLORINATED POLYETHYLENE

HTS number: 3901.90.50.00

CAS number: 064754-90-1

Chlorinated polyethylene is derived from the taxable chemicals ethylene and chlorine and is a solid produced predominantly by chlorination of polyethylene resins.

The stoichiometric material consumption formula for this substance is:

857 (ethylene) + 375 (chlorine) -----> (chlorinated polyethylene) + 375 (hydrogen chloride)

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

                                   Dale D. Goode