SERVICE ADDS ISOBUTYRATES TO TAXABLE SUBSTANCES LIST.

Notice 94-35

TAX ON CERTAIN IMPORTED SUBSTANCES; NOTICE OF DETERMINATION

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) of the Internal Revenue Code will be modified to include 2,2,4-trimethyl- 1,3-pentanediol diisobutyrate and 2,2,4-trimethyl-1,3-pentanediol monoisobutyrate.

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

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

SUPPLEMENTARY INFORMATION:

BACKGROUND

Under section 4672(a) of the Internal Revenue Code, an importer or exporter of any substance may request that the Secretary determine whether such substance should be listed as a taxable substance. The Secretary shall add such 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 such 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 March 10, 1994, the Secretary determined that 2,2,4- trimethyl-1,3-pentanediol diisobutyrate and 2,2,4-trimethyl-1,3- pentanediol monoisobutyrate should be added to the list of taxable substances in section 4672(a)(3) of the Internal Revenue Code, effective April 1, 1991.

The rate of tax prescribed for 2,2,4-trimethyl-1,3-pentanediol diisobutyrate, under section 4671(b)(3), is $5.44 per ton. This is based upon a conversion factor for methane of 0.3360 and a conversion factor for propylene of 0.8815.

The rate of tax prescribed for 2,2,4-trimethyl-1,3-pentanediol monoisobutyrate, under section 4671(b)(3), is $3.60 per ton. This is based upon a conversion factor for methane of 0.2224 and a conversion factor for propylene of 0.5836.

The petitioner is Eastman Chemicals Division, Eastman Kodak 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.

2,2,4-trimethyl-1,3-pentanediol diisobutyrate

HTS number: 2915.90.00.00

The stoichiometric material consumption formula for 2,2,4- trimethyl-1,3-pentanediol diisobutyrate is:

[formula omitted]

2,2,4-trimethyl-1,3-pentanediol diisobutyrate 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 64.4 percent by weight of the materials used in its production.

2,2,4-trimethyl-1,3-pentanediol monoisobutyrate

HTS number: 2915.60.00.00

The stoichiometric material consumption formula for 2,2,4- trimethyl-1,3-pentanediol monoisobutyrate is:

[formula omitted]

2,2,4-trimethyl-1,3-pentanediol monoisobutyrate 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 64.4 percent by weight of the materials used in its production.

Dale D. Goode, Federal Register Liaison Officer, Assistant Chief Counsel (Corporate).