IRS ADDS PHOSPHOROUS TRICHLORIDE AND PHOSPHOROUS PENTASULFIDE TO TAXABLE SUBSTANCES LIST.

Notice 94-99

TAX ON CERTAIN IMPORTED SUBSTANCES (PHOSPHOROUS TRICHLORIDE, ET AL.); NOTICE OF DETERMINATIONS

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 phosphorous trichloride and phosphorous pentasulfide.

EFFECTIVE DATE: This modification is effective January 1, 1995.

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), 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 September 29, 1994, the Secretary determined that phosphorous trichloride and phosphorous pentasulfide should be added to the list of taxable substances in section 4672(a)(3), effective January 1, 1995. The rate of tax prescribed for phosphorous trichloride, under section 4671(b)(3), is $3.10 per ton. This is based upon a conversion factor for phosphorous of 0.23 and a conversion factor for chlorine of 0.77.

The rate of tax prescribed for phosphorous pentasulfide, under section 4671(b)(3), is $1.24 per ton. This is based upon a conversion factor for phosphorous of 0.28. The petitioner is Monsanto 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.

PHOSPHOROUS TRICHLORIDE

HTS NUMBER: 2812.10.50.10

CAS NUMBER: 7719-12-2

Phosphorous trichloride is derived from the taxable chemicals phosphorous and chlorine. Phosphorous trichloride is a liquid produced predominantly by the direct union of phosphorous and chloride.

The stoichiometric material consumption formula for phosphorous trichloride is:

P4(phosphorous) + 6 Cl2 (chlorine) --> 4 PCl3 (phosphorous trichloride)

Phosphorous trichloride 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.

PHOSPHOROUS PENTASULFIDE

HTS NUMBER: 2813.90.20.00

CAS NUMBER: 1314-80-3

Phosphorous pentasulfide is derived from the taxable chemical phosphorous. Phosphorous pentasulfide is a solid produced predominantly by mixing molten phosphorous with molten sulfur.

The stoichiometric material consumption formula for phosphorous pentasulfide is:

P4 (phosphorous) + 10 S (sulfur) --> 2 P2S5 (phosphorous pentasulfide)

Phosphorous pentasulfide 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 94.6 percent by value of the materials used in its production. The stated cost for phosphorous is $0.91 per pound and the stated cost for sulfur is $0.02 per pound.

                                   Dale D. Goode,