METHYL CHLOROFORM AND TRICHLOROETHYLENE ADDED TO SUPERFUND TAX LIST.

Notice 91-32

AGENCY: Internal Revenue Service, Treasury.

ACTION: Notice.

SUMMARY: This notice announces a determination, under Notice 89-61, 1989-1 C.B. 717, that the list of taxable substances in section 4672(a)(3) of the Internal Revenue Code will be modified to include methyl chloroform and trichloroethylene.

EFFECTIVE DATE: This modification is effective as of July 1, 1990.

FOR FURTHER INFORMATION CONTACT: Ruth Hoffman, Office of Assistant Chief Counsel (Passthroughs and Special Industries), 202- 566-4475 (not a toll-free number).

SUPPLEMENTAL 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 5, 1990, the Secretary determined that methyl chloroform and trichloroethylene should be added to the list of taxable substances in section 4672(a)(3) of the Internal Revenue Code, effective as of July 1, 1990.

The petition to add methyl chloroform and trichloroethylene was submitted by Vulcan Chemicals, a manufacturer, exporter and importer of this substance. No material comments were received on this petition.

METHYL CHLOROFORM

Methyl Chloroform 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 94.4 percent by weight of the materials used in its production.

HTS number: 2903.19.50.10.

Schedule B number: 2903.19.5010.

CAS number: 71-55-6.

Methyl chloroform, a liquid is derived from the taxable chemicals CHLORINE and ETHYLENE. The predominant method of producing methyl chloroform is from vinyl chloride. Vinyl chloride is produced from ethylene dichloride. Ethylene dichloride is produced by the chlorination of ethylene.

The stoichiometric material consumption formula for this substance is:

C(sub 2)H(sub 4) (ethylene) + 1.5 Cl(sub 2) (chlorine) + 0.25 O(sub 2) (oxygen) yields CH(sub 3)CCl(sub 3) (methyl chloroform + 0.5 H(sub 2)O (water).

The rate of tax prescribed for this substance, under section 4671(b)(3), is $3.18 per ton. This is based upon a conversion factor for chlorine of 0.80 and a conversion factor for ethylene of 0.21.

TRICHLOROETHYLENE

Trichloroethylene 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 84.9 percent by weight of the materials used in its production.

HTS number: 2903.22.00.

Schedule B number: 2903.22.0000.

CAS number: 71-01-6.

Trichloroethylene, a liquid, is derived from the taxable chemicals chlorine and ethylene. The predominant method of producing trichloroethylene is by the oxychlorination of ethylene dichloride. Ethylene dichloride is produced by the chlorination of ethylene.

The stoichiometric material consumption formula for this substance is:

C(sub 2)H(sub 4) (ethylene) + 1.5 Cl(sub 2) (chlorine) + 0.75 O(sub 2) (oxygen) yields C(sub 2)HCl(sub 3) (trichloroethylene) + 1.5 H(sub 2)O (water).

The rate of tax prescribed for this substance, under section 4671(b)(3), is $3.18 per ton. This is based upon a conversion factor for chlorine of 0.80 and a conversion factor for ethylene of 0.21.

                                   Dale D. Goode,