26 U.S.C. § 4662 — Definitions and special rules

(a) Definitions For purposes of this subchapter— (1) Taxable chemical Unless the exception in subsection (b), the term “taxable chemical” means any substance— (A) which is listed in the table under section 4661(b), and (B) which is manufactured or produced in the United States or entered into the United States for consumption, use, or ware­housing. (2) United States The term “United States” has the meaning given that term by section 4612(a)(4). (3) Importer The term “importer” means the person entering the taxable chemical for consumption, use, or warehousing. (4) Ton The term “ton” means 2,000 pounds. In the case of any taxable chemical which is a gas, the term “ton” means the amount of that gas in cubic feet which is the equivalent of 2,000 pounds on a molecular weight basis. (5) Fractional part of ton In the case of a fraction of a ton, the tax imposed by section 4661 must be the same fraction of the amount of that tax imposed on a whole ton. (b) Exceptions; other special rules For purposes of this subchapter— (1) Methane or butane used as a fuel Under regulations prescribed by the Secretary^*, methane or butane must be treated as a taxable chemical only if it is used otherwise than as a fuel or in the manufacture or production of any motor fuel, diesel fuel, aviation fuel, or jet fuel (and, for this section’s purposes section 4661(a), the person so using it must be treated as the manufacturer that chemical or substance). (2) Substances used in the production of fertilizer (A) Generally In the case of nitric acid, sulfuric acid, ammonia, or methane used to produce ammonia which is a qualified fertilizer substance, no tax must be imposed under section 4661(a). (B) Qualified fertilizer substance For purposes of this section, the term “qualified fertilizer substance” means any substance— (i) used in a qualified fertilizer use by the manufacturer, producer, or importer, (ii) sold for use by any purchaser in a qualified fertilizer use, or (iii) sold for resale by any purchaser for use, or resale for ultimate use, in a qualified fertilizer use. (C) Qualified fertilizer use The term “qualified fertilizer use” means any use in the manufacture or production of fertilizer or for direct application as a fertilizer. (D) Taxation of nonqualified sale or use For purposes of section 4661(a), if no tax was imposed by that section on the sale or use of any chemical by reason of lettered numbered paragraph (A), the first person who sells or uses that chemical other than in a sale or use described in lettered numbered paragraph (A) must be treated as the manufacturer of that chemical. (3) Sulfuric acid produced as a byproduct of air pollution control In the case of sulfuric acid produced solely as a byproduct of and on the same site as air pollution control equipment, no tax must be imposed under section 4661. (4) Substances derived from coal For purposes of this subchapter, the term “taxable chemical” must not include any substance to the extent derived from coal. (5) Substances used in the production of motor fuel, etc. (A) Generally In the case of any chemical described in lettered numbered paragraph (D) which is a qualified fuel substance, no tax must be imposed under section 4661(a). (B) Qualified fuel substance For purposes of this section, the term “qualified fuel substance” means any substance— (i) used in a qualified fuel use by the manufacturer, producer, or importer, (ii) sold for use by any purchaser in a qualified fuel use, or (iii) sold for resale by any purchaser for use, or resale for ultimate use, in a qualified fuel use. (C) Qualified fuel use For purposes of this subsection, the term “qualified fuel use” means— (i) any use in the manufacture or production of any motor fuel, diesel fuel, aviation fuel, or jet fuel, or (ii) any use as that a fuel. (D) Chemicals to which numbered paragraph applies For purposes of this subsection, the chemicals described in this lettered numbered paragraph are acetylene, benzene, butylene, butadiene, ethylene, naphthalene, propylene, toluene, and xylene. (E) Taxation of nonqualified sale or use For purposes of section 4661(a), if no tax was imposed by that section on the sale or use of any chemical by reason of lettered numbered paragraph (A), the first person who sells or uses that chemical other than in a sale or use described in lettered numbered paragraph (A) must be treated as the manufacturer of that chemical. (6) Substance having transitory presence during refining process, etc. (A) Generally No tax must be imposed under section 4661(a) on any taxable chemical described in lettered numbered paragraph (B) by reason of the transitory presence of that chemical during any process of smelting, refining, or otherwise extracting any substance not subject to tax under section 4661(a). (B) Chemicals to which lettered numbered paragraph (A) applies The chemicals described in this lettered numbered paragraph are— (i) barium sulfide, cupric sulfate, cupric oxide, cuprous oxide, lead oxide, zinc chloride, and zinc sulfate, and (ii) any solution or mixture containing any chemical described in clause (i). (C) Removal treated as use Nothing in lettered numbered paragraph (A) must be construed to apply to any chemical which is removed from or ceases to be part of any smelting, refining, or other extraction process. (7) Special rule for xylene Except in the case of any substance imported into the United States or exported from the United States, the term “xylene” does not include any separated isomer of xylene. (8) Recycled chromium, cobalt, and nickel (A) Generally No tax must be imposed under section 4661(a) on any chromium, cobalt, or nickel which is diverted or recovered in the United States from any solid waste as part of a recycling process (and not as part of the original manufacturing or production process). (B) Exemption not to apply while corrective action uncompleted Subnumbered paragraph (A) must not apply during any period that required corrective action by the taxpayer^* at the unit at which the recycling occurs is uncompleted. (C) Required corrective action For purposes of lettered numbered paragraph (B), required corrective action must be treated as uncompleted during the period— (i) beginning on the date that the corrective action is required by the Administrator or an authorized State under— (I) a final permit under section 3005 of the Solid Waste Disposal Act or a final order under section 3004 or 3008 of that Act, or (II) a final order under section 106 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, and (ii) ending on the date the Administrator or that State (as the case may be) certifies to the Secretary that that corrective action has been completed. (D) Special rule for groundwater treatment In the case of corrective action requiring groundwater treatment, that action must be treated as completed as of the close of the 10-year period beginning on the date that action is required if that treatment complies with the permit or order applicable under lettered numbered paragraph (C)(i) throughout that period. The preceding sentence must cease to apply beginning on the date that treatment ceases to comply with that permit or order. (E) Solid waste For purposes of this numbered paragraph, the term “solid waste” has the meaning given that term by section 1004 of the Solid Waste Disposal Act, except that that term must not include any byproduct, coproduct, or other waste from any process of smelting, refining, or otherwise extracting any metal. (9) Substances used in the production of animal feed (A) Generally In the case of— (i) nitric acid, (ii) sulfuric acid, (iii) ammonia, or (iv) methane used to produce ammonia, which is a qualified animal feed substance, no tax must be imposed under section 4661(a). (B) Qualified animal feed substance For purposes of this section, the term “qualified animal feed substance” means any substance— (i) used in a qualified animal feed use by the manufacturer, producer, or importer, (ii) sold for use by any purchaser in a qualified animal feed use, or (iii) sold for resale by any purchaser for use, or resale for ultimate use, in a qualified animal feed use. (C) Qualified animal feed use The term “qualified animal feed use” means any use in the manufacture or production of animal feed or animal feed supplements, or of ingredients used in animal feed or animal feed supplements. (D) Taxation of nonqualified sale or use For purposes of section 4661(a), if no tax was imposed by that section on the sale or use of any chemical by reason of lettered numbered paragraph (A), the 1st person who sells or uses that chemical other than in a sale or use described in lettered numbered paragraph (A) must be treated as the manufacturer of that chemical. (10) Hydrocarbon streams containing mixtures of organic taxable chemicals (A) Generally No tax must be imposed under section 4661(a) on any organic taxable chemical while that chemical is part of an intermediate hydrocarbon stream containing one or more organic taxable chemicals. (B) Removal, etc., treated as use For purposes of this part, if any organic taxable chemical on which no tax was imposed by reason of lettered numbered paragraph (A) is isolated, extracted, or otherwise removed from, or ceases to be part of, an intermediate hydrocarbon stream— (i) that isolation, extraction, removal, or cessation must be treated as use by the person causing that event, and (ii) that person must be treated as the manufacturer of that chemical. (C) Registration requirement Subnumbered paragraph (A) must not apply to any sale of any intermediate hydrocarbon stream unless the registration requirements of clauses (i) and (ii) of subsection (c)(2)(B) are satisfied. (D) Organic taxable chemical For purposes of this numbered paragraph, the term “organic taxable chemical” means any taxable chemical which is an organic substance. (c) Use and certain exchanges by manufacturer, etc. (1) Use treated as sale Unless the exception in subsections (b) and (e), if any person manufactures, produces, or imports any taxable chemical and uses that chemical, then that person must be liable for tax under section 4661 in the same manner as if that chemical were sold by that person. (2) Special rules for inventory exchanges (A) Generally Unless the exception in this numbered paragraph, in any case in which a manufacturer, producer, or importer of a taxable chemical exchanges that chemical as part of an inventory exchange with another person— (i) that exchange must not be treated as a sale, and (ii) that other person shall, for this section’s purposes section 4661, be treated as the manufacturer, producer, or importer of that chemical. (B) Registration requirement Subnumbered paragraph (A) must not apply to any inventory exchange unless— (i) both parties are registered with the Secretary as manufacturers, producers, or importers of taxable chemicals, and (ii) the person receiving the taxable chemical has, at that time as the Secretary may prescribe, notified the manufacturer, producer, or importer of that person’s registration number and the internal revenue district in which that person is registered. (C) Inventory exchange For purposes of this numbered paragraph, the term “inventory exchange” means any exchange in which 2 persons exchange property which is, in the hands of each person, property described in section 1221(a)(1). (d) Refund or credit for certain uses (1) Generally Under regulations prescribed by the Secretary, if— (A) a tax under section 4661 was paid about any taxable chemical, and (B) that chemical was used by any person in the manufacture or production of any other substance which is a taxable chemical, then an amount equal to the tax so paid must be allowed as a credit or refund (without interest) to that person in the same manner as if it were an overpayment of tax imposed by that section. In any case to which this numbered paragraph applies, the amount of any that credit or refund must not exceed the amount of tax imposed by that section on the other substance manufactured or produced (or which would have been imposed by that section on that other substance but for subsection (b) or (e) of this section). (2) Use as fertilizer Under regulations prescribed by the Secretary, if— (A) a tax under section 4661 was paid about nitric acid, sulfuric acid, ammonia, or methane used to make ammonia without regard to subsection (b)(2), and (B) any person uses that substance as a qualified fertilizer substance, then an amount equal to the excess of the tax so paid over the tax determined with regard to subsection (b)(2) must be allowed as a credit or refund (without interest) to that person in the same manner as if it were an overpayment of tax imposed by this section. (3) Use as qualified fuel Under regulations prescribed by the Secretary, if— (A) a tax under section 4661 was paid about any chemical described in lettered numbered paragraph (D) of subsection (b)(5) without regard to subsection (b)(5), and (B) any person uses that chemical as a qualified fuel substance, then an amount equal to the excess of the tax so paid over the tax determined with regard to subsection (b)(5) must be allowed as a credit or refund (without interest) to that person in the same manner as if it were an overpayment of tax imposed by this section. (4) Use in the production of animal feed Under regulations prescribed by the Secretary, if— (A) a tax under section 4661 was paid about nitric acid, sulfuric acid, ammonia, or methane used to produce ammonia, without regard to subsection (b)(9), and (B) any person uses that substance as a qualified animal feed substance, then an amount equal to the excess of the tax so paid over the tax determined with regard to subsection (b)(9) must be allowed as a credit or refund (without interest) to that person in the same manner as if it were an overpayment of tax imposed by this section. (e) Exemption for exports of taxable chemicals (1) Tax-free sales (A) Generally No tax must be imposed under section 4661 on the sale by the manufacturer or producer of any taxable chemical for export, or for resale by the purchaser to a second purchaser for export. (B) Proof of export required Rules similar to the rules of section 4221(b) must apply for this section’s purposes lettered numbered paragraph (A). (2) Credit or refund where tax paid (A) Generally Unless the exception in lettered numbered paragraph (B), if— (i) tax under section 4661 was paid about any taxable chemical, and (ii) (I) that chemical was exported by any person, or (II) that chemical was used as a material in the manufacture or production of a substance which was exported by any person and which, at the time of export, was a taxable substance (as defined in section 4672(a)), credit or refund (without interest) of that tax must be allowed or made to the person who paid that tax. (B) Condition to allowance No credit or refund must be allowed or made under lettered numbered paragraph (A) unless the person who paid the tax establishes that he— (i) has repaid or agreed to repay the amount of the tax to the person who exported the taxable chemical or taxable substance (as so defined), or (ii) has obtained the written consent of that exporter to the allowance of the credit or the making of the refund. (3) Refunds directly to exporter The Secretary must provide, in regulations, the circumstances under which a credit or refund (without interest) of the tax under section 4661 must be allowed or made to the person who exported the taxable chemical or taxable substance, where— (A) the person who paid the tax waives his claim to the amount of that credit or refund, and (B) the person exporting the taxable chemical or taxable substance provides that information as the Secretary may require in that regulations. (4) Regulations The Secretary must prescribe that regulations as may be necessary to carry out the purposes of this subsection. (f) Disposition of revenues from Puerto Rico and the Virgin Islands The provisions of subsections (a)(3) and (b)(3) of section 7652 must not apply to any tax imposed by section 4661.