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U.S. Code as of:
01/19/04
Section 4662. Definitions and special rules
(a) Definitions
For purposes of this subchapter -
(1) Taxable chemical
Except as provided 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 such 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 such
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 shall be the same fraction of the amount of such 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 shall 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
purposes of section 4661(a), the person so using it shall be
treated as the manufacturer thereof).
(2) Substances used in the production of fertilizer
(A) In general
In the case of nitric acid, sulfuric acid, ammonia, or
methane used to produce ammonia which is a qualified fertilizer
substance, no tax shall 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
such section on the sale or use of any chemical by reason of
subparagraph (A), the first person who sells or uses such
chemical other than in a sale or use described in subparagraph
(A) shall be treated as the manufacturer of such 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
shall be imposed under section 4661.
(4) Substances derived from coal
For purposes of this subchapter, the term "taxable chemical"
shall not include any substance to the extent derived from coal.
(5) Substances used in the production of motor fuel, etc.
(A) In general
In the case of any chemical described in subparagraph (D)
which is a qualified fuel substance, no tax shall 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 such a fuel.
(D) Chemicals to which paragraph applies
For purposes of this subsection, the chemicals described in
this subparagraph 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
such section on the sale or use of any chemical by reason of
subparagraph (A), the first person who sells or uses such
chemical other than in a sale or use described in subparagraph
(A) shall be treated as the manufacturer of such chemical.
(6) Substance having transitory presence during refining process,
etc.
(A) In general
No tax shall be imposed under section 4661(a) on any taxable
chemical described in subparagraph (B) by reason of the
transitory presence of such chemical during any process of
smelting, refining, or otherwise extracting any substance not
subject to tax under section 4661(a).
(B) Chemicals to which subparagraph (A) applies
The chemicals described in this subparagraph 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 subparagraph (A) shall 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) In general
No tax shall 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
Subparagraph (A) shall 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 subparagraph (B), required corrective action
shall 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 pursuant
to -
(I) a final permit under section 3005 of the Solid Waste
Disposal Act or a final order under section 3004 or 3008 of
such 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 such State (as
the case may be) certifies to the Secretary that such
corrective action has been completed.
(D) Special rule for groundwater treatment
In the case of corrective action requiring groundwater
treatment, such action shall be treated as completed as of the
close of the 10-year period beginning on the date such action
is required if such treatment complies with the permit or order
applicable under subparagraph (C)(i) throughout such period.
The preceding sentence shall cease to apply beginning on the
date such treatment ceases to comply with such permit or order.
(E) Solid waste
For purposes of this paragraph, the term "solid waste" has
the meaning given such term by section 1004 of the Solid Waste
Disposal Act, except that such term shall 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) In general
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 shall 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
such section on the sale or use of any chemical by reason of
subparagraph (A), the 1st person who sells or uses such
chemical other than in a sale or use described in subparagraph
(A) shall be treated as the manufacturer of such chemical.
(10) Hydrocarbon streams containing mixtures of organic taxable
chemicals
(A) In general
No tax shall be imposed under section 4661(a) on any organic
taxable chemical while such 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 subparagraph (A) is
isolated, extracted, or otherwise removed from, or ceases to be
part of, an intermediate hydrocarbon stream -
(i) such isolation, extraction, removal, or cessation shall
be treated as use by the person causing such event, and
(ii) such person shall be treated as the manufacturer of
such chemical.
(C) Registration requirement
Subparagraph (A) shall 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 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
Except as provided in subsections (b) and (e), if any person
manufactures, produces, or imports any taxable chemical and uses
such chemical, then such person shall be liable for tax under
section 4661 in the same manner as if such chemical were sold by
such person.
(2) Special rules for inventory exchanges
(A) In general
Except as provided in this paragraph, in any case in which a
manufacturer, producer, or importer of a taxable chemical
exchanges such chemical as part of an inventory exchange with
another person -
(i) such exchange shall not be treated as a sale, and
(ii) such other person shall, for purposes of section 4661,
be treated as the manufacturer, producer, or importer of such
chemical.
(B) Registration requirement
Subparagraph (A) shall 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 such
time as the Secretary may prescribe, notified the
manufacturer, producer, or importer of such person's
registration number and the internal revenue district in
which such person is registered.
(C) Inventory exchange
For purposes of this 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) In general
Under regulations prescribed by the Secretary, if -
(A) a tax under section 4661 was paid with respect to any
taxable chemical, and
(B) such 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 shall be allowed as a
credit or refund (without interest) to such person in the same
manner as if it were an overpayment of tax imposed by such
section. In any case to which this paragraph applies, the amount
of any such credit or refund shall not exceed the amount of tax
imposed by such section on the other substance manufactured or
produced (or which would have been imposed by such section on
such 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 with respect to nitric
acid, sulfuric acid, ammonia, or methane used to make ammonia
without regard to subsection (b)(2), and
(B) any person uses such 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) shall be allowed
as a credit or refund (without interest) to such 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 with respect to any
chemical described in subparagraph (D) of subsection (b)(5)
without regard to subsection (b)(5), and
(B) any person uses such 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) shall be allowed
as a credit or refund (without interest) to such 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 with respect to nitric
acid, sulfuric acid, ammonia, or methane used to produce
ammonia, without regard to subsection (b)(9), and
(B) any person uses such 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) shall be allowed
as a credit or refund (without interest) to such 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) In general
No tax shall 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) shall apply for
purposes of subparagraph (A).
(2) Credit or refund where tax paid
(A) In general
Except as provided in subparagraph (B), if -
(i) tax under section 4661 was paid with respect to any
taxable chemical, and
(ii)(I) such chemical was exported by any person, or
(II) such 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 such tax shall be
allowed or made to the person who paid such tax.
(B) Condition to allowance
No credit or refund shall be allowed or made under
subparagraph (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 such exporter to
the allowance of the credit or the making of the refund.
(3) Refunds directly to exporter
The Secretary shall provide, in regulations, the circumstances
under which a credit or refund (without interest) of the tax
under section 4661 shall 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 such credit or refund, and
(B) the person exporting the taxable chemical or taxable
substance provides such information as the Secretary may
require in such regulations.
(4) Regulations
The Secretary shall prescribe such 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
shall not apply to any tax imposed by section 4661.
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