
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC4662]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                 Subtitle D--Miscellaneous Excise Taxes
 
                     CHAPTER 38--ENVIRONMENTAL TAXES
 
                 Subchapter B--Tax on Certain Chemicals
 
Sec. 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.

(Added Pub. L. 96-510, title II, Sec. 211(a), Dec. 11, 1980, 94 Stat. 
2799; amended Pub. L. 98-369, div. A, title X, Sec. 1019(a)-(c), July 
18, 1984, 98 Stat. 1022-1024; Pub. L. 99-499, title V, Sec. 513(b)-(g), 
Oct. 17, 1986, 100 Stat. 1762-1765; Pub. L. 100-647, title II, 
Sec. 2001(a), Nov. 10, 1988, 102 Stat. 3593; Pub. L. 106-170, title V, 
Sec. 532(c)(2)(U), Dec. 17, 1999, 113 Stat. 1931.)

                       References in Text

    Sections 3005, 3004, and 3008 of the Solid Waste Disposal Act, 
referred to in subsec. (b)(8)(C)(i)(I), and section 1004 of that Act, 
referred to in subsec. (b)(8)(E), are classified to sections 6925, 6924, 
6928, and 6903, respectively, of Title 42, The Public Health and 
Welfare.
    Section 106 of the Comprehensive Environmental Response, 
Compensation, and Liability Act of 1980, referred to in subsec. 
(b)(8)(C)(i)(II), is classified to section 9606 of Title 42.


                               Amendments

    1999--Subsec. (c)(2)(C). Pub. L. 106-170 substituted ``section 
1221(a)(1)'' for ``section 1221(1)''.
    1988--Subsec. (b)(10)(A). Pub. L. 100-647, Sec. 2001(a)(2), 
substituted ``one or more'' for ``a mixture of''.
    Subsec. (e)(3), (4). Pub. L. 100-647, Sec. 2001(a)(1), added par. 
(3) and redesignated former par. (3) as (4).
    1986--Subsec. (b)(7). Pub. L. 99-499, Sec. 513(c), added par. (7).
    Subsec. (b)(8). Pub. L. 99-499, Sec. 513(d), added par. (8).
    Subsec. (b)(9). Pub. L. 99-499, Sec. 513(e)(1), added par. (9).
    Subsec. (b)(10). Pub. L. 99-499, Sec. 513(g), added par. (10).
    Subsec. (c). Pub. L. 99-499, Sec. 513(f), amended subsec. (c) 
generally. Prior to amendment, subsec. (c) read as follows: ``Except as 
provided in subsection (b), if any person manufactures, produces, or 
imports a 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.''
    Subsec. (d)(1). Pub. L. 99-499, Sec. 513(b)(2), substituted ``which 
is a taxable chemical'' for ``the sale of which by such person would be 
taxable under such section'', in subpar. (B), and substituted ``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)'' for ``imposed by such 
section on the other substance manufactured or produced'' in last 
sentence.
    Subsec. (d)(4). Pub. L. 99-499, Sec. 513(e)(2), added par. (4).
    Subsecs. (e), (f). Pub. L. 99-499, Sec. 513(b)(1), added subsec. (e) 
and redesignated former subsec. (e) as (f).
    1984--Subsec. (b)(1). Pub. L. 98-369, Sec. 1019(a)(3), inserted ``or 
in the manufacture or production of any motor fuel, diesel fuel, 
aviation fuel, or jet fuel''.
    Subsec. (b)(2)(A). Pub. L. 98-369, Sec. 1019(b)(2)(A), substituted 
``qualified fertilizer substance'' for ``qualified substance''.
    Subsec. (b)(2)(B) to (D). Pub. L. 98-369, Sec. 1019(b)(1), inserted 
``fertilizer'' after ``qualified'' wherever appearing in subpar. (B), 
inserted ``fertilizer'' after ``Qualified'' in subpar. (C) heading and 
in text substituted ``The term `qualified fertilizer use' means any use 
in the manufacture or production of fertilizer or for direct application 
as a fertilizer'' for ``For purposes of this subsection, the term 
`qualified use' means any use in the manufacture or production of a 
fertilizer'', and added subpar. (D).
    Subsec. (b)(5), (6). Pub. L. 98-369, Sec. 1019(a)(1), added pars. 
(5) and (6).
    Subsec. (c). Pub. L. 98-369, Sec. 1019(c), substituted ``Except as 
provided in subsection (b), if'' for ``If''.
    Subsec. (d)(2)(B). Pub. L. 98-369, Sec. 1019(b)(2)(B), inserted 
``fertilizer'' after ``qualified'' and struck out ``, or sells such 
substance for use,'' after ``such substance''.
    Subsec. (d)(3). Pub. L. 98-369, Sec. 1019(a)(2), added par. (3).


                    Effective Date of 1999 Amendment

    Amendment by Pub. L. 106-170 applicable to any instrument held, 
acquired, or entered into, any transaction entered into, and supplies 
held or acquired on or after Dec. 17, 1999, see section 532(d) of Pub. 
L. 106-170, set out as a note under section 170 of this title.


                    Effective Date of 1988 Amendment

    Amendment by Pub. L. 100-647 effective, except as otherwise 
provided, as if included in the provision of the Superfund Revenue Act 
of 1986, Pub. L. 99-499, title V, to which it relates, see section 
2001(e) of Pub. L. 100-647, set out as a note under section 56 of this 
title.


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-499 effective Jan. 1, 1987, except as 
otherwise provided, see section 513(h) of Pub. L. 99-499, set out as a 
note under section 4661 of this title.


                    Effective Date of 1984 Amendment

    Section 1019(d) of Pub. L. 98-369 provided that:
    ``(1) In general.--The amendments made by this section [amending 
this section] shall take effect as if included in the amendments made by 
section 211(a) of the Hazardous Substance Response Revenue Act of 1980 
[Pub. L. 96-510, which enacted this section].
    ``(2) Waiver of limitation.--If refund or credit of any overpayment 
of tax resulting from the application of the amendments made by this 
section is prevented at any time before the date which for one year 
after the date of the enactment of this Act [July 18, 1984] by the 
operation of any law or rule of law (including res judicata), refund or 
credit of such overpayment (to the extent attributable to the 
application of such amendments) may, nevertheless, be made or allowed if 
claim therefor is filed on or before the date which for one year after 
the date of the enactment of this Act.''

                  Section Referred to in Other Sections

    This section is referred to in sections 4671, 4672, 4682 of this 
title.
