(a) DefinitionsFor purposes of this subchapter—(1) Taxable chemicalExcept 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 StatesThe term “United States” has the meaning given such term by section 4612(a)(4). (3) ImporterThe term “importer” means the person entering the taxable chemical for consumption, use, or warehousing. (4) TonThe 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 tonIn 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 rulesFor purposes of this subchapter—(1) Methane or butane used as a fuelUnder 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 generalIn 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 substanceFor 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 useThe 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 useFor 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 controlIn 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 coalFor 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 generalIn 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 substanceFor 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 useFor 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 appliesFor 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 useFor 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 generalNo 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) appliesThe 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 useNothing 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 xyleneExcept 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 generalNo 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 uncompletedSubparagraph (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 actionFor 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 treatmentIn 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 wasteFor 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 generalIn 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 substanceFor 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 useThe 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 useFor 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 generalNo 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 useFor 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 requirementSubparagraph (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 chemicalFor 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 saleExcept 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 generalExcept 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 requirementSubparagraph (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 exchangeFor 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 generalUnder 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 fertilizerUnder 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 fuelUnder 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 feedUnder 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 generalNo 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 requiredRules similar to the rules of section 4221(b) shall apply for purposes of subparagraph (A). (2) Credit or refund where tax paid(A) In generalExcept 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 allowanceNo 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 exporterThe 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) RegulationsThe 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 IslandsThe provisions of subsections (a)(3) and (b)(3) of section 7652 shall not apply to any tax imposed by section 4661.
