2024-03589. Superfund Tax on Chemical Substances; Request To Modify List of Taxable Substances; Notice of Filing for Caprolactam

AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Notice of filing and request for comments.

SUMMARY:

This notice of filing announces that a petition has been filed requesting that caprolactam be added to the list of taxable substances. This notice of filing also requests comments on the petition. This notice of filing is not a determination that the list of taxable substances is modified.

DATES:

Written comments and requests for a public hearing must be received on or before April 22, 2024.

ADDRESSES:

Commenters are encouraged to submit public comments or requests for a public hearing relating to this petition electronically via the Federal eRulemaking Portal at http://www.regulations.gov (indicate public docket number IRS–2024–0006 or caprolactam) by following the online instructions for submitting comments. Comments cannot be edited or withdrawn once submitted to the Federal eRulemaking Portal.

Alternatively, comments and requests for a public hearing may be mailed to: Internal Revenue Service, Attn: CC:PA:01:PR (Notice of Filing for Caprolactam), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. All comments received are part of the public record and subject to public disclosure. All comments received will be posted without change to www.regulations.gov, including any personal information provided. You should submit only information that you wish to make publicly available. If a public hearing is scheduled, notice of the time and place for the hearing will be published in the Federal Register .

FOR FURTHER INFORMATION CONTACT:

Camille Edwards Bennehoff at (202) 317–6855 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Request To Add Substance to the List

(a) Overview. A petition was filed pursuant to Rev. Proc. 2022–26 (2022–29 I.R.B. 90), as modified by Rev. Proc. 2023–20 (2023–15 I.R.B. 636), requesting that caprolactam be added to the list of taxable substances under section 4672(a) of the Internal Revenue Code (List). The petition requesting the addition of caprolactam to the List is based on weight and contains the information detailed in paragraph (b) of this document. The information is provided for public notice and comment pursuant to section 9 of Rev. Proc. 2022–26. The publication of petition information in this notice of filing is not a determination and does not constitute Treasury Department or IRS confirmation of the accuracy of the information published.

(b) Petition Content:

(1) Substance name: Caprolactam.

(2) Petitioner: AdvanSix Inc., an exporter of caprolactam.

(3) Proposed classification numbers:

(i) HTSUS number: 2933.71.00.

(ii) Schedule B number: 2933.71.0000.

(iii) CAS number: 105–60–2.

(4) Petition filing dates:

(i) Petition filing date for purposes of making a determination: November 8, 2023.

(ii) Petition filing date for purposes of section 11.02 of Rev. Proc. 2022–26, as modified by section 3 of Rev. Proc. 2023–20: January 1, 2023.

(5) Description from petition: According to the petition, caprolactam, a white solid, is primarily used to manufacture nylon resins and other synthetic fibers.

Caprolactam is made from benzene, propylene, ammonia, methane, and sulfuric acid; however, sulfuric acid is cancelled from the stoichiometric material consumption equation due to no net consumption/production. Taxable chemicals constitute 46.64 percent by weight of the materials used to produce this substance.

(6) Process identified in petition as predominant method of production of substance: Caprolactam is produced by first oxidizing cumene to yield phenol, which is then partially reduced with hydrogen to yield cyclohexanone. Cyclohexanone is then reacted with Raschig hydroxylamine to generate cyclohexanone oxime. The cyclohexanone oxime undergoes Beckmann rearrangement in the presence of fuming sulfuric acid (oleum) to give an intermediate material known as rearrangement mass, which is subsequently hydrolyzed and then neutralized with ammonia to yield ε-caprolactam.

(7) Stoichiometric material consumption equation, based on process identified as predominant method of production:

C₆ H₆ (benzene) + C₃ H₆ (propylene) + 2.5 O₂ (oxygen) + 0.5 CH₄ (methane) + 5 NH₃ (ammonia) + 2 H₂ O (water) + 2 SO₂ (sulfur dioxide) → C₆ H₁₁ ON (ε-caprolactam) + C₃ H₆ O (acetone) + 2(NH₄)₂ SO₄ (ammonium sulfate) + 0.5 CO₂ (carbon dioxide)

(8) Tax rate calculated by Petitioner, based on Petitioner's conversion factors for taxable chemicals used in production of substance:

(i) Tax rate: $14.77 per ton.

(ii) Conversion factors: 0.69 for benzene; 0.37 for propylene; 0.75 for ammonia; 0.07 for methane.

(9) Public docket number: IRS–2024–0006.

Michael Beker,

Senior Counsel (Passthroughs and Special Industries), IRS Office of Chief Counsel.