Paint Chemical Petitioned for Superfund Tax List

WEDNESDAY, JULY 19, 2023


Last week, the U.S. Department of Treasury received a petition to add methyl ethyl ketoxime, a compound used in paint, to a list of chemicals and substances that are subject to Superfund excise tax. The chemical, also referred to as MEKO, is a liquid that prevents a skin from forming in paint containers.

According to Bloomberg Tax, the bipartisan infrastructure bill reportedly reinstated a levy, known as the Superfund excise tax, on chemical companies and importers known to pollute. However, taxpayers can request a substance be added or removed to a list of items subject to the tax.

The petition was published on July 17 in the Federal Register.

About the Filing

Filed with the Internal Revenue Service, the notice of filing announces that a petition has been filed requesting that MEKO be added to the list of taxable substances under section 4672(a) of the Internal Revenue Code (List). The petitioner is listed as AdvanSix Inc., an exporter of MEKO.

The notice of filing states that MEKO is a clear liquid and a high-efficiency, anti-skinning agent that is used for air-drying paints, inks, and coatings. The majority of MEKO production was reportedly through a conventional method developed in the late 1960s, via a route that involves condensation of methyl ethyl ketone with a hydroxylamine salt in the presence of a base.

Additionally, MEKO is oximated with Raschig hydroxylamine to yield more of the material. However, more recently, a “peroxide route” was developed and thought to provide a more selective production.

The filing notes that MEKO is made from ammonia, sulfuric acid and butylene; however, sulfuric acid is cancelled from the stoichiometric material consumption equation due to no net consumption or production.

The proposed tax rate, calculated by the Petitioner based on conversion factors for taxable chemicals used in production of the substance, came out to $11.41 per ton. These conversion factors included 0.98 for ammonia and 0.64 for butylene.

Comments and requests for a public hearing must be received on or before Sept. 15, 2023. Commenters are encouraged to submit public comments or requests for a public hearing relating to the petition electronically via the Federal eRulemaking Portal.

Back in 1989, the U.S. Environmental Protection Agency issued a final test rule under the Toxic Substances Control Act that required manufacturers and processors of the compound to perform testing for health effects.

According to the published rule, the testing requirements include oncogerticity, mutagenicity, develop mental toxicity, reproductive toxicity, neurotoxicity and pharmacokinetics.

   

Tagged categories: Coating chemistry; Coating Materials; Construction chemicals; Good Technical Practice; Government; hazardous materials; Internal Revenue Service; Laws and litigation; NA; North America; Paint; Program/Project Management; Raw materials; Taxes

Join the Conversation:

Sign in to our community to add your comments.