IRS Weighs New Superfund Excise Taxes on Ion Resins and EV Battery Components

Superfund Tax Scope Expands: The Context

The IRS is proposing to expand the scope of the Superfund excise tax by adding two new substances to the list of taxable substances under Internal Revenue Code Section 4672(a). Section 4672(a) defines "taxable substance" for the Superfund excise tax on imported chemical derivatives, allowing the Secretary of the Treasury to list substances if they contain more than 20% taxable chemicals by weight or value. The mechanism for this listing is outlined in Rev. Proc. 2022-26, which details how interested parties can petition the IRS to add or remove substances from the taxable list.

The "delta" for affected businesses is significant: importers of specific chemicals, previously untaxed, may soon face excise taxes of $10.03 and $5.73 per ton respectively. This expansion is part of the broader reinstatement of the Superfund excise taxes following the Infrastructure Investment and Jobs Act. Interested parties have until March 16, 2026, to submit comments on these proposed additions.

Petition 1: The Hit to Ion Exchange Resins ($10.03/ton)

As discussed previously, the Infrastructure Investment and Jobs Act (IIJA) reinstated the Superfund excise taxes under Internal Revenue Code Section 4671. This, in turn, increases the importance of Section 4672(a), which defines "taxable substances." The IRS also provided a process, detailed in Rev. Proc. 2022-26, for how interested parties can petition the IRS to add or remove substances from the taxable list. The first such petition under consideration involves a substance used in the production of ion exchange resins.

Purolite LLC, an importer, submitted a petition requesting that a specific chemical substance be added to the list of taxable substances under Section 4672(a). The substance in question is Styrene-DVB-EVB (Styrene <50%), also known as Poly(styrene-divinylbenzene-ethylvinylbenzene). If the IRS grants the petition, importers of this substance will face a new excise tax.

• Proposed Tax Rate: The proposed tax rate for Styrene-DVB-EVB (Styrene <50%) is $10.03 per ton. This rate was calculated by the petitioner based on their conversion factors for taxable chemicals used in the production of the substance.
• Industrial Usage: Styrene-DVB-EVB (Styrene <50%) is primarily used in the production of ion exchange resins. It also finds application as a column packing material in liquid chromatography and as a separation medium in thin-layer chromatography.
• Chemistry: According to the petition, taxable chemicals (benzene and ethylene) constitute 100% by weight of the materials used to produce Styrene-DVB-EVB (Styrene <50%). The tax is based on the stoichiometric consumption of these taxable chemicals in the production process.

Petition 2: The Cost for EV Battery Manufacturers ($5.73/ton)

The IRS is also considering a petition regarding Acrylate Monomer Synthetic Rubber in a Water Emulsion, commonly known as ACM Latex. Recall that the Infrastructure Investment and Jobs Act (IIJA) reinstated the Superfund excise taxes, codified in Sections 4661 and 4671 of the Internal Revenue Code, which had been expired since December 31, 1995. Section 4672(a) defines "taxable substance" and authorizes the Secretary of the Treasury to add substances to the taxable list if they contain more than 20% of taxable chemicals by weight or value.

• Petitioner: Zeon Chemicals L.P., an importer of ACM Latex, filed the petition.
• Industry Impact: ACM Latex is used in electric vehicle battery manufacture.

The key details of the petition are as follows:

• Tax Rate: The petitioner calculates a tax rate of $5.73 per ton.
• Taxable Content: Taxable chemicals constitute 45.45% by weight of the materials used to produce ACM Latex.
• Input Chemicals: The production of ACM Latex involves propylene, methane, and ethylene.

It's worth noting that this proposed tax rate and taxable content percentage differ significantly from the Styrene-DVB-EVB petition, where the taxable chemicals (benzene and ethylene) constituted 100% of the material by weight, leading to a higher tax burden of $10.03/ton.

Winners, Losers, and Next Steps

As detailed above, the IRS has published notices regarding two petitions to add substances to the list of taxable substances under Section 4672(a) of the Internal Revenue Code. Section 4672(a) defines "taxable substance" for the purposes of the Superfund excise tax. The Infrastructure Investment and Jobs Act (IIJA) reinstated this tax, tasking the IRS with determining which imported substances meet the criteria for taxation based on their chemical composition.

Based on the information presented, the immediate "losers" would be importers of Styrene-DVB-EVB (Styrene <50%), primarily used in ion exchange resins, and importers of ACM Latex, used in EV battery manufacturing. These entities would face increased costs due to the excise tax of $10.03 per ton and $5.73 per ton, respectively. Conversely, domestic producers of these substances could be considered "winners," as the tax could potentially level the playing field by increasing the cost of imported alternatives.

Interested parties are encouraged to submit written comments or requests for a public hearing on these petitions. Comments must be received on or before March 16, 2026, and should reference docket number IRS–2025–0601 for the Styrene-DVB-EVB petition or IRS–2025–0602 for the ACM Latex petition.