IRS Weighs Adding Two Resin Copolymers to Superfund Tax List; Updates Privacy Matching

Lead: Expanding the Superfund Tax Net

The IRS is considering expanding the reach of the Superfund excise tax, potentially impacting chemical importers. At issue is Section 4672(a) of the Internal Revenue Code, which imposes a tax on the sale or use of "taxable substances" by importers. A taxable substance is any substance listed in the statute or added by the Treasury Secretary if taxable chemicals make up more than 20% of its weight.

AOC Resins and Coatings has petitioned the IRS to add two copolymer solutions to the list of taxable substances. The first petition concerns vinyl acetate-crotonic acid copolymer in a styrene solution, which the petitioner suggests should be taxed at a rate of $7.48 per ton. The second petition involves methyl methacrylate-ethyl methacrylate-methacrylic acid copolymer in a styrene solution, with a proposed tax rate of $11.55 per ton. The public is invited to submit comments on these petitions.

Deep Dive: The Vinyl Acetate Petition

AOC Resins and Coatings has petitioned the IRS to add two copolymer solutions to the list of taxable substances. The first petition concerns vinyl acetate-crotonic acid copolymer in a styrene solution, which the petitioner suggests should be taxed at a rate of $7.48 per ton. The second petition involves methyl methacrylate-ethyl methacrylate-methacrylic acid copolymer in a styrene solution, with a proposed tax rate of $11.55 per ton. The public is invited to submit comments on these petitions.

The first petition (Docket IRS-2025-0598) concerns a vinyl acetate-crotonic acid copolymer in styrene ((C4H6O2)x-(C4H6O2)y-(C8H8)s; x=99, y=1, s=124). The company seeks to have this substance added to the list of taxable substances under Section 4672(a). Section 4672(a) defines "taxable substance" for purposes of the Superfund excise tax, which is imposed by Section 4671. A substance can be added to the taxable list if taxable chemicals constitute more than 20% of the weight of the materials used to produce it. The company states that the copolymer solution is a thermoplastic low-profile additive for polyester resin, preventing shrinkage during molding.

The company identifies the 'Predominant Method of Production' of this substance as dissolving 40% vinyl acetate-crotonic acid copolymer (Vinnapas C 501) in 60% styrene. The petition states that taxable chemicals constitute 70.05% by weight of the materials used to produce this substance, exceeding the threshold in Section 4672(a).

The specific taxable inputs, according to the petition, are:

• Ethylene
• Methane
• Benzene

Based on its calculations, the company proposes a tax rate of $7.48 per ton.

Deep Dive: The Methyl Methacrylate Petition

Following the petition regarding vinyl acetate-crotonic acid copolymer, the IRS received a second petition (Docket IRS-2025-0599) requesting the addition of methyl methacrylate-ethyl methacrylate-methacrylic acid copolymer in a styrene solution to the list of taxable substances under Section 4672(a) of the Internal Revenue Code. Section 4672(a) allows the IRS to modify the list of taxable substances if taxable chemicals constitute more than 20% of the weight or value of the materials used to produce the substance. This threshold was lowered from 50% by the Infrastructure Investment and Jobs Act (IIJA), expanding the reach of the Superfund tax.

This second petition concerns a different substance with distinct characteristics. Most notably, the petitioner asserts a higher taxable weight of 81.05% and proposes a tax rate of $11.55 per ton, a notable increase from the $7.48 proposed for the vinyl acetate-crotonic acid copolymer.

The petition identifies the following taxable chemicals as constituents:

• Benzene
• Propylene
• Methane
• Ammonia
• Sulfuric Acid
• Ethylene

According to the petition, methyl methacrylate-ethyl methacrylate-methacrylic acid copolymer in a styrene solution is a thermoplastic low-profile additive used to counteract shrinkage in polyester resin during the molding process, ensuring a smoother surface finish.

Industry Impact & Context: Section 4672(a)

As we continue to track petitions for adding substances to the list of taxable substances, it's important to understand the broader context of Section 4672(a) of the Internal Revenue Code. Section 4672(a) is the provision that defines what constitutes a "taxable substance" for the purposes of the Superfund excise tax under Section 4671, which imposes a tax on the sale or use of taxable substances by importers.

The significance of this list stems from the tax treatment of imported substances versus domestically produced goods. Domestic manufacturers pay the tax on the raw chemicals used to create substances, as outlined in Section 4661, which imposes a tax on the sale or use of 42 specific "taxable chemicals". However, importers of substances are taxed under Section 4671 if that substance appears on the 4672(a) list. Therefore, these petitions to add substances to the list serve to level the playing field. If an imported substance contains a significant amount of taxable chemicals, adding it to the list ensures that importers pay their fair share, similar to domestic manufacturers. Prior to the Infrastructure Investment and Jobs Act (IIJA), a substance was only deemed taxable if taxable chemicals constituted more than 50% of its weight or value. However, the IIJA lowered this threshold to 20%, significantly expanding the scope of products subject to the tax.

The IRS provides a process for modifying this list, as detailed in Revenue Procedure 2022-26. This revenue procedure outlines the formal mechanism for modifying the list of taxable substances. "Interested persons," including importers, exporters, and manufacturers of a substance, may submit a petition to add or remove a substance from the Section 4672(a) list.

Administrative Note: Privacy Act Matching Program

The IRS is also renewing its efforts to ensure compliance with existing laws through data matching programs. As part of its ongoing administrative duties, the IRS issued a notice regarding the re-establishment of its "Disclosure of Information to Federal, State and Local Agencies" (DIFSLA) Computer Matching Program. This program, operating under the authority of Section 6103(l)(7), which allows the IRS to disclose Federal Tax Information (FTI) to certain agencies, facilitates the verification of eligibility and benefit levels in various federal benefit programs, such as Social Security (SSI) and SNAP.

The renewed agreement is expected to be in effect from January 15, 2026, through July 16, 2027. This renewal signifies the IRS's continued commitment to utilizing data matching for compliance and verification purposes while adhering to the Privacy Act of 1974.