Table of Contents
Environmental taxes are imposed on crude oil and petroleum products (oil spill liability), the sale or use of ozone-depleting chemicals (ODCs), and imported products containing or manufactured with ODCs. In addition, a floor stocks tax is imposed on ODCs held on January 1 by any person (other than the manufacturer or importer of the ODCs) for sale or for use in further manufacture.
Figure the environmental tax on Form 6627. Enter the tax on the appropriate lines of Form 720 and attach Form 6627 to Form 720.
For environmental tax purposes, United States includes the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, any possession of the United States, the Commonwealth of the Northern Mariana Islands, the Trust Territory of the Pacific Islands, the continental shelf areas (applying the principles of Internal Revenue Code section 638), and foreign trade zones. No one is exempt from the environmental taxes, including the federal government, state and local governments, Indian tribal governments, and nonprofit educational organizations.
The oil spill liability tax is reported on Form 6627, Environmental Taxes, and Form 720, Quarterly Federal Excise Tax Return (IRS Nos. 18 and 21). The oil spill liability tax rate is $.08 per barrel and generally applies to crude oil received at a U.S. refinery and to petroleum products entered into the United States for consumption, use, or warehousing. The tax also applies to certain uses and the exportation of domestic crude oil.
Crude oil includes crude oil condensates and natural gasoline. Petroleum products include crude oil, refined and residual oil, and other liquid hydrocarbon refinery products.
For a list of the taxable ODCs and tax rates, see the Form 6627 instructions.
Tax is imposed on an ODC when it is first used or sold by its manufacturer or importer. The manufacturer or importer is liable for the tax.
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Metered-dose inhalers.
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Recycled ODCs.
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Exported ODCs.
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ODCs used as feedstock.
A credit or refund (without interest) of tax paid on ODCs may be claimed if a taxed ODC is:
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Used as a propellant in a metered-dose inhaler (the person who used the ODC as a propellant may file a claim),
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Exported (the manufacturer may file a claim), or
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Used as a feedstock (the person who used the ODC may file a claim).
For information on how to file for credits or refunds, see the Instructions for Form 720 or Schedule 6 (Form 8849).
An imported product containing or manufactured with ODCs is subject to tax if it is entered into the United States for consumption, use, or warehousing and is listed in the Imported Products Table. The Imported Products Table is listed in Regulations section 52.4682-3(f)(6).
The tax is based on the weight of the ODCs used in the manufacture of the product. Use the following methods to figure the ODC weight.
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The actual (exact) weight of each ODC used as a material in manufacturing the product.
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If the actual weight cannot be determined, the ODC weight listed for the product in the Imported Products Table.
However, if you cannot determine the actual weight and the table does not list an ODC weight for the product, the rate of tax is 1% of the entry value of the product.
Tax is imposed on an imported taxable product when the product is first sold or used by its importer. The importer is liable for the tax.
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The importer has consistently treated the sale of similar items as the first sale or use of similar taxable imported products.
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The importer has not chosen to treat entry into the United States as use of the product.
The table lists all the products that are subject to the tax on imported taxable products and specifies the ODC weight (discussed later) of each product.
Each listing in the table identifies a product by name and includes only products that are described by that name. Most listings identify a product by both name and Harmonized Tariff Schedule (HTS) heading. In those cases, a product is included in that listing only if the product is described by that name and the rate of duty on the product is determined by reference to that HTS heading. A product is included in the listing even if it is manufactured with or contains a different ODC than the one specified in the table.
Part II of the table lists electronic items that are not included within any other list in the table. An imported product is included in this list only if the product meets one of the following tests.
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It is an electronic component whose operation involves the use of nonmechanical amplification or switching devices such as tubes, transistors, and integrated circuits.
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It contains components described in (1), which account for more than 15% of the cost of the product.
These components do not include passive electrical devices, such as resistors and capacitors. Items such as screws, nuts, bolts, plastic parts, and similar specially fabricated parts that may be used to construct an electronic item are not themselves included in the listing for electronic items.
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A product is listed in Part I of the table if it is a mixture containing ODCs.
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A product is listed in Part II of the table if the Commissioner has determined that the ODCs used as materials in the manufacture of the product under the predominant method are used for purposes of refrigeration or air conditioning, creating an aerosol or foam, or manufacturing electronic components.
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A product is listed in Part III of the table if the Commissioner has determined that the product meets both the following tests.
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It is not an imported taxable product.
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It would otherwise be included within a list in Part II of the table.
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Tax is imposed on any ODC held (other than by the manufacturer or importer of the ODC) on January 1 for sale or use in further manufacturing. The person holding title (as determined under local law) to the ODC is liable for the tax, whether or not delivery has been made.
These chemicals are taxable without regard to the type or size of storage container in which the ODCs are held. The tax may apply to an ODC whether it is in a 14-ounce can or a 30-pound tank.
You are liable for the floor stocks tax if you hold any of the following on January 1.
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At least 400 pounds of ODCs other than halons or methyl chloroform,
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At least 50 pounds of halons, or
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At least 1,000 pounds of methyl chloroform.
If you are liable for the tax, prepare an inventory on January 1 of the taxable ODCs held on that date for sale or for use in further manufacturing. You must pay this floor stocks tax by June 30 of each year. Report the tax on Form 6627 and Part II of Form 720 for the second calendar quarter.
For the tax rates, see the Form 6627 instructions.
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ODCs mixed with other ingredients that contribute to achieving the purpose for which the mixture will be used, unless the mixture contains only ODCs and one or more stabilizers.
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ODCs contained in a manufactured article in which the ODCs will be used for their intended purpose without being released from the article.
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ODCs that have been reclaimed or recycled.
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ODCs sold in a qualifying sale for:
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Use as a feedstock,
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Export, or
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Use as a propellant in a metered-dose inhaler.
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