Tax-Free Inventory Exchange Election

§ 4662. Definitions and special rules(a) DefinitionsFor purposes of this subchapter—(1) Taxable chemicalExcept as provided in subsection (b), the term “taxable chemical” means any substance—(A) which is listed in the table under section 4661(b), and (B) which is manufactured or produced in the United States or entered into the United States for consumption, use, or ware­housing. (2) United StatesThe term “United States” has the meaning given such term by section 4612(a)(4). (3) ImporterThe term “importer” means the person entering the taxable chemical for consumption, use, or warehousing. (4) TonThe term “ton” means 2,000 pounds. In the case of any taxable chemical which is a gas, the term “ton” means the amount of such gas in cubic feet which is the equivalent of 2,000 pounds on a molecular weight basis. (5) Fractional part of tonIn the case of a fraction of a ton, the tax imposed by section 4661 shall be the same fraction of the amount of such tax imposed on a whole ton. (b) Exceptions; other special rulesFor purposes of this subchapter—(1) Methane or butane used as a fuelUnder regulations prescribed by the Secretary, methane or butane shall be treated as a taxable chemical only if it is used otherwise than as a fuel or in the manufacture or production of any motor fuel, diesel fuel, aviation fuel, or jet fuel (and, for purposes of section 4661(a), the person so using it shall be treated as the manufacturer thereof). (2) Substances used in the production of fertilizer(A) In generalIn the case of nitric acid, sulfuric acid, ammonia, or methane used to produce ammonia which is a qualified fertilizer substance, no tax shall be imposed under section 4661(a). (B) Qualified fertilizer substanceFor purposes of this section, the term “qualified fertilizer substance” means any substance—(i) used in a qualified fertilizer use by the manufacturer, producer, or importer, (ii) sold for use by any purchaser in a qualified fertilizer use, or (iii) sold for resale by any purchaser for use, or resale for ultimate use, in a qualified fertilizer use. (C) Qualified fertilizer useThe term “qualified fertilizer use” means any use in the manufacture or production of fertilizer or for direct application as a fertilizer. (D) Taxation of nonqualified sale or useFor purposes of section 4661(a), if no tax was imposed by such section on the sale or use of any chemical by reason of subparagraph (A), the first person who sells or uses such chemical other than in a sale or use described in subparagraph (A) shall be treated as the manufacturer of such chemical. (3) Sulfuric acid produced as a byproduct of air pollution controlIn the case of sulfuric acid produced solely as a byproduct of and on the same site as air pollution control equipment, no tax shall be imposed under section 4661. (4) Substances derived from coalFor purposes of this subchapter, the term “taxable chemical” shall not include any substance to the extent derived from coal.