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February 29, 2024

Petition Filed to Add Iso-butanol to List of Chemical Substances Subject to Superfund Excise Tax

Lynn L. Bergeson Carla N. Hutton

The Internal Revenue Service (IRS) announced on February 27, 2024, that it received a petition requested that iso-butanol (also known as isobutanol, iso butyl alcohol, 2-methyl propan-1-ol, or 2-methyl-1-propanol) be added to the list of taxable substances under Section 4672(a) of the Internal Revenue Code. 89 Fed. Reg. 14558. OQ Chemicals Corporation, an exporter of iso-butanol, filed the petition. The notice states:

According to the petition, iso-butanol is an isomer of n-butanol. Iso-butanol is a four carbon branched aliphatic alcohol. It is used as a solvent or in the manufacture of esters, such as isobutyl acetate, isobutyl acrylate, and isobutyl methacrylate.

Iso-butanol is made from methane and propylene. Taxable chemicals constitute 78.41 percent by weight of the materials used to produce this substance.

According to the notice, the predominant method of production is the co-production of iso-butanol by hydroformylation of propylene to produce both iso-butyraldehyde and n-butyraldehyde followed by hydrogenation of the aldehyde intermediates to the corresponding iso-butanol and n-butanol. Written comments and requests for a public hearing are due April 29, 2024. More information on the Superfund excise tax on chemicals is available in our April 4, 2023, memorandum, “IRS Proposes Regulations Regarding Superfund Tax on Chemicals,” our July 13, 2022, memorandum, “Superfund Tax on Chemicals: What You Need to Know to Comply,” and our May 19, 2022, memorandum, “Reinstated Superfund Excise Tax Imposed on Certain Chemical Substances.”