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July 17, 2023

Petition Filed to Add Methyl Ethyl Ketoxime to List of Chemical Substances Subject to Superfund Excise Tax

Lynn L. Bergeson Carla N. Hutton

The Internal Revenue Service (IRS) announced on July 17, 2023, that it received a petition requesting that methyl ethyl ketoxime (MEKO) be added to the list of taxable substances under Section 4672(a) of the Internal Revenue Code. 88 Fed. Reg. 45454. The petitioner is AdvanSix Inc., an exporter of MEKO. The notice includes the following description of the petition:

According to the petition, MEKO is a clear liquid and a high-efficiency, anti-skinning agent that is used for air-drying paints, inks, and coatings. The vast majority of the production of MEKO is by the conventional method developed in the late 1960s, via a route that involves condensation of methyl ethyl ketone with a hydroxylamine salt in the presence of a base. More specifically, methyl ethyl ketone is oximated with Raschig hydroxylamine to yield MEKO. More recently a “peroxide route” was developed and thought to provide a more selective production of MEKO. The peroxide route involves the liquid-phase ammoximation of methyl ethyl ketone with H2O2, and ammonia, over Ti-MWW catalyst. Because of incumbent systems already in use, this peroxide route method is not widely adapted.

MEKO is made from ammonia, sulfuric acid, and butylene; however, sulfuric acid is cancelled from the stoichiometric material consumption equation due to no net consumption/production. The percent of MEKO produced with taxable chemicals is 39.97, by weight, of all materials used in the production of MEKO.

Comments and requests for a public hearing are due September 15, 2023. 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.”