The Internal Revenue Service (IRS) announced on February 22, 2024, that it received petitions requesting that caprolactam (89 Fed. Reg. 13400) and nylon 6 (89 Fed. Reg. 13399) be added to the list of taxable substances under Section 4672(a) of the Internal Revenue Code. AdvanSix Inc., an exporter of caprolactam and nylon 6, filed the petitions. The notice for caprolactam states:

According to the petition, caprolactam, a white solid, is primarily used to manufacture nylon resins and other synthetic fibers.

Caprolactam is made from benzene, propylene, ammonia, methane, and sulfuric acid; however, sulfuric acid is cancelled from the stoichiometric material consumption equation due to no net consumption/production. Taxable chemicals constitute 46.64 percent by weight of the materials used to produce this substance.

The notice for nylon 6 states:

According to the petition, nylon 6, or poly(caprolactam), is a semicrystalline polyamide that has broad use in textile fibers, engineering plastics, food packaging films, and monofilaments. The number “6” in nylon 6 refers to the number of carbon atoms in each polymeric repeat unit. Nylon 6 may be utilized neat or with functional additives by melt processing into the desired final form.

Nylon 6 is made from benzene, propylene, ammonia, methane, and sulfuric acid; however, sulfuric acid is cancelled from the stoichiometric material consumption equation due to no net consumption/production. Taxable chemicals constitute 46.64 percent by weight of the materials used to produce this substance.

Comments and requests for a public hearing are due April 22, 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.”

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