(a) Overview. This section provides rules relating to the tax imposed under section 4681 on ozone-depleting chemicals (ODCs) that are exported. In general, tax is not imposed on ODCs that a manufacturer or importer sells for export, or for resale by the purchaser to a second purchaser for export, if the procedural requirements set forth in paragraph (d) of this section are met. The tax benefit of this exemption is limited, however, to the manufacturer's or importer's exemption amount. Thus, if the tax that would otherwise be imposed under section 4681 on ODCs that a manufacturer or importer sells for export exceeds this exemption amount, a tax equal to the excess is imposed on the ODCs. The exemption amount, which is determined separately for post-1989 ODCs and post-1990 ODCs, is calculated for each calendar year in accordance with the rules of paragraph (c) of this section. This section also provides rules under which a tax imposed under section 4681 on exported ODCs may be credited or refunded, subject to the same limit on tax benefits, if the procedural requirements set forth in paragraph (f) of this section are met. See §52.4681-1(c) for definitions relating to the tax on ODCs.
(b) Exemption or partial exemption from tax—(1) In general. Except as provided in paragraph (b)(2) of this section, no tax is imposed on an ODC if the manufacturer or importer of the ODC sells the ODC in a qualifying sale for export (within the meaning of paragraph (d)(1) of this section).
(2) Tax imposed if exemption amount exceeded—(i) Post-1989 ODCs. The tax imposed on post-1989 ODCs that a manufacturer or importer sells in qualifying sales for export during a calendar year is equal to the excess (if any) of—
(A) The tax that would be imposed on the ODCs but for section 4682(d)(3) and this section; over
(B) The post-1989 ODC exemption amount for the calendar year determined under paragraph (c)(1) of this section.
(ii) Post-1990 ODCs. The tax imposed on post-1990 ODCs that a manufacturer or importer sells in qualifying sales for export during a calendar year is equal to the excess (if any) of—
(A) The tax that would be imposed on the ODCs but for section 4682(d)(3) and this section; over
(B) The post-1990 ODC exemption amount for the calendar year determined under paragraph (c)(2) of this section.
(iii) Allocation of tax—(A) Post-1989 ODCs. The tax (if any) determined under paragraph (b)(2)(i) of this section may be allocated among the post-1989 ODCs on which it is imposed in any manner, provided that the amount allocated to any post-1989 ODC does not exceed the tax that would be imposed on such ODC but for section 4682(d)(3) and this section.
(B) Post-1990 ODCs. The tax (if any) determined under paragraph (b)(2)(ii) of this section may be allocated among the post-1990 ODCs on which it is imposed in any manner, provided that the amount allocated to any post-1990 ODC does not exceed the tax that would be imposed on such ODC but for section 4682(d)(3) and this section.
(c) Exemption amount—(1) Post-1989 ODC exemption amount. A manufacturer's or importer's post-1989 ODC exemption amount for a calendar year is the sum of the following amounts:
(i) The 1986 export percentage of the aggregate tax that would (but for section 4682(d), section 4682(g), and this section) be imposed under section 4681 on the maximum quantity, determined without regard to additional production allowances, of post-1989 ODCs that the person is permitted to manufacture during the calendar year under rules prescribed by the Environmental Protection Agency (40 CFR part 82).
(ii) The aggregate tax that would (but for section 4682(d), section 4682(g), and this section) be imposed under section 4681 on post-1989 ODCs that the person manufactures during the calendar year under any additional production allowance granted by the Environmental Protection Agency.
(iii) The aggregate tax that would (but for section 4682(d), section 4682(g), and this section) be imposed under section 4681 on post-1989 ODCs imported by the person during the calendar year.
(2) Post-1990 ODC exemption amount. A manufacturer's or importer's post-1990 ODC exemption amount for a calendar year is the sum of the following amounts:
(i) The 1989 export percentage of the aggregate tax that would (but for section 4682(d), section 4682(g), and this section) be imposed under section 4681 on the maximum quantity, determined without regard to additional production allowances, of post-1990 ODCs the person is permitted to manufacture during the calendar year under rules prescribed by the Environmental Protection Agency.
(ii) The aggregate tax that would (but for section 4682(d), section 4682(g), and this section) be imposed under section 4681 on post-1990 ODCs that the person manufactures during the calendar year under any additional production allowance granted by the Environmental Protection Agency.
(iii) The aggregate tax that would (but for section 4682(d), section 4682(g), and this section) be imposed under section 4681 on post-1990 ODCs imported by the person during the calendar year.
(3) Definitions—(i) 1986 export percentage. See section 4682(d)(3)(B)(ii) for the meaning of the term 1986 export percentage.
(ii) 1989 export percentage. See section 4682(d)(3)(C) for the meaning of the term 1989 export percentage.
(d) Procedural requirements relating to tax-free sales for export—(1) Qualifying sales—(i) In general. A sale of ODCs is a qualifying sale for export if—
(A) The seller is the manufacturer or importer of the ODCs and the purchaser is a purchaser for export or for resale to a second purchaser for export;
(B) At the time of the sale, the seller and the purchaser are registered with the Internal Revenue Service; and
(C) At the time of the sale, the seller—
(1) Has an unexpired certificate in substantially the form set forth in paragraph (d)(3)(ii) of this section from the purchaser; and
(2) Relies on the certificate in good faith.
(ii) Qualifying resale. A sale of ODCs is a qualifying resale for export if—
(A) The seller acquired the ODCs in a qualifying sale for export and the purchaser is a second purchaser for export;
(B) At the time of the sale, the seller and the purchaser are registered with the Internal Revenue Service; and
(C) At the time of the sale, the seller—
(1) Has an unexpired certificate in substantially the form set forth in paragraph (d)(3)(ii)(A) of this section from the purchaser of the ODCs; and
(2) Relies on the certificate in good faith.
(iii) Special rule relating to sales made before July 1, 1993. If a sale for export made before July 1, 1993, satisfies all the requirements of paragraph (d)(1)(i) or (ii) of this section other than those relating to registration, the sale will be treated as a qualifying sale (or resale) for export. Thus, a sale made before July 1, 1993, may be a qualifying sale (or resale) even if the parties to the sale are not registered and the required certificate does not contain statements regarding registration.
(iv) Registration. Application for registration is made on Form 637 (or any other form designated for the same use by the Commissioner) according to the instructions applicable to the form. A person is registered only if the district director has issued that person a letter of registration and it has not been revoked or suspended. The effective date of the registration must be no earlier than the date on which the district director signs the letter of registration. Each business unit that has, or is required to have, a separate employer identification number is treated as a separate person.
(2) Good faith reliance. The requirements of paragraph (d)(1) of this section are not satisfied with respect to a sale of ODCs and the sale is not a qualifying sale (or resale) if, at the time of the sale—
(i) The seller has reason to believe that the ODCs are not purchased for export; or
(ii) The Internal Revenue Service has notified the seller that the purchaser's registration has been revoked or suspended.
(3) Certificate—(i) In general. The certificate required under paragraph (d)(1) of this section consists of a statement executed and signed under penalties of perjury by a person with authority to bind the purchaser, in substantially the same form as model certificates provided in paragraph (d)(3)(ii) of this section, and containing all information necessary to complete such model certificate. A new certificate must be given if any information in the current certificate changes. The certificate may be included as part of any business records normally used to document a sale. The certificate expires on the earliest of the following dates—
(A) The date one year after the effective date of the certificate;
(B) The date the purchaser provides a new certificate to the seller; or
(C) The date the seller is notified by the Internal Revenue Service or the purchaser that the purchaser's registration has been revoked or suspended.
(ii) Model certificates—(A) ODCs sold for export by the purchaser. If the purchaser will export the ODCs, the certificate must be in substantially the following form:
CERTIFICATE OF PURCHASER OF CHEMICALS FOR EXPORT BY THE PURCHASER
(To support tax-free sales under section 4682(d)(3) of the Internal Revenue Code.)
(not more than one year
after effective date)
The undersigned purchaser (Purchaser) certifies the following under penalties of perjury:
Purchaser is registered with the Internal Revenue Service as a purchaser of ozone-depleting chemicals for export under registration number _____. Purchaser's registration has not been suspended or revoked by the Internal Revenue Service.
The following percentage of ozone-depleting chemicals purchased from:
(Name of seller)
(Address of seller)
(Taxpayer identifying number of seller)
are purchased for export by Purchaser.
| Product | Percentage |
|---|---|
| CFC-11 | _____ |
| CFC-12 | _____ |
| CFC-113 | _____ |
| CFC-114 | _____ |
| CFC-115 | _____ |
| Halon-1211 | _____ |
| Halon-1301 | _____ |
| Halon-2402 | _____ |
| Carbon tetrachloride | _____ |
| Methyl chloroform | _____ |
| Other (specify) | |
| _______ | _____ |
This certificate applies to (check and complete as applicable):
___ All shipments to Purchaser at the following location(s):
___ All shipments to Purchaser under the following Purchaser account number(s):
___ All shipments to Purchaser under the following purchase order(s):
___ One or more shipments to Purchaser identified as follows:
Purchaser understands that Purchaser will be liable for tax imposed under section 4681 if Purchaser does not export the ODCs to which this certificate applies.
Purchaser understands that any use of the ODCs to which this certificate applies other than for export may result in the revocation of Purchaser's registration.
Purchaser will retain the business records needed to document the export of the ozone-depleting chemicals to which this certificate applies and will make such records available for inspection by Government officers.
Purchaser has not been notified by the Internal Revenue Service that its registration has been revoked or suspended.
Purchaser understands that the fraudulent use of this certificate may subject Purchaser and all parties making such fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.
Name of Purchaser
Address of Purchaser
Taxpayer Identifying Number of Purchaser
Title of person signing
Printed or typed name of person signing
Signature
(B) ODCs sold by the purchaser for resale for export by the second purchaser. If the purchaser will resell the ODCs to a second purchaser for export by the second purchaser, the certificate must be in substantially the following form:
CERTIFICATE OF PURCHASER OF CHEMICALS FOR RESALE FOR EXPORT BY THE SECOND PURCHASER
(To support tax-free sales under section 4682(d)(3) of the Internal Revenue Code.)
(not more than one year
after effective date)
The undersigned purchaser (Purchaser) certifies the following under penalties of perjury:
Purchaser is registered with the Internal Revenue Service as a purchaser of ozone-depleting chemicals for export under registration number _____. Purchaser's registration has not been suspended or revoked by the Internal Revenue Service.
The following percentage of ozone-depleting chemicals purchased from:
(Name of seller)
(Address of seller)
(Taxpayer identifying number of seller)
will be resold by Purchaser to persons (Second Purchasers) that certify to Purchaser that they are (1) registered with the Internal Revenue Service as purchasers of ozone-depleting chemicals for export and (2) purchasing the ozone-depleting chemicals for export.
| Product | Percentage |
|---|---|
| CFC-11 | _____ |
| CFC-12 | _____ |
| CFC-113 | _____ |
| CFC-114 | _____ |
| CFC-115 | _____ |
| Halon-1211 | _____ |
| Halon-1301 | _____ |
| Halon-2402 | _____ |
| Carbon tetrachloride | _____ |
| Methyl chloroform | _____ |
| Other (specify) | |
| _______ | _____ |
This certificate applies to (check and complete as applicable):
___ All shipments to Purchaser at the following location(s):
___ All shipments to Purchaser under the following Purchaser account number(s):
___ All shipments to Purchaser under the following purchase order(s):
___ One or more shipments to Purchaser identified as follows:
Purchaser understands that Purchaser will be liable for tax imposed under section 4681 if Purchaser does not resell the ODCs to which this certificate applies to a Second Purchaser for export or export those ODCs.
Purchaser understands that any use of the ODCs to which this certificate applies other than for resale to Second Purchasers for export may result in the revocation of Purchaser's registration.
Purchaser will retain the business records needed to document the sales to Second Purchasers for export covered by this certificate and will make such records available for inspection by Government officers. Purchaser also will retain and make available for inspection by Government officers the certificates of its Second Purchasers.
Purchaser has not been notified by the Internal Revenue Service that its registration has been revoked or suspended. In addition, the Internal Revenue Service has not notified Purchaser of the revocation or suspension of the registration of any Second Purchaser who will purchase ozone-depleting chemicals to which this certificate applies.
Purchaser understands that the fraudulent use of this certificate may subject Purchaser and all parties making such fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.
Name of Purchaser
Address of Purchaser
Taxpayer Identifying Number of Purchaser
Title of person signing
Printed or typed name of person signing
Signature
(4) Documentation of export—(i) After December 31, 1992. After December 31, 1992, to document the exportation of any ODCs, a person must have the evidence required by the Environmental Protection Agency as proof that the ODCs were exported.
(ii) Before January 1, 1993. Before January 1, 1993, to document the exportation of any ODCs, a person must have evidence substantially similar to that required by the Environmental Protection Agency as proof that the ODCs were exported.
(e) Purchaser liable for tax—(1) Purchaser in qualifying sale. The purchaser of ODCs in a qualifying sale for export is treated as the manufacturer of the ODC and is liable for any tax imposed under section 4681 (determined without regard to exemptions for qualifying sales under this section or §52.4682-1) when it sells or uses the ODCs if that purchaser does not-
(i) Export the ODCs and document the exportation of the ODCs in accordance with paragraph (d)(4) of this section; or
(ii) Sell the ODCs in a qualifying resale for export.
(2) Purchaser in qualifying resale. The purchaser of ODCs in a qualifying resale for export is treated as the manufacturer of the ODC and is liable for any tax imposed under section 4681 (determined without regard to exemptions for qualifying sales under this section or §52.4682-1) when it sells or uses the ODCs if that purchaser does not export the ODCs and document the exportation of the ODCs in accordance with paragraph (d)(4) of this section.
(f) Credit or refund—(1) In general. Except as provided in paragraph (f)(2) of this section, a manufacturer or importer that meets the conditions of paragraph (f)(3) of this section is allowed a credit or refund (without interest) of the tax it paid to the government under section 4681 on ODCs that are exported. Persons other than manufacturers and importers of ODCs cannot file claims for credit or refund of tax imposed under section 4681 on ODCs that are exported.
(2) Limitation. The amount of credits or refunds of tax under this paragraph (f) is limited—
(i) In the case of tax paid on post-1989 ODCs sold during a calendar year, to the amount (if any) by which the post-1989 exemption amount for the year exceeds the tax benefit provided to such post-1989 ODCs under paragraph (b) of this section; and
(ii) In the case of tax paid on post-1990 ODCs sold during a calendar year, to the amount (if any) by which the post-1990 exemption amount for the year exceeds the tax benefit provided to such post-1990 ODCs under paragraph (b) of this section.
(3) Conditions to allowance of credit or refund. The conditions of this paragraph (f)(3) are met if the manufacturer or importer—
(i) Documents the exportation of the ODCs in accordance with paragraph (d)(4) of this section; and
(ii) Establishes that it has—
(A) Repaid or agreed to repay the amount of the tax to the person that exported the ODC; or
(B) Obtained the written consent of the exporter to the allowance of the credit or the making of the refund.
(4) Procedural rules. See section 6402 and the regulations under that section for procedural rules relating to filing a claim for credit or refund of tax.
(g) Examples. The following examples illustrate the provisions of this section. In each example, the sales are qualifying sales for export (within the meaning of paragraph (d)(1) of this section), all registration, certification, and documentation requirements of this section are met, and the ODCs sold for export are exported:
(ii) Components of limit on tax benefit. Under paragraph (c)(1) of this section, D's exemption amount for 1993 is equal to the sum of—
(A) D's 1986 export percentage multiplied by the aggregate tax that would (but for section 4682(d), section 4682(g), and §52.4682-5) be imposed under section 4681 on the maximum quantity of post-1989 ODCs D is permitted to manufacture during 1993;
(B) The aggregate tax that would (but for section 4682(d), section 4682(g), and §52.4682-5) be imposed under section 4681 on post-1989 ODCs that D manufactures during 1993 under an additional production allowance; and
(C) The aggregate tax that would (but for section 4682(d), section 4682(g), and §52.4682-5) be imposed under section 4681 on post-1989 ODCs imported by D during 1993.
(iii) Limit on tax benefit. The amounts described in paragraphs (ii)(B) and (C) of this Example 1 are equal to zero. Thus, D's 1993 exemption amount is $167,500 (50% of $335,000 (the tax that would otherwise be imposed on 100,000 pounds of CFC-11 in 1993)).
(iv) Application of limit on tax benefit. Under paragraph (b)(2) of this section, the tax imposed on the CFC-11 D sells for export is equal to the excess of the tax that would have been imposed on those ODCs but for section 4682(d) and §52.4682-5, over D's 1993 exemption amount. But for §52.4682-5, $268,000 ($3.35 × 80,000) of tax would have been imposed on the CFC-11 sold for export. Thus, $100,500 ($268,000 − $167,500) of tax is imposed on the CFC-11 sold for export.
(ii) Limit on tax benefit. E's 1993 exemption amount is $167,500, (50% of $335,000 (the tax that would otherwise be imposed on 100,000 pounds of CFC-11 in 1993)). The credit or refund allowed to E under paragraph (f) of this section is limited under paragraph (f)(2) of this section to the amount by which E's 1993 exemption amount exceeds E's 1993 tax benefit under paragraph (b) of this section.
(iii) Application of limit on tax benefit. Because E sold 45,000 pounds of CFC-11 tax free in qualifying sales for export in 1993, E's 1993 tax benefit under paragraph (b) of this section is $150,750 ($3.35 × 45,000). Thus, the credit or refund allowed to E under paragraph (f) of this section is limited to $16,750 ($167,500−$150,750).
(ii) Limit on tax benefit. F's 1993 exemption amount is $301,500, ($167,500 (50% of $335,000 (the tax that would otherwise be imposed on 100,000 pounds of CFC-11 in 1993) plus $134,000 (the tax that would otherwise be imposed on the 40,000 pounds imported)). The credit or refund allowed to F under paragraph (f) of this section is limited under paragraph (f)(2) of this section to the amount by which F's 1993 exemption amount exceeds F's 1993 tax benefit under paragraph (b) of this section.
(iii) Application of limit on tax benefit. Because F sold 45,000 pounds of CFC-11 tax free in qualifying sales for export in 1993, F's 1993 tax benefit under paragraph (b) of this section is $150,750 ($3.35 × 45,000). Thus, the credit or refund allowed to F under paragraph (f) of this section is limited to $150,750 ($301,500−$150,750). The limitation does not affect F's credit or refund because the tax F paid on exported ODCs is only $117,250 ($3.35 × 35,000).
(h) Effective date. This section is effective January 1, 1993.
[T.D. 8622, 60 FR 52853, Oct. 11, 1995]
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