§4671 Imposition of Tax

Summary

Importers pay an excise tax on "taxable substances" — products made from certain taxable chemicals — when they sell or use them in the United States. The tax equals what the chemical tax under section 4661 would have been on the chemicals used to make the substance, as if those chemicals had been sold here. If the importer does not give the IRS enough information to figure that amount, the tax is instead 10 percent of the substance's appraised value when it entered the country (raised from 5 percent by a 2021 law, effective July 1, 2022). The IRS can also set a substance-specific rate based on the predominant production method. No tax applies if the sale or use is already taxed under section 4611 or 4661, and exemptions similar to those for chemicals used as fuel or to make fertilizer or animal feed carry over. The tax expires after December 31, 2031.