IRS Expands Taxable Chemical List: What It Means for Toxic Exposure Injury Claims

The Internal Revenue Service (IRS) has recently expanded its list of taxable chemicals, a move that could have significant implications for individuals pursuing toxic exposure injury claims. This update to the list, governed by Section 4672 of the Internal Revenue Code (IRC), affects the Superfund tax, which is designed to fund the cleanup of hazardous waste sites. Understanding these changes is crucial for anyone who has suffered harm due to chemical exposure, as it may influence the financial aspects of their legal settlements.

Understanding the IRS’s Taxable Chemical List

The IRS maintains a list of “taxable substances” that are subject to excise taxes under the Superfund program. This program, officially known as the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), aims to address the environmental and health hazards posed by uncontrolled or abandoned hazardous waste sites. The taxes collected on these chemicals contribute to the funding of cleanup efforts.

Section 4672(a) of the IRC defines a taxable substance as any substance listed by the Secretary of the Treasury. The list includes specific chemicals and substances where taxable chemicals constitute a significant portion of their weight or value. The Secretary makes these determinations in consultation with the Environmental Protection Agency (EPA) and the Commissioner of U.S. Customs and Border Protection [9, 10].

Recent Expansions to the List

In a recent notice, the IRS added 21 new substances to the taxable chemical list [12, 15]. These additions, effective January 1, 2026, include a range of chemicals used in various industries [15]:

Polyphenylene sulfide
Cellulose acetate (degree of substitution = 1.5-2.0)
4,4′-isopropylidenediphenol-epichlorohydrin copolymer
Nylon 6
Caprolactam
Methyl ethyl ketoxime
Iso-butanol
Diethylene glycol monomethyl ether
Ethylene glycol phenyl ether
Methoxytriglycol
Propylene glycol methyl ether acetate
Propylene glycol methyl ether
Propylene glycol n-propyl ether
Propylene glycol phenyl ether
Di-isobutyl carbinol
Di-isobutyl ketone
Methyl isobutyl carbinol
Cyanuric acid
Potassium bicarbonate
Potassium carbonate
Sodium chlorite

These additions followed petitions from importers, exporters, or interested parties who demonstrated that taxable chemicals constitute more than 20% of the substance’s weight [15]. The IRS also corrected a typographical error related to sodium nitrilotriacetate monohydrate and prescribed a tax rate for it, effective July 1, 2022 [15, 16].

How This Impacts Toxic Exposure Injury Claims

The expansion of the taxable chemical list may seem distant from personal injury claims, but it has the potential to influence these cases in several ways:

Funding for Cleanup Efforts: The Superfund tax directly supports the cleanup of hazardous waste sites. An expanded tax base means more funds available for remediation, potentially reducing the long-term health risks associated with these sites.
Identifying Responsible Parties: The Superfund program also focuses on identifying and holding responsible parties accountable for the pollution they cause. The tax list can serve as a reference point in determining which entities are involved with taxable substances and, therefore, potentially liable for contamination.
Tax Implications of Settlements: While settlements for physical injuries are generally not taxable, it’s essential to understand how the IRS classifies different types of compensation [14, 17, 20]. Compensation for lost wages or punitive damages may be taxable, and it’s crucial to consult with a tax professional to navigate these complexities [14].

Legal Options for Victims of Toxic Exposure

If you or a loved one has been exposed to toxic chemicals, understanding your legal options is essential. Several avenues may be available to seek compensation for the harm suffered [1, 3, 5]:

Personal Injury Lawsuits: These lawsuits aim to hold responsible parties accountable for their negligence or wrongful conduct that led to the exposure [1, 3, 5].
Product Liability Claims: If the exposure resulted from a defective or dangerous product, a claim can be filed against the manufacturer, distributor, or retailer [1, 5, 8].
Workers’ Compensation Claims: If the exposure occurred in the workplace, workers’ compensation benefits may be available to cover medical expenses and lost wages [1, 5].
Toxic Tort Claims: In cases involving negligence, recklessness, or intentional misconduct, toxic tort claims can be filed against responsible parties [3].
Environmental Lawsuits: Environmental laws like CERCLA provide avenues for addressing large-scale contamination and seeking damages [6].

Types of Damages Recoverable

In a toxic exposure lawsuit, victims may be eligible for various types of damages [1, 2]:

Medical Expenses: Compensation for treatment, surgeries, medications, and ongoing care [1, 2].
Lost Wages: Compensation for time missed from work due to illness or injury [1, 2].
Pain and Suffering: Damages for the physical and emotional distress caused by the exposure [1, 2].
Punitive Damages: In cases of gross negligence or recklessness, punitive damages may be awarded to punish the wrongdoer [1].
Loss of Consortium: Compensation for the loss of companionship and services of a loved one [2].
Costs of Medical Monitoring: Compensation for future medical testing to detect potential health issues related to the exposure [2].

Steps to Take If You’ve Been Exposed

If you suspect you’ve been exposed to toxic chemicals, taking the following steps is crucial [3]:

Seek Medical Attention: Consult a medical professional for a thorough evaluation and document all related medical records [3].
Report the Exposure: Inform your employer (if workplace exposure) and relevant authorities about the incident [3].
Gather Evidence: Collect any relevant evidence, including medical records, workplace safety reports, and witness statements [3].
Consult an Attorney: Reach out to an experienced attorney specializing in toxic exposure cases to understand your rights and options [3].

Navigating the Tax Implications of Settlements

Settlements or awards received in toxic exposure cases may have tax implications. It’s essential to understand how the IRS treats these payments [14, 19, 20]:

Physical Injury Settlements: Generally, settlements for physical injuries or sickness are not taxable unless you previously claimed related medical expenses as a tax deduction [14, 17, 20].
Lost Wages and Punitive Damages: Compensation for lost wages and punitive damages are typically taxable [14, 17, 20].
Tax Planning: Consider strategies like spreading payments over time to avoid higher tax brackets [20].

The Importance of Legal Representation

Navigating the complexities of toxic exposure cases requires the expertise of experienced legal counsel. An attorney can help you [3, 5]:

Investigate the Exposure: Determine the source and extent of the toxic exposure [3, 5].
Identify Liable Parties: Identify all parties responsible for the exposure [3, 5].
Build a Strong Case: Gather evidence and build a compelling case to support your claim [3, 5].
Negotiate a Fair Settlement: Negotiate with insurance companies and other parties to reach a fair settlement [3, 5].
Represent You in Court: If a settlement cannot be reached, represent you in court to pursue your case [3, 5].

Conclusion

The IRS’s expansion of the taxable chemical list highlights the ongoing efforts to address the environmental and health consequences of toxic substances. For individuals pursuing toxic exposure injury claims, understanding these changes and their legal options is crucial. Consulting with an experienced attorney and tax professional can help you navigate the complexities of these cases and secure the compensation you deserve.