Subpart A—Distilled Spirits
Editorial Notes
Prior Provisions
A prior subpart A, comprising sections 5001 to 5012, related to tax on distilled spirits, prior to the general revision of this chapter by
Amendments
2005—
1980—
1979—
§5001. Imposition, rate, and attachment of tax
(a) Rate of tax
(1) General
There is hereby imposed on all distilled spirits produced in or imported into the United States a tax at the rate of $13.50 on each proof gallon and a proportionate tax at the like rate on all fractional parts of a proof gallon.
(2) Products containing distilled spirits
All products of distillation, by whatever name known, which contain distilled spirits, on which the tax imposed by law has not been paid, and any alcoholic ingredient added to such products, shall be considered and taxed as distilled spirits.
(3) Wines containing more than 24 percent alcohol by volume
Wines containing more than 24 percent of alcohol by volume shall be taxed as distilled spirits.
(4) Distilled spirits withdrawn free of tax
Any person who removes, sells, transports, or uses distilled spirits, withdrawn free of tax under section 5214(a) or section 7510, in violation of laws or regulations now or hereafter in force pertaining thereto, and all such distilled spirits shall be subject to all provisions of law relating to distilled spirits subject to tax, including those requiring payment of the tax thereon; and the person so removing, selling, transporting, or using the distilled spirits shall be required to pay such tax.
(5) Denatured distilled spirits or articles
Any person who produces, withdraws, sells, transports, or uses denatured distilled spirits or articles in violation of laws or regulations now or hereafter in force pertaining thereto, and all such denatured distilled spirits or articles shall be subject to all provisions of law pertaining to distilled spirits that are not denatured, including those requiring the payment of tax thereon; and the person so producing, withdrawing, selling, transporting, or using the denatured distilled spirits or articles shall be required to pay such tax.
(6) Fruit-flavor concentrates
If any volatile fruit-flavor concentrate (or any fruit mash or juice from which such concentrate is produced) containing one-half of 1 percent or more of alcohol by volume, which is manufactured free from tax under section 5511, is sold, transported, or used by any person in violation of the provisions of this chapter or regulations promulgated thereunder, such person and such concentrate, mash, or juice shall be subject to all provisions of this chapter pertaining to distilled spirits and wines, including those requiring the payment of tax thereon; and the person so selling, transporting, or using such concentrate, mash, or juice shall be required to pay such tax.
(7) Imported liqueurs and cordials
Imported liqueurs and cordials, or similar compounds, containing distilled spirits, shall be taxed as distilled spirits.
(8) Imported distilled spirits withdrawn for beverage purposes
There is hereby imposed on all imported distilled spirits withdrawn from customs custody under section 5232 without payment of the internal revenue tax, and thereafter withdrawn from bonded premises for beverage purposes, an additional tax equal to the duty which would have been paid had such spirits been imported for beverage purposes, less the duty previously paid thereon.
(9) Alcoholic compounds from Puerto Rico
Except as provided in section 5314, upon bay rum, or any article containing distilled spirits, brought from Puerto Rico into the United States for consumption or sale there is hereby imposed a tax on the spirits contained therein at the rate imposed on distilled spirits produced in the United States.
(b) Time of attachment on distilled spirits
The tax shall attach to distilled spirits as soon as this substance is in existence as such, whether it be subsequently separated as pure or impure spirits, or be immediately, or at any subsequent time, transferred into any other substance, either in the process of original production or by any subsequent process.
(c) Reduced rate
(1) In general
In the case of a distilled spirits operation, the otherwise applicable tax rate under subsection (a)(1) shall be—
(A) $2.70 per proof gallon on the first 100,000 proof gallons of distilled spirits, and
(B) $13.34 per proof gallon on the first 22,130,000 of 1 proof gallons of distilled spirits to which subparagraph (A) does not apply,
which have been distilled or processed by such operation and removed during the calendar year for consumption or sale, or which have been imported by the importer into the United States during the calendar year but only if the importer is an electing importer under paragraph (3) and the proof gallons of distilled spirits have been assigned to the importer pursuant to such paragraph.
(2) Controlled groups
(A) In general
In the case of a controlled group, the proof gallon quantities specified under subparagraphs (A) and (B) of paragraph (1) shall be applied to such group and apportioned among the members of such group in such manner as the Secretary or their delegate shall by regulations prescribe.
(B) Definition
For purposes of subparagraph (A), the term "controlled group" shall have the meaning given such term by subsection (a) of section 1563, except that "more than 50 percent" shall be substituted for "at least 80 percent" each place it appears in such subsection.
(C) Rules for non-corporations
Under regulations prescribed by the Secretary, principles similar to the principles of subparagraphs (A) and (B) shall be applied to a group under common control where one or more of the persons is not a corporation.
(D) Single taxpayer
Pursuant to rules issued by the Secretary, two or more entities (whether or not under common control) that produce or process distilled spirits under a license, franchise, or other arrangement shall be treated as a single taxpayer for purposes of the application of this subsection.
(3) Reduced tax rate for foreign manufacturers and importers
(A) In general
In the case of any proof gallons of distilled spirits which have been produced outside of the United States and imported into the United States, the rate of tax applicable under paragraph (1) (referred to in this paragraph as the "reduced tax rate") may be assigned by the distilled spirits operation (provided that such operation makes an election described in subparagraph (B)(ii)) to any electing importer of such proof gallons pursuant to the requirements established by the Secretary under subparagraph (B).
(B) Assignment
The Secretary of the Treasury, after consultation with the Secretary of the Department of Homeland Security, shall, through such rules, regulations, and procedures as are determined appropriate, establish procedures for assignment of the reduced tax rate provided under this paragraph, which shall include—
(i) a limitation to ensure that the number of proof gallons of distilled spirits for which the reduced tax rate has been assigned by a distilled spirits operation—
(I) to any importer does not exceed the number of proof gallons produced by such operation during the calendar year which were imported into the United States by such importer, and
(II) to all importers does not exceed the 22,230,000 proof gallons of distilled spirits to which the reduced tax rate applies,
(ii) procedures that allow the election of a distilled spirits operation to assign and an importer to receive the reduced tax rate provided under this paragraph,
(iii) requirements that the distilled spirits operation provide any information as the Secretary determines necessary and appropriate for purposes of carrying out this paragraph, and
(iv) procedures that allow for revocation of eligibility of the distilled spirits operation and the importer for the reduced tax rate provided under this paragraph in the case of any erroneous or fraudulent information provided under clause (iii) which the Secretary deems to be material to qualifying for such reduced rate.
(C) Controlled group
(i) In general
For purposes of this section, any importer making an election described in subparagraph (B)(ii) shall be deemed to be a member of the controlled group of the distilled spirits operation, as described under paragraph (2).
(ii) Apportionment
For purposes of this paragraph, in the case of a controlled group, rules similar to section 5051(a)(5)(B) shall apply.
(4) Refunds in lieu of reduced rates for foreign production removed after December 31, 2022
(A) In general
In the case of any proof gallons of distilled spirits which have been produced outside the United States and imported into the United States, if such proof gallons of distilled spirits are removed after December 31, 2022—
(i) paragraph (1) shall not apply, and
(ii) the amount determined under subparagraph (B) shall be allowed as a refund, determined for periods not less frequently than quarterly, to the importer in the same manner as if such amount were an overpayment of tax imposed by this section.
(B) Amount of refund
The amount determined under this subparagraph with respect to any importer for any period is an amount equal to the sum of—
(i) the excess (if any) of—
(I) the amount of tax imposed under this subpart on proof gallons of distilled spirits referred to in subparagraph (A) which were removed during such period, over
(II) the amount of tax which would have been imposed under this subpart on such proof gallons of distilled spirits if this section were applied without regard to this paragraph, plus
(ii) the amount of interest which would be allowed and paid on an overpayment of tax at the overpayment rate established under section 6621(a)(1) (without regard to the second sentence thereof) were such rate applied to the excess (if any) determined under clause (i) for the number of days in the filing period for which the refund under this paragraph is being determined.
(C) Application of rules related to elections and assignments
Subparagraph (A)(ii) shall apply only if the importer is an electing importer under paragraph (3) and the proof gallons of distilled spirits have been assigned to the importer pursuant to such paragraph.
(D) Rules for refunds within 90 days
For purposes of refunds allowed under this paragraph, section 6611(e) shall be applied by substituting "90 days" for "45 days" each place it appears.
(5) Processed distilled spirits
A distilled spirit shall not be treated as processed for purposes of this subsection unless a process described in section 5002(a)(5)(A) (other than bottling) is performed with respect to such distilled spirit.
(d) Cross reference
For provisions relating to the tax on shipments to the United States of taxable articles from Puerto Rico and the Virgin Islands, see section 7652.
(Added
Editorial Notes
Prior Provisions
A prior section 5001, acts Aug. 16, 1954, ch. 736,
Amendments
2020—Subsec. (c).
Subsec. (c)(2)(D).
Subsec. (c)(3)(B).
Subsec. (c)(4).
Subsec. (c)(5).
2019—Subsec. (c).
Subsec. (c)(4).
2017—Subsec. (c).
Subsec. (c)(1).
Subsec. (c)(3), (4).
Subsec. (d).
1994—Subsec. (a)(3) to (10).
1990—Subsec. (a)(1), (3).
1984—Subsec. (a)(1), (3).
1979—Subsec. (a)(1).
Subsec. (a)(2).
1965—Subsec. (a)(1).
Subsec. (a)(3).
1964—Subsec. (a)(1).
Subsec. (a)(3).
1963—Subsec. (a)(1).
Subsec. (a)(3).
1962—Subsec. (a)(1).
Subsec. (a)(3).
1961—Subsec. (a)(1).
Subsec. (a)(3).
1960—Subsec. (a)(1).
Subsec. (a)(3).
1959—Subsec. (a)(1).
Subsec. (a)(3).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Effective Date of 2019 Amendment
Effective Date of 2017 Amendment
Effective Date of 1994 Amendment
Effective Date of 1990 Amendment
Effective Date of 1984 Amendment
"(1)
"(2)
Effective Date of 1979 Amendment
Effective Date of 1965 Amendment
Amendment by
Effective Date
Short Title
Regulations
Savings Provision
References to Other Provisions of Law
Repeal of Acts Mar. 3, 1877 and Oct. 18, 1888
Administration of Refunds
Floor Stocks Taxes on Distilled Spirits, Wine, and Beer
"(1)
"(A)
"(i) on which tax was determined under part I of subchapter A of
"(ii) which is held on such date for sale by any person,
there shall be imposed a tax at the applicable rate on each such article.
"(B)
"(i) $1 per proof gallon in the case of distilled spirits,
"(ii) $0.90 per wine gallon in the case of wine described in paragraph (1), (2), (3), or (5) of section 5041(b) of such Code, and
"(iii) $9 per barrel in the case of beer.
In the case of a fraction of a gallon or barrel, the tax imposed by subparagraph (A) shall be the same fraction as the amount of such tax imposed on a whole gallon or barrel.
"(C)
"(2)
"(A) In the case of wine held by the producer thereof on January 1, 1991, if a credit would have been allowable under section 5041(c) of such Code (as added by this section) on such wine had the amendments made by subsection (b) [amending
"(B) In the case of beer held by the producer thereof on January 1, 1991, if the rate of the tax imposed by section 5051 of such Code would have been determined under subsection (a)(2) thereof had the beer so held been removed for consumption on December 31, 1990, the tax imposed by paragraph (1) on such beer shall not apply.
"(C) For purposes of this paragraph, an article shall not be treated as held by the producer if title thereto had at any time been transferred to any other person.
"(3)
"(A) the aggregate liquid volume of tax-increased articles held by such dealer on such date does not exceed 500 wine gallons, and
"(B) such dealer submits to the Secretary (at the time and in the manner required by the Secretary) such information as the Secretary shall require for purposes of this paragraph.
"(4)
"(A) $240 to the extent such taxes are attributable to distilled spirits,
"(B) $270 to the extent such taxes are attributable to wine, and
"(C) $87 to the extent such taxes are attributable to beer.
Such credit shall not exceed the amount of taxes imposed by paragraph (1) with respect to distilled spirits, wine, or beer, as the case may be, for which the dealer is liable.
"(5)
"(A)
"(B)
"(C)
"(6)
"(A)
"(i) the 500 wine gallon amount specified in paragraph (3), and
"(ii) the $240, $270, and $87 amounts specified in paragraph (4),
shall be apportioned among the dealers who are component members of such group in such manner as the Secretary shall by regulations prescribe. For purposes of the preceding sentence, the term 'controlled group' has the meaning given to such term by subsection (a) of section 1563 of such Code; except that for such purposes the phrase 'more than 50 percent' shall be substituted for the phrase 'at least 80 percent' each place it appears in such subsection.
"(B)
"(7)
"(A)
"(B)
"(i) the tax imposed by section 5001 of such Code in the case of distilled spirits,
"(ii) the tax imposed by section 5041 of such Code in the case of wine, and
"(iii) the tax imposed by section 5051 of such Code in the case of beer.
"(8)
"(A)
"(B)
"(C)
"(9)
Floor Stocks Tax Treatment of Articles in Foreign Trade Zones
"(1) internal revenue taxes have been determined, or customs duties liquidated, with respect to such article before such date pursuant to a request made under the 1st proviso of section 3(a) of such Act [
"(2) such article is held on such date under the supervision of a customs officer pursuant to the 2d proviso of such section 3(a)."
Floor Stocks Taxes on Distilled Spirits
"(1)
"(2)
"(A) the aggregate liquid volume of distilled spirits held by such dealer on such date does not exceed 500 wine gallons, and
"(B) such dealer submits to the Secretary (at the time and in the manner required by the Secretary) such information as the Secretary shall require for purposes of this paragraph.
"(3)
"(4)
"(A)
"(B)
"(C)
"(i)
"(ii)
"(I) The first installment shall be paid on or before April 1, 1986.
"(II) The second installment shall be paid on or before July 1, 1986.
"(III) The third installment shall be paid on or before October 1, 1986.
If the taxpayer does not pay any installment under this clause on or before the date prescribed for its payment, the whole of the unpaid tax shall be paid upon notice and demand from the Secretary.
"(iii)
"(5)
"(A)
"(i) the 500 wine gallon amount specified in paragraph (2),
"(ii) the $800 amount specified in paragraph (3), and
"(iii) the $500,000 amount specified in paragraph (4)(C)(iii),
shall be apportioned among the dealers who are component members of such group in such manner as the Secretary shall by regulations prescribe. For purposes of the preceding sentence, the term 'controlled group' has the meaning given to such term by subsection (a) of section 1563 of the Internal Revenue Code of 1986; except that for such purposes the phrase 'more than 50 percent' shall be substituted for the phrase 'at least 80 percent' each place it appears in such subsection.
"(B)
"(6)
"(7)
"(A)
"(i) any wholesale dealer in liquors (as defined in section 5112(b) of the Internal Revenue Code of 1986), and
"(ii) any retail dealer in liquors (as defined in section 5122(a) of such Code).
"(B)
"(C)
"(D)
"(E)
"(F)
"(i) internal revenue taxes have been determined, or customs duties liquidated, with respect to such distilled spirits before such date pursuant to a request made under the first proviso of section 3(a) of such Act [
"(ii) such distilled spirits are held on such date under the supervision of customs pursuant to the second proviso of such section 3(a).
Under regulations prescribed by the Secretary, provisions similar to sections 5062 and 5064 of such Code shall apply to distilled spirits with respect to which tax is imposed by paragraph (1) by reason of this subparagraph."
§5002. Definitions
(a) In general
For purposes of this chapter—
(1) Distilled spirits plant
The term "distilled spirits plant" means an establishment which is qualified under subchapter B to perform any distilled spirits operation.
(2) Distilled spirits operation
The term "distilled spirits operation" means any operation for which qualification is required under subchapter B.
(3) Bonded premises
The term "bonded premises", when used with respect to distilled spirits, means the premises of a distilled spirits plant, or part thereof, on which distilled spirits operations are authorized to be conducted.
(4) Distiller
The term "distiller" includes any person who—
(A) produces distilled spirits from any source or substance,
(B) brews or makes mash, wort, or wash fit for distillation or for the production of distilled spirits (other than the making or using of mash, wort, or wash in the authorized production of wine or beer, or the production of vinegar by fermentation),
(C) by any process separates alcoholic spirits from any fermented substance, or
(D) making or keeping mash, wort, or wash, has a still in his possession or use.
(5) Processor
(A) In general
The term "processor", when used with respect to distilled spirits, means any person who—
(i) manufactures, mixes, or otherwise processes distilled spirits, or
(ii) manufactures any article.
(B) Rectifier, bottler, etc., included
The term "processor" includes (but is not limited to) a rectifier, bottler, and denaturer.
(6) Certain operations not treated as processing
In applying paragraph (5), there shall not be taken into account—
(A) Operations as distiller
Any process which is the operation of a distiller.
(B) Mixing of taxpaid spirits for immediate consumption
Any mixing (after determination of tax) of distilled spirits for immediate consumption.
(C) Use by apothecaries
Any process performed by an apothecary with respect to distilled spirits which such apothecary uses exclusively in the preparation or making up of medicines unfit for use for beverage purposes.
(7) Warehouseman
The term "warehouseman", when used with respect to distilled spirits, means any person who stores bulk distilled spirits.
(8) Distilled spirits
The terms "distilled spirits", "alcoholic spirits", and "spirits" mean that substance known as ethyl alcohol, ethanol, or spirits of wine in any form (including all dilutions and mixtures thereof from whatever source or by whatever process produced).
(9) Bulk distilled spirits
The term "bulk distilled spirits" means distilled spirits in a container having a capacity in excess of 1 wine gallon.
(10) Proof spirits
The term "proof spirits" means that liquid which contains one-half its volume of ethyl alcohol of a specific gravity of 0.7939 at 60 degrees Fahrenheit (referring to water at 60 degrees Fahrenheit as unity).
(11) Proof gallon
The term "proof gallon" means a United States gallon of proof spirits, or the alcoholic equivalent thereof.
(12) Container
The term "container", when used with respect to distilled spirits, means any receptacle, vessel, or form of package, bottle, tank, or pipeline used, or capable of use, for holding, storing, transferring, or conveying distilled spirits.
(13) Approved container
The term "approved container", when used with respect to distilled spirits, means a container the use of which is authorized by regulations prescribed by the Secretary.
(14) Article
Unless another meaning is distinctly expressed or manifestly intended, the term "article" means any substance in the manufacture of which denatured distilled spirits are used.
(15) Export
The terms "export", "exported", and "exportation" include shipments to a possession of the United States.
(b) Cross references
(1) For definition of manufacturer of stills, see section 5102.
(2) For definition of dealer, see section 5121(c)(3).
(3) For definitions of wholesale dealers, see section 5121(c).
(4) For definitions of retail dealers, see section 5122(c).
(5) For definitions of general application to this title, see
(Added
Editorial Notes
Prior Provisions
A prior section 5002, act Aug. 16, 1954, ch. 736,
Provisions similar to those comprising subsec. (a)(6), (9), and (11) of this section were contained in prior sections 5213(a)(1) and 5319(1), (2), and (7), act Aug. 16, 1954, ch. 736,
Amendments
2005—Subsec. (b)(2).
Subsec. (b)(3).
Subsec. (b)(4).
1994—Subsec. (b)(1) to (6).
1979—Subsec. (a)(1).
Subsec. (a)(2), (3).
Subsec. (a)(4).
Subsec. (a)(5) to (7).
Subsec. (a)(8).
Subsec. (a)(9).
Subsec. (a)(10) to (15).
Subsec. (b).
1976—Subsec. (a)(10).
1965—Subsec. (a).
Statutory Notes and Related Subsidiaries
Effective Date of 2005 Amendment
Effective Date of 1994 Amendment
Amendment by
Effective Date of 1979 Amendment
Amendment by
Effective Date of 1965 Amendment
§5003. Cross references to exemptions, etc.
(1) For provisions authorizing the withdrawal of distilled spirits free of tax for use by Federal or State agencies, see sections 5214(a)(2) and 5313.
(2) For provisions authorizing the withdrawal of distilled spirits free of tax by nonprofit educational organizations, scientific universities or colleges of learning, laboratories, hospitals, blood banks, sanitariums, and charitable clinics, see section 5214(a)(3).
(3) For provisions authorizing the withdrawal of certain imported distilled spirits from customs custody without payment of tax, see section 5232.
(4) For provisions authorizing the withdrawal of denatured distilled spirits free of tax, see section 5214(a)(1).
(5) For provisions exempting from tax distilled spirits for use in production of vinegar by the vaporizing process, see section 5505(j).
(6) For provisions relating to the withdrawal of wine spirits without payment of tax for use in the production of wine, see section 5373.
(7) For provisions exempting from tax volatile fruit-flavor concentrates, see section 5511.
(8) For provisions authorizing the withdrawal of distilled spirits from bonded premises without payment of tax for export, see section 5214(a)(4).
(9) For provisions authorizing withdrawal of distilled spirits without payment of tax to customs bonded warehouses for export, see section 5214(a)(9).
(10) For provisions relating to withdrawal of distilled spirits without payment of tax as supplies for certain vessels and aircraft, see
(11) For provisions authorizing regulations for withdrawal of distilled spirits for use of United States free of tax, see section 7510.
(12) For provisions relating to withdrawal of distilled spirits without payment of tax to foreign-trade zones, see
(13) For provisions relating to exemption from tax of taxable articles going into the possessions of the United States, see section 7653(b).
(14) For provisions authorizing the withdrawal of distilled spirits without payment of tax for use in certain research, development, or testing, see section 5214(a)(10).
(15) For provisions authorizing the withdrawal of distilled spirits without payment of tax for transfer to manufacturing bonded warehouses for manufacturing for export, see section 5214(a)(6).
(16) For provisions authorizing the withdrawal of articles from the bonded premises of a distilled spirits plant free of tax when contained in an article, see section 5214(a)(11).
(17) For provisions relating to allowance for certain losses in bond, see section 5008(a).
(Added
Editorial Notes
Prior Provisions
A prior section 5003, act Aug. 16, 1954, ch. 736,
Amendments
1979—Par. (9).
Pars. (15) to (17).
1977—Par. (9).
Par. (14).
Statutory Notes and Related Subsidiaries
Effective Date of 1979 Amendment
Amendment by
Effective Date of 1977 Amendment
§5004. Lien for tax
(a) Distilled spirits subject to lien
(1) General
The tax imposed by section 5001(a)(1) shall be a first lien on the distilled spirits from the time the spirits are in existence as such until the tax is paid.
(2) Exceptions
The lien imposed by paragraph (1), or any similar lien imposed on the spirits under prior provisions of internal revenue law, shall terminate in the case of distilled spirits produced on premises qualified under internal revenue law for the production of distilled spirits when such distilled spirits are—
(A) withdrawn from bonded premises on determination of tax; or
(B) withdrawn from bonded premises free of tax under provisions of section 5214(a)(1), (2), (3), (11), or (12), or section 7510; or
(C) exported, deposited in a foreign-trade zone, used in the production of wine, laden as supplies upon, or used in the maintenance or repair of, certain vessels or aircraft, deposited in a customs bonded warehouse, or used in certain research, development, or testing, as provided by law.
(b) Cross reference
For provisions relating to extinguishing of lien in case of redistillation, see section 5223(e).
(Added
Editorial Notes
Prior Provisions
A prior section 5004, act Aug. 16, 1954, ch. 736,
Provisions similar to those comprising subsec. (b)(1) of this section were contained in prior section 5007(e)(1), act Aug. 16, 1954, ch. 736,
Amendments
1980—Subsec. (a)(2)(B).
1979—Subsec. (a)(2)(B).
Subsecs. (b), (c).
1977—Subsec. (a)(2).
1976—Subsec. (b)(3)(B), (4).
1965—Subsec. (c).
Statutory Notes and Related Subsidiaries
Effective Date of 1980 Amendment
Amendment by
Effective Date of 1979 Amendment
Amendment by
Effective Date of 1977 Amendment
Amendment by
Effective Date of 1965 Amendment
§5005. Persons liable for tax
(a) General
The distiller or importer of distilled spirits shall be liable for the taxes imposed thereon by section 5001(a)(1).
(b) Domestic distilled spirits
(1) Liability of persons interested in distilling
Every proprietor or possessor of, and every person in any manner interested in the use of, any still, distilling apparatus, or distillery, shall be jointly and severally liable for the taxes imposed by law on the distilled spirits produced therefrom.
(2) Exception
A person owning or having the right of control of not more than 10 percent of any class of stock of a corporate proprietor of a distilled spirits plant shall not be deemed to be a person liable for the tax for which such proprietor is liable under the provisions of paragraph (1). This exception shall not apply to an officer or director of such corporate proprietor.
(c) Proprietors of distilled spirits plants
(1) Bonded storage
Every person operating bonded premises of a distilled spirits plant shall be liable for the internal revenue tax on all distilled spirits while the distilled spirits are stored on such premises, and on all distilled spirits which are in transit to such premises (from the time of removal from the transferor's bonded premises) pursuant to application made by him. Such liability for the tax on distilled spirits shall continue until the distilled spirits are transferred or withdrawn from bonded premises as authorized by law, or until such liability for tax is relieved by reason of the provisions of section 5008(a). Nothing in this paragraph shall relieve any person from any liability imposed by subsection (a) or (b).
(2) Transfers in bond
When distilled spirits are transferred in bond in accordance with the provisions of section 5212, persons liable for the tax on such spirits under subsection (a) or (b), or under any similar prior provisions of internal revenue law, shall be relieved of such liability, if proprietors of transferring and receiving premises are independent of each other and neither has a proprietary interest, directly or indirectly, in the business of the other, and all persons liable for the tax under subsection (a) or (b), or under any similar prior provisions of internal revenue law, have divested themselves of all interest in the spirits so transferred. Such relief from liability shall be effective from the time of removal from the transferor's bonded premises, or from the time of divestment of interest, whichever is later.
(d) Withdrawals free of tax
All persons liable for the tax under subsection (a) or (b), or under any similar prior provisions of internal revenue law, shall be relieved of such liability as to distilled spirits withdrawn free of tax under the provisions of section 5214(a)(1), (2), (3), (11), or (12), or under section 7510, at the time such spirits are so withdrawn from bonded premises.
(e) Withdrawals without payment of tax
(1) Liability for tax
Any person who withdraws distilled spirits from the bonded premises of a distilled spirits plant without payment of tax, as provided in section 5214(a)(4), (5), (6), (7), (8), (9), (10), or (13), shall be liable for the internal revenue tax on such distilled spirits, from the time of such withdrawal; and all persons liable for the tax on such distilled spirits under subsection (a) or (b), or under any similar prior provisions of internal revenue law, shall, at the time of such withdrawal, be relieved of any such liability on the distilled spirits so withdrawn if the person withdrawing such spirits and the person, or persons, liable for the tax under subsection (a) or (b), or under any similar prior provisions of internal revenue law, are independent of each other and neither has a proprietary interest, directly or indirectly, in the business of the other, and all persons liable for the tax under subsection (a) or (b), or under any similar prior provisions of internal revenue law, have divested themselves of all interest in the spirits so withdrawn.
(2) Relief from liability
All persons liable for the tax on distilled spirits under paragraph (1) of this subsection, or under subsection (a) or (b), or under any similar prior provisions of internal revenue law, shall be relieved of any such liability at the time, as the case may be, the distilled spirits are exported, deposited in a foreign-trade zone, used in the production of wine, used in the production of nonbeverage wine or wine products, deposited in customs bonded warehouses, laden as supplies upon, or used in the maintenance or repair of, certain vessels or aircraft, or used in certain research, development, or testing, as provided by law.
(f) Cross references
(1) For provisions requiring bond covering operations at, and withdrawals from, distilled spirits plants, see section 5173.
(2) For provisions relating to transfer of tax liability to redistiller in case of redistillation, see section 5223.
(3) For liability for tax on denatured distilled spirits, articles, and volatile fruit-flavor concentrates, see section 5001(a)(5) and (6).
(4) For liability for tax on distilled spirits withdrawn free of tax, see section 5001(a)(4).
(5) For liability of wine producer for unlawfully using wine spirits withdrawn for the production of wine, see section 5391.
(6) For provisions relating to transfer of tax liability for wine, see section 5043(a)(1)(A).
(Added
Editorial Notes
Prior Provisions
A prior section 5005, acts Aug. 16, 1954, ch. 736,
Provisions similar to those comprising subsec. (c)(1), (2) of this section were contained in prior sections 5194(f), 5217(a), and 5232(a), act Aug. 16, 1954, ch. 736,
Amendments
1994—Subsec. (f)(3).
Subsec. (f)(4).
1984—Subsec. (e)(1).
Subsec. (e)(2).
1980—Subsec. (d).
1979—Subsec. (c)(3).
Subsec. (d).
Subsec. (f)(1).
Subsec. (f)(6).
1977—Subsec. (d).
Subsec. (e)(1).
Subsec. (e)(2).
1976—Subsec. (c)(2).
Statutory Notes and Related Subsidiaries
Effective Date of 1994 Amendment
Amendment by
Effective Date of 1984 Amendment
Amendment by
Effective Date of 1980 Amendment
Amendment by
Effective Date of 1979 Amendment
Amendment by
Effective Date of 1977 Amendment
Amendment by
Effective Date of 1976 Amendment
§5006. Determination of tax
(a) Requirements
(1) In general
Except as otherwise provided in this section, the tax on distilled spirits shall be determined when the spirits are withdrawn from bond. Such tax shall be determined by such means as the Secretary shall by regulations prescribe, and with the use of such devices and apparatus (including but not limited to tanks and pipelines) as the Secretary may require. The tax on distilled spirits withdrawn from the bonded premises of a distilled spirits plant shall be determined upon completion of the gauge for determination of tax and before withdrawal from bonded premises, under such regulations as the Secretary shall prescribe.
(2) Distilled spirits not accounted for
If the Secretary finds that the distiller has not accounted for all the distilled spirits produced by him, he shall, from all the evidence he can obtain, determine what quantity of distilled spirits was actually produced by such distiller, and an assessment shall be made for the difference between the quantity reported and the quantity shown to have been actually produced at the rate of tax imposed by law for every proof gallon.
(b) Taxable loss
(1) On original quantity
Where there is evidence satisfactory to the Secretary that there has been any loss of distilled spirits from any cask or other package deposited on bonded premises, other than a loss which by reason of section 5008(a) is not taxable, the Secretary may require the withdrawal from bonded premises of such distilled spirits, and direct the officer designated by him to collect the tax accrued on the original quantity of distilled spirits entered for deposit on bonded premises in such cask or package; except that, under regulations prescribed by the Secretary, when the extent of any loss from causes other than theft or unauthorized voluntary destruction can be established by the proprietor to the satisfaction of the Secretary an allowance of the tax on the loss so established may be credited against the tax on the original quantity. If such tax is not paid on demand it shall be assessed and collected as other taxes are assessed and collected.
(2) Alternative method
Where there is evidence satisfactory to the Secretary that there has been access, other than is authorized by law, to the contents of casks or packages stored on bonded premises, and the extent of such access is such as to evidence a lack of due diligence or a failure to employ necessary and effective controls on the part of the proprietor, the Secretary (in lieu of requiring the casks or packages to which such access has been had to be withdrawn and tax paid on the original quantity of distilled spirits entered for deposit on bonded premises in such casks or packages as provided in paragraph (1)) may assess an amount equal to the tax on 5 proof gallons of distilled spirits at the prevailing rate on each of the total number of such casks or packages as determined by him.
(3) Application of subsection
The provisions of this subsection shall apply to distilled spirits which are filled into casks or packages, as authorized by law, after entry and deposit on bonded premises, whether by recasking, filling from storage tanks, consolidation of packages, or otherwise; and the quantity filled into such casks or packages shall be deemed to be the original quantity for the purpose of this subsection, in the case of loss from such casks or packages.
(c) Distilled spirits not bonded
(1) General
The tax on any distilled spirits, removed from the place where they were distilled and (except as otherwise provided by law) not deposited in storage on bonded premises of a distilled spirits plant, shall, at any time within the period of limitation provided in section 6501, when knowledge of such fact is obtained by the Secretary, be assessed on the distiller of such distilled spirits (or other person liable for the tax) and payment of such tax immediately demanded and, on the neglect or refusal of payment, the Secretary shall proceed to collect the same by distraint. This paragraph shall not exclude any other remedy or proceeding provided by law.
(2) Production at other than qualified plants
Except as otherwise provided by law, the tax on any distilled spirits produced in the United States at any place other than a qualified distilled spirits plant shall be due and payable immediately upon production.
(d) Unlawfully imported distilled spirits
Distilled spirits smuggled or brought into the United States unlawfully shall, for purposes of this chapter, be held to be imported into the United States, and the internal revenue tax shall be due and payable at the time of such importation.
(e) Cross reference
For provisions relating to removal of distilled spirits from bonded premises on determination of tax, see section 5213.
(Added
Editorial Notes
Prior Provisions
A prior section 5006, acts Aug. 16, 1954, ch. 736,
Provisions similar to those comprising subsecs. (a)(2)(A), (3) of this section were contained in prior sections 5007(e)(1) and 5232(a), act Aug. 16, 1954, ch. 736,
Amendments
1979—Subsec. (a)(1).
Subsec. (a)(2), (3).
Subsec. (b)(1).
Subsec. (b)(2), (3).
1976—Subsecs. (a) to (c).
Statutory Notes and Related Subsidiaries
Effective Date of 1979 Amendment
Amendment by
Application of 1972 Amendments to Prior Sections
"(1) The amendments made by this section [amending this section and
"(A) distilled spirits which on the date of the enactment of this Act [Sept. 2, 1958] are in internal revenue bonded warehouses or are in transit to or between such warehouses, and in respect of which the 8-year bonding period has not expired before the date of enactment of this Act; and
"(B) distilled spirits which after the date of the enactment of this Act [Sept. 2, 1958] are entered for deposit in an internal revenue bonded warehouse.
"(2) If the 8 years from the date of original entry of any distilled spirits for deposit in internal revenue bonded warehouses expires at any time during the 10-day period which begins on the date of the enactment of this Act [Sept. 2, 1958], the amendments made by this section shall apply with respect to such spirits if (and only if) before the close of such 10-day period there is filed with the Secretary of the Treasury or his delegate either—
"(A) a consent of surety which changes (for periods on and after the date of the enactment of this Act) the condition based on the withdrawal of spirits from the internal revenue bonded warehouse within 8 years from the date of original entry for deposit to a condition based on the withdrawal of spirits from the internal revenue bonded warehouse within 20 years from the date of original entry for deposit, or
"(B) a bond which applies to periods on and after the date of the enactment of this Act and which satisfies the requirements of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], as amended by this section, and is conditioned on the withdrawal of spirits from the internal revenue bonded warehouse within 20 years from the date of original entry for deposit."
§5007. Collection of tax on distilled spirits
(a) Tax on distilled spirits removed from bonded premises
The tax on domestic distilled spirits and on distilled spirits removed from customs custody under section 5232 shall be paid in accordance with section 5061.
(b) Collection of tax on imported distilled spirits
The internal revenue tax imposed by section 5001(a)(1) and (2) upon imported distilled spirits shall be collected by the Secretary and deposited as internal revenue collections, under such regulations as the Secretary may prescribe. Section 5688 shall be applicable to the disposition of imported spirits.
(c) Cross references
(1) For authority of the Secretary to make determinations and assessments of internal revenue taxes and penalties, see section 6201(a).
(2) For authority to assess tax on distilled spirits not bonded, see section 5006(c).
(3) For provisions relating to payment of tax, under certain conditions, on distilled spirits withdrawn free of tax, denatured distilled spirits, articles, and volatile fruit-flavor concentrates, see section 5001(a)(4), (5), and (6).
(Added
Editorial Notes
Prior Provisions
A prior section 5007, act Aug. 16, 1954, ch. 736,
Prior section 5007(c) related to "payment of tax on alcoholic compounds from Puerto Rico and Virgin Islands". See
Prior section 5007(e)(1) related to "assessment for deficiencies in production and excess of materials used" and "requirement". See
Prior section 5007(e)(2) related to "relief from assessment for deficiencies in production and excess of materials used" and is obsolete.
Amendments
1994—Subsec. (b).
Subsec. (c)(3).
1979—Subsec. (a).
1976—Subsec. (a)(2).
Subsec. (b)(1).
Subsecs. (b)(2), (c)(1).
Statutory Notes and Related Subsidiaries
Effective Date of 1994 Amendment
Amendment by
Effective Date of 1979 Amendment
Amendment by
Effective Date of 1976 Amendment
Amendment by section 1905(b)(2)(A) of
§5008. Abatement, remission, refund, and allowance for loss or destruction of distilled spirits
(a) Distilled spirits lost or destroyed in bond
(1) Extent of loss allowance
No tax shall be collected in respect of distilled spirits lost or destroyed while in bond, except that such tax shall be collected—
(A) Theft
In the case of loss by theft, unless the Secretary finds that the theft occurred without connivance, collusion, fraud, or negligence on the part of the proprietor of the distilled spirits plant, owner, consignor, consignee, bailee, or carrier, or the employees or agents of any of them;
(B) Voluntary destruction
In the case of voluntary destruction, unless such destruction is carried out as provided in subsection (b); and
(C) Unexplained shortage
In the case of an unexplained shortage of bottled distilled spirits.
(2) Proof of loss
In any case in which distilled spirits are lost or destroyed, whether by theft or otherwise, the Secretary may require the proprietor of the distilled spirits plant or other person liable for the tax to file a claim for relief from the tax and submit proof as to the cause of such loss. In every case where it appears that the loss was by theft, the burden shall be upon the proprietor of the distilled spirits plant or other person responsible for the distilled spirits tax to establish to the satisfaction of the Secretary that such loss did not occur as the result of connivance, collusion, fraud, or negligence on the part of the proprietor of the distilled spirits plant, owner, consignor, consignee, bailee, or carrier, or the employees or agents of any of them.
(3) Refund of tax
In any case where the tax would not be collectible by virtue of paragraph (1), but such tax has been paid, the Secretary shall refund such tax.
(4) Limitations
Except as provided in paragraph (5), no tax shall be abated, remitted, credited, or refunded under this subsection where the loss occurred after the tax was determined (as provided in section 5006(a)). The abatement, remission, credit, or refund of taxes provided for by paragraphs (1) and (3) in the case of loss of distilled spirits by theft shall only be allowed to the extent that the claimant is not indemnified against or recompensed in respect of the tax for such loss.
(5) Applicability
The provisions of this subsection shall extend to and apply in respect of distilled spirits lost after the tax was determined and before completion of the physical removal of the distilled spirits from the bonded premises.
(b) Voluntary destruction
The proprietor of the distilled spirits plant or other persons liable for the tax imposed by this chapter or by section 7652 with respect to any distilled spirits in bond may voluntarily destroy such spirits, but only if such destruction is under such supervision and under such regulations as the Secretary may prescribe.
(c) Distilled spirits returned to bonded premises
(1) In general
Whenever any distilled spirits on which tax has been determined or paid are returned to the bonded premises of a distilled spirits plant under section 5215(a), the Secretary shall abate or (without interest) credit or refund the tax imposed under section 5001(a)(1) (or the tax equal to such tax imposed under section 7652) on the spirits so returned.
(2) Claim must be filed within 6 months of return of spirits
No allowance under paragraph (1) may be made unless claim therefor is filed within 6 months of the date of the return of the spirits. Such claim may be filed only by the proprietor of the distilled spirits plant to which the spirits were returned, and shall be filed in such form as the Secretary may by regulations prescribe.
(d) Distilled spirits withdrawn without payment of tax
The provisions of subsection (a) shall be applicable to loss of distilled spirits occurring during transportation from bonded premises of a distilled spirits plant to—
(1) the port of export, in case of withdrawal under section 5214(a)(4);
(2) the customs manufacturing bonded warehouse, in case of withdrawal under section 5214(a)(6);
(3) the vessel or aircraft, in case of withdrawal under section 5214(a)(7);
(4) the foreign-trade zone, in case of withdrawal under section 5214(a)(8); and
(5) the customs bonded warehouse in the case of withdrawal under sections 5066 and 5214(a)(9).
The provisions of subsection (a) shall be applicable to loss of distilled spirits withdrawn from bonded premises without payment of tax under section 5214(a)(10) for certain research, development, or testing, until such distilled spirits are used as provided by law.
(e) Other laws applicable
All provisions of law, including penalties, applicable in respect of the internal revenue tax on distilled spirits, shall, insofar as applicable and not inconsistent with subsection (c), be applicable to the credits or refunds provided for under such subsection to the same extent as if such credits or refunds constituted credits or refunds of such tax.
(f) Cross reference
For provisions relating to allowance for loss in case of wine spirits withdrawn for use in wine production, see section 5373(b)(3).
(Added
Editorial Notes
Prior Provisions
A prior section 5008, act Aug. 16, 1954, ch. 736,
Provisions similar to those comprising subsecs. (a)(1) to (4) and (f)(1), (2) of this section were contained in prior sections 5011(a)(1) to (4), 5023, 5247(e) and 5522(b), act Aug. 16, 1954, ch. 736,
Amendments
1997—Subsec. (c)(1).
1979—Subsec. (a)(1)(C).
Subsec. (a)(5).
Subsec. (b).
Subsec. (c).
Subsec. (d).
Subsec. (e).
Subsec. (f).
Subsecs. (g), (h).
1977—Subsec. (d).
Subsec. (f)(5).
1976—Subsec. (b)(1).
Subsec. (b)(2).
Subsec. (c)(1).
Subsec. (c)(2), (3).
Subsec. (c)(5).
Subsec. (d)(1).
1971—Subsec. (b)(2).
Subsec. (c)(1)(A).
Subsec. (c)(5).
1968—Subsec. (c)(1).
1965—Subsec. (d)(2).
Statutory Notes and Related Subsidiaries
Effective Date of 1997 Amendment
Effective Date of 1979 Amendment
Amendment by
Effective Date of 1977 Amendment
Amendment by
Effective Date of 1976 Amendment
Amendment by section 1905(a)(2) of
Effective Date of 1971 Amendment
Amendment by
Effective Date of 1968 Amendment
"(a) For purposes of subsection (b), the effective date of this Act is the first day of the first calendar month which begins more than 90 days after the date of the enactment of this Act [Oct. 22, 1968].
"(b) The amendments made by the first section of this Act [amending this section] shall apply only to losses sustained on or after such effective date. The amendments made by section 2 [amending
Effective Date of 1965 Amendment
Distilled Spirits Returned to Bonded Premises of Distilled Spirits Plant During 1980
Subsec. (c)(1) of this section to be treated as including a reference to
[§5009. Repealed. Pub. L. 96–39, title VIII, §807(a)(7), July 26, 1979, 93 Stat. 281 ]
Section, added
A prior section 5009, act Aug. 16, 1954, ch. 736,
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective Jan. 1, 1980, see section 810 of
§5010. Credit for wine content and for flavors content
(a) Allowance of credit
(1) Wine content
On each proof gallon of the wine content of distilled spirits, there shall be allowed a credit against the tax imposed by section 5001 (or 7652) equal to the excess of—
(A) $13.50, over
(B) the rate of tax which would be imposed on the wine under section 5041(b) but for its removal to bonded premises.
(2) Flavors content
On each proof gallon of the flavors content of distilled spirits, there shall be allowed a credit against the tax imposed by section 5001 (or 7652) equal to $13.50.
(3) Fractional part of proof gallon
In the case of any fractional part of a proof gallon of the wine content, or of the flavors content, of distilled spirits, a proportionate credit shall be allowed.
(b) Time for determining and allowing credit
(1) In general
The credit allowable by subsection (a)—
(A) shall be determined at the same time the tax is determined under section 5006 (or 7652) on the distilled spirits containing the wine or flavors, and
(B) shall be allowable at the time the tax imposed by section 5001 (or 7652) on such distilled spirits is payable as if the credit allowable by this section constituted a reduction in the rate of tax.
(2) Determination of content in the case of imports
For purposes of this section, the wine content, and the flavors content, of imported distilled spirits shall be established by such chemical analysis, certification, or other methods as may be set forth in regulations prescribed by the Secretary.
(c) Definitions
For purposes of this section—
(1) Wine content
(A) In general
The term "wine content" means alcohol derived from wine.
(B) Wine
The term "wine"—
(i) means wine on which tax would be imposed by paragraph (1), (2), or (3) of section 5041(b) but for its removal to bonded premises, and
(ii) does not include any substance which has been subject to distillation at a distilled spirits plant after receipt in bond.
(2) Flavors content
(A) In general
Except as provided in subparagraph (B), the term "flavors content" means alcohol derived from flavors of a type for which drawback is allowable under section 5114.
(B) Exceptions
The term "flavors content" does not include—
(i) alcohol derived from flavors made at a distilled spirits plant,
(ii) alcohol derived from flavors distilled at a distilled spirits plant, and
(iii) in the case of any distilled spirits product, alcohol derived from flavors to the extent such alcohol exceeds (on a proof gallon basis) 2½ percent of the finished product.
(Added
Editorial Notes
Prior Provisions
A prior section 5010, act Aug. 16, 1954, ch. 736,
Amendments
2005—Subsec. (c)(2)(A).
1990—Subsec. (a)(1), (2).
1988—Subsec. (c)(2)(B).
1984—Subsec. (a)(1), (2).
Statutory Notes and Related Subsidiaries
Effective Date of 2005 Amendment
Amendment by
Effective Date of 1990 Amendment
Amendment by
Effective Date of 1988 Amendment
Effective Date of 1984 Amendment
Amendment by
Effective Date
§5011. Income tax credit for average cost of carrying excise tax
(a) In general
For purposes of section 38, the amount of the distilled spirits credit for any taxable year is the amount equal to the product of—
(1) in the case of—
(A) any eligible wholesaler, the number of cases of bottled distilled spirits—
(i) which were bottled in the United States, and
(ii) which are purchased by such wholesaler during the taxable year directly from the bottler of such spirits, or
(B) any person which is subject to section 5005 and which is not an eligible wholesaler, the number of cases of bottled distilled spirits which are stored in a warehouse operated by, or on behalf of, a State or political subdivision thereof, or an agency of either, on which title has not passed on an unconditional sale basis, and
(2) the average tax-financing cost per case for the most recent calendar year ending before the beginning of such taxable year.
(b) Eligible wholesaler
For purposes of this section, the term "eligible wholesaler" means any person which holds a permit under the Federal Alcohol Administration Act as a wholesaler of distilled spirits which is not a State or political subdivision thereof, or an agency of either.
(c) Average tax-financing cost
(1) In general
For purposes of this section, the average tax-financing cost per case for any calendar year is the amount of interest which would accrue at the deemed financing rate during a 60-day period on an amount equal to the deemed Federal excise tax per case.
(2) Deemed financing rate
For purposes of paragraph (1), the deemed financing rate for any calendar year is the average of the corporate overpayment rates under paragraph (1) of section 6621(a) (determined without regard to the last sentence of such paragraph) for calendar quarters of such year.
(3) Deemed Federal excise tax per case
For purposes of paragraph (1), the deemed Federal excise tax per case is $25.68.
(d) Other definitions and special rules
For purposes of this section—
(1) Case
The term "case" means 12 80-proof 750-milliliter bottles.
(2) Number of cases in lot
The number of cases in any lot of distilled spirits shall be determined by dividing the number of liters in such lot by 9.
(Added
Editorial Notes
References in Text
The Federal Alcohol Administration Act, referred to in subsec. (b), is act Aug. 29, 1935, ch. 814,
Prior Provisions
A prior section 5011, act Aug. 16, 1954, ch. 736,
A prior section 5012, act Aug. 16, 1954, ch. 736,
Statutory Notes and Related Subsidiaries
Effective Date
Section applicable to taxable years beginning after Sept. 30, 2005, see section 11126(d) of