Title 26 — Internal Revenue CodeRelease 119-73
§5006 Determination of tax
Title 26 › Subtitle Subtitle E— - Alcohol, Tobacco, and Certain Other Excise Taxes › Chapter CHAPTER 51— - DISTILLED SPIRITS, WINES, AND BEER › Subchapter Subchapter A— - Gallonage and Occupational Taxes › Part PART I— - GALLONAGE TAXES › Subpart Subpart A— - Distilled Spirits › § 5006
Summary
Tax on distilled spirits is figured when the spirits are taken out of bonded storage. The Treasury sets the rules and tools for measuring and must check the gauge for spirits from a distilled spirits plant before they leave. If a distiller has not properly reported how much was made, the Treasury will use the evidence it has to estimate the real amount and charge tax on the difference at the law’s per‑proof‑gallon rate. If spirits are lost or someone gets into casks on bonded premises, the Treasury can require withdrawal and charge tax on the original amount unless the loss is clearly nontaxable or the owner proves the loss was not from theft or wrongful destruction. If the owner showed negligence, the Treasury may instead tax an amount equal to 5 proof gallons for each affected cask. The same rules apply if barrels are refilled or repackaged after deposit. Spirits removed and not put into bonded storage can be assessed and collected when the government learns of that fact. Spirits made outside a qualified plant are taxed when made. Smuggled spirits are treated as imports and taxed when brought into the country.
Full Legal Text
Title 26, §5006
Internal Revenue Code — Source: USLM XML via OLRC
(a)(1)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as otherwise provided in this section, the tax on distilled spirits shall be determined when the spirits are withdrawn from bond.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 The tax on distilled spirits withdrawn from the bonded premises of a distilled spirits plant shall be determined upon completion of the gauge for determination of tax and before withdrawal from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)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)(1)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)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)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)(1)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)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)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)For provisions relating to removal of distilled spirits from bonded premises on determination of tax, see section 5213.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Prior Provisions
A prior section 5006, acts Aug. 16, 1954, ch. 736, 68A Stat. 599; Sept. 2, 1958, Pub. L. 85–859, title II, § 206(a), 72 Stat. 1431, consisted of provisions similar to those comprising this section, prior to the general revision of this chapter by Pub. L. 85–859. Provisions similar to those comprising subsecs. (a)(2)(A), (3) of this section were contained in prior section 5007(e)(1) and 5232(a), act Aug. 16, 1954, ch. 736, 68A Stat. 600, 643, prior to the general revision of this chapter by Pub. L. 85–859.
Amendments
1979—Subsec. (a)(1). Pub. L. 96–39, § 804(a), struck out “internal revenue” after “provided in this section, the” and “storage, gauging, and bottling” after “but not limited to”. Subsec. (a)(2), (3). Pub. L. 96–39, § 804(a), redesignated par. (3) as (2). Former par. (2), relating to distilled spirits entered for storage, was struck out. Subsec. (b)(1). Pub. L. 96–39, § 807(a)(4)(A), (B), substituted “on bonded premises” for “in storage in internal revenue bond” in two places and “; except” for “, notwithstanding that the time specified in any bond given for the withdrawal of the spirits entered in storage in such cask or package has not expired, except”. Subsec. (b)(2), (3). Pub. L. 96–39, § 807(a)(4)(B), substituted “on bonded premises” for “in storage in internal revenue bond”. 1976—Subsecs. (a) to (c). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.
Statutory Notes and Related Subsidiaries
Effective Date
of 1979 AmendmentAmendment by Pub. L. 96–39 effective Jan. 1, 1980, see section 810 of Pub. L. 96–39, set out as a note under section 5001 of this title. Application of 1972
Amendments
to Prior Sections Pub. L. 85–859, title II, § 206(f), Sept. 2, 1958, 72 Stat. 1431, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided: “(1) The
Amendments
made by this section [amending this section and section 5005, 5232, 5242, and 5243 of this title] shall apply with respect to:“(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.”
Reference
Citations & Metadata
Citation
26 U.S.C. § 5006
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73