Title 26 — Internal Revenue CodeRelease 119-73
§5008 Abatement, remission, refund, and allowance for loss or destruction of distilled spirits
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 › § 5008
Summary
Stops tax on distilled spirits kept in bonded storage when they are lost or destroyed, with some limits. No tax is due for spirits lost or destroyed in bond unless the loss was theft (and the owner or operator cannot prove there was no secret help, fraud, or carelessness), or the owner purposely destroyed them without following the required rules, or there is an unexplained shortage of bottled spirits. The Treasury Secretary can ask the owner or other person who owes the tax to file a claim and give proof of what happened. If tax was already paid, it will be refunded when the rule allows, but theft refunds are limited if the owner was compensated elsewhere. Normally no refund is allowed for losses that happen after the tax was already fixed, except the rule still applies to losses that occur after tax is fixed but before the spirits are physically removed from the bonded place. Owners may destroy spirits in bond only under the Secretary’s supervision and rules. If taxed spirits are returned to the bonded plant, the tax will be abated or refunded if the plant files a proper claim within 6 months of the return. The same loss rules cover spirits lost while being moved to export ports, customs manufacturing warehouses, vessels or aircraft, foreign-trade zones, or customs bonded warehouses. Other tax laws and penalties that apply to distilled spirits also apply to these refunds or credits. For wine spirits used in wine production, see section 5373(b)(3).
Full Legal Text
Title 26, §5008
Internal Revenue Code — Source: USLM XML via OLRC
(a)(1)No tax shall be collected in respect of distilled spirits lost or destroyed while in bond, except that such tax shall be collected—
(A)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)In the case of voluntary destruction, unless such destruction is carried out as provided in subsection (b); and
(C)In the case of an unexplained shortage of bottled distilled spirits.
(2)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)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)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)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)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)(1)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)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)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 section 5066 and 5214(a)(9).
(e)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)For provisions relating to allowance for loss in case of wine spirits withdrawn for use in wine production, see section 5373(b)(3).
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Prior Provisions
A prior section 5008, act Aug. 16, 1954, ch. 736, 68A Stat. 602, consisted of provisions similar to those comprising this section, prior to the general revision of this chapter by Pub. L. 85–859. See section 5205(a), (g) and 5604(a)(1) of this title. Provisions similar to those comprising subsecs. (a)(1) to (4) and (f)(1), (2) of this section were contained in prior section 5011(a)(1) to (4), 5023, 5247(e) and 5522(b), act Aug. 16, 1954, ch. 736, 68A Stat. 604, 606, 648, 679, prior to the general revision of this chapter by Pub. L. 85–859.
Amendments
1997—Subsec. (c)(1). Pub. L. 105–34 substituted “on which tax has been determined or paid” for “withdrawn from bonded premises on payment or determination of tax”. 1979—Subsec. (a)(1)(C). Pub. L. 96–39, § 807(a)(6)(A), added subpar. (C). Subsec. (a)(5). Pub. L. 96–39, § 807(a)(6)(B), substituted “before” for “prior to the completion” and struck out provisions relating to the applicability of this subsection where the loss occurred after the time prescribed for the withdrawal of the distilled spirits from the bonded premises under section 5006(a)(2) and relating to the applicability of this paragraph to any loss of distilled spirits for which abatement, remission, credit, or refund of tax is allowed under subsec. (c). Subsec. (b). Pub. L. 96–39, § 807(a)(6)(C), struck out “(1) Distilled spirits in bond” before “The proprietor of” and provisions relating to distilled spirits withdrawn for rectification or bottling. Subsec. (c). Pub. L. 96–39, § 807(a)(6)(C), added subsec. (c). Former subsec. (c), which related to loss of distilled spirits withdrawn from bond for rectification or bottling, was struck out. Subsec. (d). Pub. L. 96–39, § 807(a)(6)(D), redesignated subsec. (f) as (d). Former subsec. (d), which related to distilled spirits returned to bonded premises, was struck out. Subsec. (e). Pub. L. 96–39, § 807(a)(6)(D), (E), redesignated subsec. (g) as (e) and substituted “subsection (c)” for “subsections (b)(2), (c), and (d)” and “under such subsection” for “under such subsections”. Former subsec. (e), which related to samples of distilled spirits used for analysis or testing by United States, was struck out. Subsec. (f). Pub. L. 96–39, § 807(a)(6)(D), redesignated subsec. (h) as (f). Former subsec. (f) redesignated (d). Subsecs. (g), (h). Pub. L. 96–39, § 807(a)(6)(D), redesignated subsecs. (g) and (h) as (e) and (f), respectively. 1977—Subsec. (d). Pub. L. 95–176, § 2(f), reenacted par. (1) and substituted heading “General” for “Allowance of tax” and “(or the tax equal to such tax imposed under section 7652)” for “or under section 7652”; added pars. (2) and (3); and redesignated as par. (4) provisions of former par. (2) and inserted reference to allowance of claims under par. (2) or (3). Subsec. (f)(5). Pub. L. 95–176, § 4(e), added par. (5). 1976—Subsec. (b)(1). Pub. L. 94–455, §§ 1905(a)(2)(A), 1906(b)(13)(A), inserted “or by section 7652” after “tax imposed by this chapter” and struck out “or his delegate” after “Secretary”. Subsec. (b)(2). Pub. L. 94–455, §§ 1905(a)(2)(B), 1906(b)(13)(A), struck out “or his delegate” after “Secretary” and inserted “, or under section 7652” after “under subpart B of this part”. Subsec. (c)(1). Pub. L. 94–455, §§ 1905(a)(2)(C), 1906(b)(13)(A), struck out “or his delegate” after “Secretary” wherever appearing and inserted “or under section 7652” after “under section 5001(a)(1)”. Subsec. (c)(2), (3). Pub. L. 94–273 substituted “computation year” for “fiscal year” wherever appearing. Subsec. (c)(5). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”. Subsec. (d)(1). Pub. L. 94–455, §§ 1905(a)(2)(C), (D), 1906(b)(13)(A), struck out “on or after July 1, 1959,” after “from bonded premises,” and “or his delegate” after “Secretary” and inserted “or under section 7652” after “under section 5001(a)(1)”. 1971—Subsec. (b)(2). Pub. L. 91–659, § 2(a), struck out condition that the distilled spirits can be destroyed only before bottling and permitted destruction after completion of bottling so long as the distilled spirits are on the bottling premises and added taxes imposed under subpart B of this Part as additional taxes which can be claimed for abatement, remission, credit or refund. Subsec. (c)(1)(A). Pub. L. 91–659, § 1, added cl. (iii). Subsec. (c)(5). Pub. L. 91–659, § 2(b), permits distilled spirits returned to bottling premises to be treated for purposes of the various loss provisions as though they had not been removed from the bottling premises. 1968—Subsec. (c)(1). Pub. L. 90–630 inserted provisions allowing abatement, remission, and refund if the casualty loss occurs after completion of the packaging but before the spirits have been removed from the premises of the distilled spirits plant to which the spirits were removed from bond. 1965—Subsec. (d)(2). Pub. L. 89–44 struck out final clause prohibiting the allowance of a claim in respect to any distilled spirits withdrawn from bonded premises of a distilled spirits plant more than 6 months prior to the date of such return.
Statutory Notes and Related Subsidiaries
Effective Date
of 1997 Amendment Pub. L. 105–34, title XIV, § 1411(b), Aug. 5, 1997, 111 Stat. 1046, provided that: “The amendment made by subsection (a) [amending this section] shall take effect on the 1st day of the 1st calendar quarter that begins at least 180 days after the date of the enactment of this Act [Aug. 5, 1997].”
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.
Effective Date
of 1977 AmendmentAmendment by Pub. L. 95–176 effective on first day of first calendar month beginning more than 90 days after Nov. 14, 1977, see section 7 of Pub. L. 95–176, set out as a note under section 5003 of this title.
Effective Date
of 1976 AmendmentAmendment by section 1905(a)(2) of Pub. L. 94–455 effective on first day of first month which begins more than 90 days after Oct. 4, 1976, see section 1905(d) of Pub. L. 94–455, set out as a note under section 5005 of this title.
Effective Date
of 1971 AmendmentAmendment by Pub. L. 91–659 effective on first day of first calendar month which begins more than 90 days after Jan. 8, 1971, see section 6 of Pub. L. 91–659, set out as an
Effective Date
note under section 5066 of this title.
Effective Date
of 1968 Amendment Pub. L. 90–630, § 4, Oct. 22, 1968, 82 Stat. 1329, provided that: “(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 section 5062 of this title and section 1313 of Title 19, Customs Duties] shall apply only to articles exported on or after such
Effective Date
. The
Amendments
made by section 3 [amending section 5232 of this title] shall apply only to withdrawals from customs custody on or after such
Effective Date
.”
Effective Date
of 1965 Amendment Pub. L. 89–44, title VIII, § 805(g)(1), June 21, 1965, 79 Stat. 162, provided that: “The
Amendments
made by subsections (a), (c), (e), and (f)(6) [amending this section and section 5062, 5215, and 5608 of this title] shall take effect on July 1, 1965.” Distilled Spirits Returned to Bonded Premises of Distilled Spirits Plant During 1980Subsec. (c)(1) of this section to be treated as including a reference to section 5041 of this title with respect to distilled spirits returned to the bonded premises of distilled spirits plants during 1980, see section 808(d) of Pub. L. 96–39, set out as a note under section 5061 of this title.
Reference
Citations & Metadata
Citation
26 U.S.C. § 5008
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73