§5181 — Title 26 Internal Revenue Code | U.S. Code

Summary

Lets a person open a distillery only to make alcohol for fuel, if they follow rules and any bond the Secretary requires. The Secretary must try to speed up applications, set a minimum bond, and encourage fuel alcohol production. The Secretary can waive other parts of the tax code for these plants except for this section and any rules that require paying tax. Applicants must use the form and steps the Secretary sets. The Secretary must send a written receipt within 15 days saying whether the application meets the rules. Only the first application for a plant each calendar quarter counts. After the receipt is sent, the Secretary must approve or deny within 45 days. If no decision is made, the application is treated as approved. If denied, the Secretary must give detailed reasons and the denial does not stop a new application. No bond is required for an eligible plant, and its premises are treated as bonded for certain rules. “Eligible distilled spirits plant” means a plant that makes alcohol only for fuel and makes no more than 10,000 proof gallons a year. Alcohol made under these rules can be taken out free of tax as allowed by law, but it must be used only as fuel. Before leaving the premises it must be made unfit to drink by adding substances that do not harm its use as fuel. “Distilled spirits” for this part does not include alcohol made from petroleum, natural gas, or coal.

Title 26, §5181

Internal Revenue Code — Source: USLM XML via OLRC

(a)(1)On such application and bond and in such manner as the Secretary may prescribe by regulation, a person may establish a distilled spirits plant solely for the purpose of—

(A)producing, processing, and storing, and

(B)using or distributing,

(2)In prescribing regulations under paragraph (1) and in carrying out the provisions of this section, the Secretary shall, to the greatest extent possible, take steps to—

(A)expedite all applications;

(B)establish a minimum bond; and

(C)generally encourage and promote (through regulation or otherwise) the production of alcohol for fuel purposes.

(b)The Secretary may by regulation provide for the waiver of any provision of this chapter (other than this section or any provision requiring the payment of tax) for any distilled spirits plant described in subsection (a) if the Secretary finds it necessary to carry out the provisions of this section.

(c)(1)(A)An application for an operating permit for an eligible distilled spirits plant shall be in such a form and manner, and contain such information, as the Secretary may by regulations prescribe; except that the Secretary shall, to the greatest extent possible, take steps to simplify the application so as to expedite the issuance of such permits.

(B)Within 15 days of receipt of an application under subparagraph (A), the Secretary shall send a written notice of receipt to the applicant, together with a statement as to whether the application meets the requirements of subparagraph (A). If such a notice is not sent and the applicant has a receipt indicating that the Secretary has received an application, paragraph (2) shall apply as if a written notice required by the preceding sentence, together with a statement that the application meets the requirements of subparagraph (A), had been sent on the 15th day after the date the Secretary received the application.

(C)If more than one application is submitted with respect to any eligible distilled spirits plant in any calendar quarter, the provisions of this section shall apply only to the first application submitted with respect to such plant during such quarter. For purposes of the preceding sentence, if a corrected or amended first application is filed, such application shall not be considered as a separate application, and the 15-day period referred to in subparagraph (A) shall commence with receipt of the corrected or amended application.

(2)(A)In any case in which the Secretary under paragraph (1)(B) has notified an applicant of receipt of an application which meets the requirements of paragraph (1)(A), the Secretary shall make a determination as to whether such operating permit is to be issued, and shall notify the applicant of such determination, within 45 days of the date on which notice was sent under paragraph (1)(B).

(B)If the Secretary has not notified an applicant within the time prescribed under subparagraph (A), the application shall be treated as approved.

(C)If the Secretary determines under subparagraph (A) that a permit should not be issued—

(i)the Secretary shall include in the notice to the applicant of such determination under subparagraph (A) detailed reasons for such determination, and

(ii)such determination shall not prejudice any further application for such operating permit.

(3)No bond shall be required for an eligible distilled spirits plant. For purposes of section 5212 and subsection (e)(2) of this section, the premises of an eligible distilled spirits plant shall be treated as bonded premises.

(4)The term “eligible distilled spirits plant” means a plant which is used to produce distilled spirits exclusively for fuel use and the production from which does not exceed 10,000 proof gallons per year.

(d)Distilled spirits produced under this section may be withdrawn free of tax from the bonded premises (and any premises which are not bonded by reason of subsection (c)(3)) of a distilled spirits plant exclusively for fuel use as provided in section 5214(a)(12).

(e)(1)Distilled spirits produced under this section shall not be withdrawn, used, sold, or disposed of for other than fuel use.

(2)For protection of the revenue and under such regulations as the Secretary may prescribe, distilled spirits produced under this section shall, before withdrawal from the bonded premises of a distilled spirits plant, be rendered unfit for beverage use by the addition of substances which will not impair the quality of the spirits for fuel use.

(f)For purposes of this section, the term “distilled spirits” does not include distilled spirits produced from petroleum, natural gas, or coal.

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

A prior section 5181 was renumbered 5182 of this title.

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 96–223, title II, § 232(h)(3), Apr. 2, 1980, 94 Stat. 281, provided that: “The

Amendments

made by subsection (e) [enacting this section, amending section 5004, 5005, 5214, and 5601, and repealing provisions set out as a note under section 4081 of this title] shall take effect on the first day of the first calendar month beginning more than 60 days after the date of the enactment of this Act [Apr. 2, 1980].”

§5181 Distilled spirits for fuel use