§5370 — Title 26 Internal Revenue Code | U.S. Code

§5370 Losses

Title 26 › Subtitle Subtitle E— - Alcohol, Tobacco, and Certain Other Excise Taxes › Chapter CHAPTER 51— - DISTILLED SPIRITS, WINES, AND BEER › Subchapter Subchapter F— - Bonded and Taxpaid Wine Premises › Part PART II— - OPERATIONS › § 5370

Last updated Apr 6, 2026|Official source

Summary

Wine lost or destroyed while stored in a bonded cellar is normally not taxed. But tax must be paid if the loss was theft, unless the Secretary finds the theft happened without connivance, collusion, fraud, or negligence by the proprietor or other people responsible for the wine (owners, consignors, consignees, bailees, carriers, or their agents or employees). Tax also applies for voluntary destruction unless it was done under government supervision or with the Secretary’s approval after proper notice under the rules. The Secretary can make rules that require the cellar owner or other person liable for the tax to file a claim and show proof of why the wine was lost. If the loss seems to be theft, the person in charge must prove to the Secretary that the theft was not due to connivance, collusion, fraud, or negligence by those responsible.

Title 26, §5370

Internal Revenue Code — Source: USLM XML via OLRC

(a)No tax shall be collected in respect of any wines lost or destroyed while in bond, except that tax shall be collected—

(1)In the case of loss by theft, unless the Secretary shall find that the theft occurred without connivance, collusion, fraud, or negligence on the part of the proprietor or other person responsible for the tax, or the owner, consignor, consignee, bailee, or carrier, or the agents or employees of any of them; and

(2)In the case of voluntary destruction, unless the wine was destroyed under Government supervision, or on such adequate notice to, and approval by, the Secretary as regulations shall provide.

(b)In any case in which the wine is lost or destroyed, whether by theft or otherwise, the Secretary may require by regulations the proprietor of the bonded wine cellar 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 on the proprietor or other person liable for the 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, owner, consignor, consignee, bailee, or carrier, or the agents or employees of any of them.

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

A prior section 5370, act Aug. 16, 1954, ch. 736, 68A Stat. 666, consisted of provisions similar to those comprising this section, prior to the general revision of this chapter by Pub. L. 85–859.

Amendments

1976—Pub. L. 94–455 struck out “or his delegate” after “Secretary” wherever appearing.