Title 26, Internal Revenue CodeRelease 119-110
§5005 Persons Liable for Tax
Title 26 › Subtitle E — Alcohol, Tobacco, and Certain Other Excise Taxes › CHAPTER 51 — DISTILLED SPIRITS, WINES, AND BEER › Subchapter A — Gallonage and Occupational Taxes › PART I — GALLONAGE TAXES › Subpart A — Distilled Spirits › § 5005
Summary
Distillers and importers must pay the tax on distilled spirits under section 5001(a)(1). Anyone who owns, operates, or uses a still, distilling equipment, or a distillery can also be held responsible for the tax on spirits made there. If someone owns 10 percent or less of a corporation that runs a distillery, they are not responsible, unless they are an officer or director. People who run bonded distillery premises must pay the tax on spirits stored there or in transit to those premises until the spirits are lawfully transferred, withdrawn, or relief is given under section 5008(a). If spirits are moved “in bond” under section 5212 to unrelated, independent proprietors and all prior interested parties give up their interest, the old parties are released from tax responsibility from the time of removal or divestment. Spirits withdrawn free of tax under section 5214(a)(1),(2),(3),(11) or (12), or under section 7510, free the prior taxpayers at withdrawal. A person who withdraws spirits without paying tax under section 5214(a)(4)–(10) or (13) becomes responsible from the time of withdrawal, but prior parties are relieved if the withdrawer is independent, there is no ownership ties, and the prior parties have divested. Relief also applies when spirits are exported, put in a foreign‑trade zone, used to make wine or certain wine products, placed in customs bonded warehouses, loaded as supplies on certain vessels or aircraft or used to maintain them, or used for certain research, development, or testing. Related rules appear in sections 5173, 5223, 5001(a)(4),(5),(6), 5391, and 5043(a)(1)(A).
Full Legal Text
Title 26, §5005
Internal Revenue Code, Source: USLM XML via OLRC
(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).
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Prior Provisions
A prior section 5005, acts Aug. 16, 1954, ch. 736, 68A Stat. 599; Sept. 2, 1958, Pub. L. 85–859, title II, § 206(d), 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 subsec. (c)(1), (2) of this section were contained in prior section 5194(f), 5217(a), and 5232(a), act Aug. 16, 1954, ch. 736, 68A Stat. 634, 641, 643, prior to the general revision of this chapter by Pub. L. 85–859.
Amendments
1994—Subsec. (f)(3). Pub. L. 103–465, § 136(c)(2)(A), substituted “section 5001(a)(5) and (6)” for “section 5001(a)(6) and (7)”. Subsec. (f)(4). Pub. L. 103–465, § 136(c)(2)(B), substituted “section 5001(a)(4)” for “section 5001(a)(5)”. 1984—Subsec. (e)(1). Pub. L. 98–369, § 455(b)(1), substituted “(10), or (13)” for “or (10)”. Subsec. (e)(2). Pub. L. 98–369, § 455(b)(2), inserted “used in the production of nonbeverage wine or wine products,”. 1980—Subsec. (d). Pub. L. 96–223 substituted “(11), or (12),” for “or (11),”. 1979—Subsec. (c)(3). Pub. L. 96–39, § 807(a)(3)(A), struck out par. (3) which related to liability for taxes with regard to withdrawals of distilled spirits from the bonded premises of a distilled spirits plant. Subsec. (d). Pub. L. 96–39, § 807(a)(3)(B), substituted “(3), or (11)” for “or (3)”. Subsec. (f)(1). Pub. L. 96–39, § 807(a)(3)(C), substituted “requiring bond covering operations at, and withdrawals from, distilled spirits plants” for “conditioning warehousing bonds on the payment of the tax” and “5173” for “5173(c)”. Subsec. (f)(6). Pub. L. 96–39, § 807(a)(3)(D), added par. (6). 1977—Subsec. (d). Pub. L. 95–176, § 4(d)(1), struck out reference to par. (9) of section 5214(a). Subsec. (e)(1). Pub. L. 95–176, § 4(d)(2), inserted reference to pars. (9) and (10) of section 5214(a). Subsec. (e)(2). Pub. L. 95–176, § 4(b), substituted “customs bonded warehouses” for “customs manufacturing bonded warehouses” and provided for relief from liability for tax on distilled spirits used in certain research, development, or testing. 1976—Subsec. (c)(2). Pub. L. 94–455 substituted “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.” for “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).”.
Statutory Notes and Related Subsidiaries
Effective Date
of 1994 AmendmentAmendment by Pub. L. 103–465 effective Jan. 1, 1995, see section 136(d) of Pub. L. 103–465, set out as a note under section 5001 of this title.
Effective Date
of 1984 AmendmentAmendment by Pub. L. 98–369 effective July 18, 1984, see section 456(c) of Pub. L. 98–369, set out as an
Effective Date
note under section 5101 of this title.
Effective Date
of 1980 AmendmentAmendment by Pub. L. 96–223 effective on first day of first calendar month beginning more than 60 days after Apr. 2, 1980, see section 232(h)(3) of Pub. L. 96–223, set out as an
Effective Date
note under section 5181 of this title.
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 Amendment Pub. L. 94–455, title XIX, § 1905(d), Oct. 4, 1976, 90 Stat. 1824, provided that: “The
Amendments
made by this section [amending this section and sections 5007 to 5009, 5025, 5026, 5043, 5054, 5061, 5105, 5111, 5113, 5114, 5117, 5121, 5122, 5131, 5142, 5148, 5171, 5174, 5177, 5179, 5214, 5222, 5232 to 5234, 5272, 5314, 5362, 5368, 5392, 5505, 5551, 5601, 5662, 5685, 5701, 5703, 5704, 5712, 5723, 5751, 5752, 5762, and 5763 of this title and repealing section 5104, 5144, 5315, 5676, and 5689 of this title] shall take effect on the first day of the first month which begins more than 90 days after the date of the enactment of this Act [Oct. 4, 1976].”
Reference
Citations & Metadata
Citation
26 U.S.C. § 5005
Title 26, Internal Revenue Code
Last Updated
Sep 22, 2026
Release point: 119-110