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Title 26 — Internal Revenue CodeRelease 119-73

§5011 Income Tax Credit for Average Cost of Carrying Excise Tax

Title 26 › Subtitle 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 › § 5011

Last updated Apr 6, 2026|Official source

Summary

Liquor wholesalers get a tax credit meant to cover the cost of fronting the federal excise tax on distilled spirits. The credit equals the number of cases of U.S.-bottled spirits the wholesaler bought directly from the bottler during the year, multiplied by an "average tax-financing cost" per case. That cost is the interest that would build up over 60 days on the deemed federal excise tax per case, which is set at $25.68, using an average IRS overpayment interest rate. Businesses that owe the spirits tax but are not wholesalers can count cases sitting in state-run warehouses that have not yet been sold. A case means 12 bottles of 80-proof spirits at 750 milliliters each.

Full Legal Text

Title 26, §5011

Internal Revenue Code — Source: USLM XML via OLRC

(a)For purposes of section 38, the amount of the distilled spirits credit for any taxable year is the amount equal to the product of—
(1)in the case of—
(A)any eligible wholesaler, the number of cases of bottled distilled spirits—
(i)which were bottled in the United States, and
(ii)which are purchased by such wholesaler during the taxable year directly from the bottler of such spirits, or
(B)any person which is subject to section 5005 and which is not an eligible wholesaler, the number of cases of bottled distilled spirits which are stored in a warehouse operated by, or on behalf of, a State or political subdivision thereof, or an agency of either, on which title has not passed on an unconditional sale basis, and
(2)the average tax-financing cost per case for the most recent calendar year ending before the beginning of such taxable year.
(b)For purposes of this section, the term “eligible wholesaler” means any person which holds a permit under the Federal Alcohol Administration Act as a wholesaler of distilled spirits which is not a State or political subdivision thereof, or an agency of either.
(c)(1)For purposes of this section, the average tax-financing cost per case for any calendar year is the amount of interest which would accrue at the deemed financing rate during a 60-day period on an amount equal to the deemed Federal excise tax per case.
(2)For purposes of paragraph (1), the deemed financing rate for any calendar year is the average of the corporate overpayment rates under paragraph (1) of section 6621(a) (determined without regard to the last sentence of such paragraph) for calendar quarters of such year.
(3)For purposes of paragraph (1), the deemed Federal excise tax per case is $25.68.
(d)For purposes of this section—
(1)The term “case” means 12 80-proof 750-milliliter bottles.
(2)The number of cases in any lot of distilled spirits shall be determined by dividing the number of liters in such lot by 9.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Federal Alcohol Administration Act, referred to in subsec. (b), is act Aug. 29, 1935, ch. 814, 49 Stat. 977, which is classified generally to subchapter I (§ 201 et seq.) of chapter 8 of Title 27, Intoxicating Liquors. For complete classification of this Act to the Code, see section 201 of Title 27 and Tables.

Prior Provisions

A prior section 5011, act Aug. 16, 1954, ch. 736, 68A Stat. 604, related to abatement, remission, refund and allowance for loss or destruction of distilled spirits, prior to the general revision of this chapter by Pub. L. 85–859. A prior section 5012, act Aug. 16, 1954, ch. 736, 68A Stat. 605, related to drawback on exportation of distilled spirits, prior to the general revision of this chapter by Pub. L. 85–859.

Statutory Notes and Related Subsidiaries

Effective Date

Section applicable to taxable years beginning after Sept. 30, 2005, see section 11126(d) of Pub. L. 109–59, set out as an

Effective Date

of 2005

Amendments

note under section 38 of this title.

Reference

Citations & Metadata

Citation

26 U.S.C. § 5011

Title 26 — Internal Revenue Code

Last Updated

Apr 6, 2026

Release point: 119-73