§5173 — Title 26 Internal Revenue Code | U.S. Code

Summary

People who plan to open and run a distilled spirits plant must put up a bond before they start, unless section 5551(d) says they do not have to. Distilled spirits cannot be taken out of bonded premises unless the tax is paid or the proprietor has a bond that covers the withdrawal. That rule does not apply to spirits withdrawn under sections 5214 or 7510. A bond can cover one plant; a plant and an adjacent bonded wine cellar; or two or more plants (and their adjacent wine cellars) in the same area if they are run by the same person or a corporation with its controlled subsidiaries. A withdrawal bond can cover withdrawals from any premises that could be on the same operations bond. Under rules made by the Secretary, a single unit bond may cover both operations and withdrawals. Every bond must promise to follow the laws and rules and to pay all taxes, penalties, and fines. The Secretary will set other terms and the bond amounts, including minimums and maximums. The whole bond amount can be used to pay any liability. If a bond covers withdrawals but not operations, it is extra to the operations bond, and any spirits withdrawn under that bond are no longer covered by the operations bond. A wine cellar is only “adjacent” if the plant is qualified to make distilled spirits and both are run by the same person or controlled subsidiaries. A bond that covers an adjacent wine cellar replaces the wine bond that would otherwise be required under section 5354, except for any supplemental bonds that section still needs.

Title 26, §5173

Internal Revenue Code — Source: USLM XML via OLRC

(a)(1)Except as provided under section 5551(d), no person intending to establish a distilled spirits plant may commence operations at such plant unless such person has furnished bond covering operations at such plant.

(2)Except as provided under section 5551(d), no distilled spirits (other than distilled spirits withdrawn under section 5214 or 7510) may be withdrawn from bonded premises except on payment of tax unless the proprietor of the bonded premises has furnished bond covering such withdrawal.

(b)The bond required by paragraph (1) of subsection (a) shall meet the requirements of paragraph (1), (2), or (3) of this subsection:

(1)The bond covers operations at a single distilled spirits plant.

(2)The bond covers operations at a distilled spirits plant and at an adjacent bonded wine cellar.

(3)The bond covers operations at 2 or more distilled spirits plants (and adjacent bonded wine cellars) which—

(A)are located in the same geographical area (as designated in regulations prescribed by the Secretary), and

(B)are operated by the same person (or, in the case of a corporation, by such corporation and its controlled subsidiaries).

(c)The bond required by paragraph (2) of subsection (a) shall cover withdrawals from 1 or more bonded premises the operations at which could be covered by the same operations bond under subsection (b).

(d)Under regulations prescribed by the Secretary, the requirements of paragraphs (1) and (2) of subsection (a) shall be treated as met by a unit bond which covers both operations at, and withdrawals from, 1 or more bonded premises which could be covered by the same operations bond under subsection (b).

(e)(1)Any bond furnished under this section shall be conditioned that the person furnishing the bond—

(A)will faithfully comply with all provisions of law and regulations relating to the activities covered by such bond, and

(B)will pay—

(i)all taxes imposed by this chapter, and

(ii)all penalties incurred by, or fines imposed on, such person for violation of any such provision.

(2)Any bond furnished under this section shall contain such other terms and conditions as may be required by regulations prescribed by the Secretary.

(f)(1)The penal sum of any bond shall be the amount determined under regulations prescribed by the Secretary.

(2)The Secretary shall by regulations prescribe a minimum amount and a maximum amount for each type of bond which may be furnished under this section.

(g)The total amount of any bond furnished under this section shall be available for the satisfaction of any liability incurred under the terms and conditions of such bond.

(h)For purposes of this section—

(1)In the case of any bond furnished under this section which covers withdrawals but not operations—

(A)such bond shall be in addition to the operations bond, and

(B)if distilled spirits are withdrawn under such bond, the operations bond shall no longer cover liability for payment of the tax on the spirits withdrawn.

(2)(A)No wine cellar shall be treated as being adjacent to a distilled spirits plant unless—

(i)such distilled spirits plant is qualified under this subchapter for the production of distilled spirits, and

(ii)such wine cellar and the distilled spirits plant are operated by the same person (or, in the case of a corporation, by such corporation and its controlled subsidiaries).

(B)In the case of any adjacent wine cellar, a bond furnished under this section which covers operations at such wine cellar shall be in lieu of any bond which would otherwise be required under section 5354 with respect to such wine cellar (other than supplemental bonds required under the second sentence of section 5354).

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

A prior section 5173, act Aug. 16, 1954, ch. 736, 68A Stat. 628, related to “distillery fixtures and equipment”, prior to the general revision of this chapter by Pub. L. 85–859. See section 5178(a)(1)(A), (2)(B)(C), (c)(1) and 5202(b) of this title. Provisions similar to those comprising subsecs. (a), (b), (b)(1), (b)(1)(A) to (C), (b)(3), (c), (c)(1), (d) and (e)(1) of this section were contained in prior sections of act Aug. 16, 1954, prior to the general revision of this chapter by Pub. L. 85–859, as follows: Present subsecs.:Prior sections (a)5172, 5176(a), 5231, 5232(a), 5272(a), 5301–5303, 5304(a)(5), 5305, 5311(a)(3). (b)5176 (a), (d). (b)(1)5176(a), 5177(c). (b)(1)(A)–(C)5177(b)(1)–(3). (b)(3)5177(b)(4). (c)5232(a), 5302, 5303, 5306, 5331(a)(3). (c)(1)5232(a). (d)5272(a). (e)(1)5304(a)(5). The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A Stat. 627, 629 to 631, 643, 650, 654, 655, 657, 662.

Amendments

2015—Subsec. (a)(1). Pub. L. 114–113, § 332(b)(2)(A)(i), substituted “Except as provided under section 5551(d), no person” for “No person”. Subsec. (a)(2). Pub. L. 114–113, § 332(b)(2)(A)(ii), substituted “Except as provided under section 5551(d), no distilled spirits” for “No distilled spirits”. 1979—Pub. L. 96–39, among other changes, struck out provisions relating to liens on distillery property and the furnishing of indemnity bonds as methods of securing tax payments and inserted provisions relating to the one plant operations bond, which will cover the operations at a bonded wine cellar which is adjacent to the distilled spirits plant and operated by the same person. 1976—Pub. L. 94–455 struck out “or his delegate” after “Secretary” wherever appearing. 1971—Subsec. (b)(1). Pub. L. 91–659, § 4(b), extended exception clause in parenthetical by making reference to cl. (4) of this subsection. Subsec. (b)(2). Pub. L. 91–659, § 4(c), inserted reference to par. (4). Subsec. (b)(4). Pub. L. 91–659, § 4(a), added par. (4).

Statutory Notes and Related Subsidiaries

Effective Date

of 2015 AmendmentAmendment by Pub. L. 114–113 applicable to any calendar quarters beginning more than 1 year after Dec. 18, 2015, see section 332(c) of Pub. L. 114–113, set out as a note under section 5061 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 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. Transitional Rules Relating to All-In-Bond Method Pub. L. 96–39, title VIII, § 809(c),

July 26, 1979, 93 Stat. 292, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “For purposes of section 5173 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (relating to bonds), each person who intends to continue operation at a premises after

December 31, 1979, shall be treated as intending to establish a distilled spirits plant on such premises on

January 1, 1980.”

§5173 Bonds

Summary

Title 26, §5173

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Effective Date

Effective Date

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