26 U.S.C. § 5171 — Establishment

Page 3182 TITLE 26—INTERNAL REVENUE CODE § 5171 Another prior section 5132, act Aug. 16, 1954, ch. 736, 68A Stat. 623, related to registration and regulation of persons claiming drawback, prior to the general revi- sion of this chapter by Pub. L. 85–859. A prior section 5133 was renumbered section 5113 of this title. Another prior section 5133, act Aug. 16, 1954, ch. 736, 68A Stat. 623, related to investigation of claims, prior to the general revision of this chapter by Pub. L. 85–859. A prior section 5134 was renumbered section 5114 of this title. Another prior section 5134, acts Aug. 16, 1954, ch. 736, 68A Stat. 623; Mar. 30, 1955, ch. 18, § 3(b)(2), 69 Stat. 15; Mar. 29, 1956, ch. 115, § 3(b)(2), 70 Stat. 67; Mar. 29, 1957, Pub. L. 85–12, § 3(b)(2), 71 Stat. 10; June 30, 1958, Pub. L. 85–475, § 3(b)(2), 72 Stat. 259, related to drawbacks, prior to the general revision of this chapter by Pub. L. 85–859. A prior section 5141, added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1346, related to registration, prior to repeal by Pub. L. 109–59, title XI, § 11125(a)(1)(E), (c), Aug. 10, 2005, 119 Stat. 1953, 1957, ef- fective July 1, 2008, but inapplicable to taxes imposed for periods before such date. Another prior section 5141, act Aug. 16, 1954, ch. 736, 68A Stat. 624, related to registration, prior to the gen- eral revision of this chapter by Pub. L. 85–859. A prior section 5142 was renumbered section 5732 of this title. Another prior section 5142, act Aug. 16, 1954, ch. 736, 68A Stat. 624, related to payment of tax, prior to the general revision of this chapter by Pub. L. 85–859. A prior section 5143 was renumbered section 5733 of this title. Another prior section 5143, act Aug. 16, 1954, ch. 736, 68A Stat. 624, related to time for filing returns and cross-referred to penalty provisions for failure to file returns or for making false or fraudulent returns, prior to the general revision of this chapter by Pub. L. 85–859. A prior section 5144, added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1348, authorized and directed Secretary or his delegate to procure the necessary stamps for payment of special taxes and to make need- ful regulations relative thereto, prior to repeal by Pub. L. 94–455, title XIX, § 1905(b)(3)(D)(i), Oct. 4, 1976, 90 Stat. 1822. Another prior section 5144, act Aug. 16, 1954, ch. 736, 68A Stat. 624, related to liability for occupational taxes, prior to the general revision of this chapter by Pub. L. 85–859. A prior section 5145 was renumbered section 5734 of this title. Another prior section 5145, act Aug. 16, 1954, ch. 736, 68A Stat. 625, related to ‘‘supply of stamps’’, prior to the general revision of this chapter by Pub. L. 85–859. A prior section 5146 was renumbered section 5123 of this title. Another prior section 5146, act Aug. 16, 1954, ch. 736, 68A Stat. 625, contained cross references to provisions respecting posting stamp in place of business, prior to the general revision of this chapter by Pub. L. 85–859. A prior section 5147, added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1348, related to application of former subpart G, prior to repeal by Pub. L. 109–59, title XI, § 11125(a)(1)(E), (c), Aug. 10, 2005, 119 Stat. 1953, 1957, effective July 1, 2008, but inapplicable to taxes im- posed for periods before such date. Another prior section 5147, act Aug. 16, 1954, ch. 736, 68A Stat. 626, made a cross reference to provision re- specting keeping of list of special taxpayers for public inspection, prior to the general revision of this chapter by Pub. L. 85–859. A prior section 5148, added Pub. L. 108–357, title II, § 246(a), Oct. 22, 2004, 118 Stat. 1448, related to suspen- sion of occupational tax, prior to repeal by Pub. L. 109–59, title XI, § 11125(a)(1)(E), (c), Aug. 10, 2005, 119 Stat. 1953, 1957, effective July 1, 2008, but inapplicable to taxes imposed for periods before such date. Another prior section 5148 was renumbered section 5149 of this title, prior to repeal by Pub. L. 109–59. Another prior section 5148, act Aug. 16, 1954, ch. 736, 68A Stat. 626, related to ‘‘Application of State laws’’, prior to the general revision of this chapter by Pub. L. 85–859. A prior section 5149, added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1348, § 5148; amended Pub. L. 94–455, title XIX, § 1905(b)(3)(E), Oct. 4, 1976, 90 Stat. 1822; renumbered § 5149, Pub. L. 108–357, title II, § 246(a), Oct. 22, 2004, 118 Stat. 1448, contained cross references to provisions imposing penalties, prior to repeal by Pub. L. 109–59, title XI, § 11125(a)(1)(E), (c), Aug. 10, 2005, 119 Stat. 1953, 1957, effective July 1, 2008, but inappli- cable to taxes imposed for periods before such date. Another prior section 5149, act Aug. 16, 1954, ch. 736, 68A Stat. 626, related to ‘‘Application of subpart’’, prior to the general revision of this chapter by Pub. L. 85–859. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective July 1, 2008, but inapplicable to taxes imposed for periods before such date, see section 11125(c) of Pub. L. 109–59, set out as an Effective Date of 2005 Amendment note under section 5002 of this title. Subchapter B—Qualification Requirements for Distilled Spirits Plants Sec. 5171. Establishment. 5172. Application. 5173. Bonds. [5174. Repealed.] 5175. Export bonds. 5176. New or renewed bonds. 5177. Other provisions relating to bonds. 5178. Premises of distilled spirits plants. 5179. Registration of stills. 5180. Signs. 5181. Distilled spirits for fuel use. 5182. Cross references. Editorial Notes PRIOR PROVISIONS A prior subchapter B, Distilleries, consisted of part I, Establishment, part II, Operation, and part III, General Provisions Relating to Distilleries and Distilled Spir- its, and consisted of sections 5171 to 5180, 5191 to 5197, and 5211 to 5217, respectively, prior to the general revi- sion of this chapter by Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1313. AMENDMENTS 2018—Pub. L. 115–141, div. U, title IV, § 401(a)(242), Mar. 23, 2018, 132 Stat. 1195, substituted ‘‘Premises of distilled spirits plants’’ for ‘‘Distilled spirits plants’’ in item 5178. 1980—Pub. L. 96–223, title II, § 232(e)(2)(F), Apr. 2, 1980, 94 Stat. 280, added item 5181 and redesignated former item 5181 as 5182. 1979—Pub. L. 96–39, title VIII, § 807(b)(4), July 26, 1979, 93 Stat. 290, substituted ‘‘Bonds’’ for ‘‘Qualification bonds’’ in item 5173, struck out item 5174 ‘‘Withdrawal bonds’’, and substituted ‘‘Distilled spirits plants’’ for ‘‘Premises of distilled spirits plants’’ in item 5178. § 5171. Establishment (a) Certain operations may be conducted only on bonded premises Except as otherwise provided by law, oper- ations as a distiller, warehouseman, or processor may be conducted only on the bonded premises of a distilled spirits plant by a person who is qualified under this subchapter. (b) Establishment of distilled spirits plant A distilled spirits plant may be established only by a person who intends to conduct at such Page 3183 TITLE 26—INTERNAL REVENUE CODE § 5171 plant operations as a distiller, as a warehouse- man, or as both. (c) Registration (1) In general Each person shall, before commencing oper- ations at a distilled spirits plant (and at such other times as the Secretary may by regula- tions prescribe), make application to the Sec- retary for, and receive notice of, the registra- tion of such plant. (2) Application required where new operations are added No operation in addition to those set forth in the application made pursuant to paragraph (1) may be conducted at a distilled spirits plant until the person has made application to the Secretary for, and received notice of, the registration of such additional operation. (3) Secretary may establish minimum capacity and level of activity requirements The Secretary may by regulations prescribe for each type of operation minimum capacity and level of activity requirements for quali- fying premises as a distilled spirits plant. (4) Applicant must comply with law and regu- lations No plant (or additional operation) shall be registered under this section until the appli- cant has complied with the requirements of law and regulations in relation to the quali- fication of such plant (or additional oper- ation). (d) Permits (1) Requirements Each person required to file an application for registration under subsection (c) whose distilled spirits operations (or any part there- of) are not required to be covered by a basic permit under the Federal Alcohol Administra- tion Act (27 U.S.C. secs. 203 and 204) shall, be- fore commencing the operations (or part thereof) not so covered, apply for and obtain a permit under this subsection from the Sec- retary to engage in such operations (or part thereof). Subsections (b), (c), (d), (e), (f), (g), and (h) of section 5271 are hereby made appli- cable to persons filing applications and per- mits required by or issued under this sub- section. (2) Exceptions for agencies of a State or polit- ical subdivisions Paragraph (1) shall not apply to any agency of a State or political subdivision thereof or to any officer or employee of any such agency, and no such agency, officer, or employee shall be required to obtain a permit thereunder. (e) Cross references (1) For penalty for failure of a distiller or proc- essor to file application for registration as required by this section, see section 5601(a)(2). (2) For penalty for the filing of a false application by a distiller, warehouseman, or processor of dis- tilled spirits, see section 5601(a)(3). (Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1349; amended Pub. L. 94–455, title XIX, §§ 1905(a)(13), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1820, 1834; Pub. L. 96–39, title VIII, § 805(a), July 26, 1979, 93 Stat. 274.) Editorial Notes REFERENCES IN TEXT The Federal Alcohol Administration Act, referred to in subsec. (d)(1), 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. The basic permit is covered by sections 203 and 204 of Title 27. For complete classification of this Act to the Code, see section 201 of Title 27 and Tables. PRIOR PROVISIONS A prior section 5171, act Aug. 16, 1954, ch. 736, 68A Stat. 627, related to ‘‘premises prohibited for dis- tilling’’, prior to the general revision of this chapter by Pub. L. 85–859. See sections 5178(a)(1)(B), (b), (c)(2), and 5505(b) of this title. Provisions similar to those comprising subsecs. (a), (b)(1) and (c) of this section were contained in prior sec- tions 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, 5175(a), 5177(a), 5178, 5231, 5243(a), 5271(a), 5301–5303, 5305, 5331(a)(1). (b)(1) .............................. 5301–5303, 5304(a)(1). (c) .................................. 5175(b), 5271(b). The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A Stat. 627 to 631, 643, 645, 650, 654, 655. AMENDMENTS 1979—Subsecs. (a), (b). Pub. L. 96–39 added subsecs. (a) and (b) and redesignated former subsecs. (a) and (b) as (c) and (d), respectively. Subsec. (c). Pub. L. 96–39 redesignated former subsec. (a) as (c) and inserted provisions relating to an applica- tion requirement where new operations are added and permitting the Secretary to establish minimum capac- ity and level of activity requirements. Former subsec. (c) redesignated (e). Subsec. (d). Pub. L. 96–39 redesignated former subsec. (b) as (d) and substituted reference to subsection (c) for reference to subsection (a) and struck out reference to section 5274. Subsec. (e). Pub. L. 96–39 redesignated former subsec. (c) as (e) and substituted reference to processor for ref- erence to rectifier and reference to warehouseman for reference to bonded warehouseman and struck out ref- erence to bottler. 1976—Subsec. (b)(1). Pub. L. 94–455, §§ 1905(a)(13)(A), 1906(b)(13)(A), struck out ‘‘49 Stat. 978;’’ before ‘‘27 U.S.C. 203, 204’’ in parenthetical provisions after ‘‘Fed- eral Alcohol Administration Act’’ and struck out ‘‘or his delegate’’ after ‘‘Secretary’’. Subsec. (b)(3). Pub. L. 94–455, § 1905(a)(13)(B), struck out par. (3) under which persons who were qualified on June 30, 1959, to perform operations for which a permit was required covering operations not required to be covered by a basic permit under the Federal Alcohol Administration Act had been allowed to continue oper- ations pending a reasonable opportunity to make appli- cation for a permit. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1979 AMENDMENT Amendment by Pub. L. 96–39 effective Jan. 1, 1980, see section 810 of Pub. L. 96–39, set out as a note under sec- tion 5001 of this title. EFFECTIVE DATE OF 1976 AMENDMENT Amendment by section 1905(a)(13) of Pub. L. 94–455 ef- fective on first day of first month which begins more than 90 days after Oct. 4, 1976, see section 1905(d) of Page 3184 TITLE 26—INTERNAL REVENUE CODE § 5172 Pub. L. 94–455, set out as a note under section 5005 of this title. EFFECTIVE DATE Section effective July 1, 1959, see section 210(a)(1) of Pub. L. 85–859, set out as a note under section 5001 of this title. TRANSITIONAL RULES RELATING TO ALL-IN-BOND METHOD Pub. L. 96–39, title VIII, § 809(a), (b), July 26, 1979, 93 Stat. 292, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘(a) NEW APPLICATION REQUIRED.— ‘‘(1) IN GENERAL.—For purposes of section 5171 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (relating to establishment of distilled spirits plants), each person who intends to continue any dis- tilled spirits 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. ‘‘(2) CURRENT REGISTRATION TO REMAIN IN EFFECT.— Notwithstanding paragraph (1), the registration of any person under section 5171 of the Internal Revenue Code of 1986 which is in effect on December 31, 1979, shall remain in effect until final action on the appli- cation required by paragraph (1). ‘‘(b) CONTINUING OPERATIONS AT EXISTING PREMISES.— With respect to any operation which was permitted to be conducted on May 1, 1979, at premises which were registered on such date under section 5171 of the Inter- nal Revenue Code of 1986, the determination of whether such premises qualify for registration under such sec- tion as a distilled spirits plant shall be made without regard to whether or not— ‘‘(1) the person engaged in operations at such prem- ises is registered under such section with respect to such premises as a distiller or warehouseman, and ‘‘(2) such premises meet the minimum capacity and level of activity requirements for that type of oper- ation.’’ § 5172. Application The application for registration required by section 5171(c) shall, in such manner and form as the Secretary may by regulations prescribe, identify the applicant and persons interested in the business (or businesses) covered by the ap- plication, show the nature, location and extent of the premises, show the specific type or types of operations to be conducted on such premises, and show any other information which the Sec- retary may by regulations require for the pur- pose of carrying out the provisions of this chap- ter. (Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1349; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 96–39, title VIII, § 807(a)(13), July 26, 1979, 93 Stat. 282.) Editorial Notes PRIOR PROVISIONS A prior section 5172, act Aug. 16, 1954, ch. 736, 68A Stat. 627, related to ‘‘conditions precedent to carrying on business of distilling’’, prior to the general revision of this chapter by Pub. L. 85–859 and is covered in part by this section. See also sections 5171(a), 5173(a), 5178(a)(1)(A), and 5601(a)(2), (4) of this title. Provisions similar to those comprising this section were contained in prior sections 5175(a), 5178, 5231, 5243(a), 5271, 5301 to 5303, 5305, and 5331(a)(1), act Aug. 16, 1954, ch. 736, 68A Stat. 628, 631, 643, 645, 650, 654, 655, 657, 661, prior to the general revision of this chapter by Pub. L. 85–859. AMENDMENTS 1979—Pub. L. 96–39 substituted ‘‘section 5171(c)’’ for ‘‘section 5171(a)’’. 1976—Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’ wherever appearing. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1979 AMENDMENT Amendment by Pub. L. 96–39 effective Jan. 1, 1980, see section 810 of Pub. L. 96–39, set out as a note under sec- tion 5001 of this title. § 5173. Bonds (a) Operations at, and withdrawals from, dis- tilled spirits plant must be covered by bond (1) Operations 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 cov- ering operations at such plant. (2) Withdrawals 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) Operations bonds The bond required by paragraph (1) of sub- section (a) shall meet the requirements of para- graph (1), (2), or (3) of this subsection: (1) One plant bond The bond covers operations at a single dis- tilled spirits plant. (2) Adjacent wine cellar bond The bond covers operations at a distilled spirits plant and at an adjacent bonded wine cellar. (3) Area bond The bond covers operations at 2 or more dis- tilled 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 corpora- tion and its controlled subsidiaries). (c) Withdrawal bonds The bond required by paragraph (2) of sub- section (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) Unit bonds 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 with- drawals from, 1 or more bonded premises which could be covered by the same operations bond under subsection (b).