26 U.S.C. § 5601 — Criminal penalties

Page 3238 TITLE 26—INTERNAL REVENUE CODE § 5562 vision of the internal revenue laws relating to distilled spirits, except those requiring payment of the tax thereon, whenever in his judgment it may seem expedient to do so to meet the re- quirements of the national defense. Whenever the Secretary shall exercise the authority con- ferred by this section he may prescribe such reg- ulations as may be necessary to accomplish the purpose which caused him to grant the exemp- tion. (Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1397; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.) Editorial Notes PRIOR PROVISIONS Provisions similar to those comprising this section were contained in prior section 5217(b), act Aug. 16, 1954, ch. 736, 68A Stat. 641, 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. § 5562. Exemptions from certain requirements in cases of disaster Whenever the Secretary finds that it is nec- essary or desirable, by reason of disaster, to waive provisions of internal revenue law with regard to distilled spirits, he may temporarily exempt proprietors of distilled spirits plants from any provision of the internal revenue laws relating to distilled spirits, except those requir- ing payment of the tax thereon, to the extent he may deem necessary or desirable. (Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1397; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.) Editorial Notes PRIOR PROVISIONS Provisions similar to those comprising this section were contained in prior section 5215, act Aug. 16, 1954, ch. 736, 68A Stat. 640, 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’’. Subchapter J—Penalties, Seizures, and Forfeitures Relating to Liquors Part I. Penalty, seizure, and forfeiture provisions ap- plicable to distilling, rectifying, and dis- tilled and rectified products. II. Penalty and forfeiture provisions applicable to wine and wine production. III. Penalty, seizure, and forfeiture provisions ap- plicable to beer and brewing. IV. Penalty, seizure, and forfeiture provisions common to liquors. [V. Repealed.] Editorial Notes PRIOR PROVISIONS A prior subchapter J consisted of parts I to V, prior to the general revision of this chapter by Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1313. AMENDMENTS 2005—Pub. L. 109–59, title XI, § 11125(b)(19)(B), Aug. 10, 2005, 119 Stat. 1956, struck out item for part V ‘‘Pen- alties applicable to occupational taxes’’. PART I—PENALTY, SEIZURE, AND FOR- FEITURE PROVISIONS APPLICABLE TO DISTILLING, RECTIFYING, AND DIS- TILLED AND RECTIFIED PRODUCTS Sec. 5601. Criminal penalties. 5602. Penalty for tax fraud by distiller. 5603. Penalty relating to records, returns, and re- ports. 5604. Penalties relating to marks, brands, and con- tainers. 5605. Penalty relating to return of materials used in the manufacture of distilled spirits, or from which distilled spirits may be recov- ered. 5606. Penalty relating to containers of distilled spirits. 5607. Penalty and forfeiture for unlawful use, re- covery, or concealment of denatured dis- tilled spirits, or articles. 5608. Penalty and forfeiture for fraudulent claims for export drawback or unlawful relanding. 5609. Destruction of unregistered stills, distilling apparatus, equipment, and materials. 5610. Disposal of forfeited equipment and material for distilling. 5611. Release of distillery before judgment. 5612. Forfeiture of taxpaid distilled spirits remain- ing on bonded premises. 5613. Forfeiture of distilled spirits not closed, marked, or branded as required by law. 5614. Burden of proof in cases of seizure of spirits. 5615. Property subject to forfeiture. Editorial Notes PRIOR PROVISIONS A prior part I consisted of sections 5601 to 5650, prior to the general revision of this chapter by Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1313. AMENDMENTS 1984—Pub. L. 98–369, div. A, title IV, § 454(c)(11)(B), (12)(C), July 18, 1984, 98 Stat. 822, struck out ‘‘stamps,’’ in item 5604, and substituted ‘‘closed’’ for ‘‘stamped’’ in item 5613. § 5601. Criminal penalties (a) Offenses Any person who— (1) Unregistered stills has in his possession or custody, or under his control, any still or distilling apparatus set up which is not registered, as required by section 5179(a); or (2) Failure to file application engages in the business of a distiller or proc- essor without having filed application for and received notice of registration, as required by section 5171(c); or (3) False or fraudulent application engages, or intends to engage, in the busi- ness of distiller, warehouseman, or processor of distilled spirits, and files a false or fraudu- lent application under section 5171; or (4) Failure or refusal of distiller, warehouse- man, or processor to give bond carries on the business of a distiller, ware- houseman, or processor without having given bond as required by law; or Page 3239 TITLE 26—INTERNAL REVENUE CODE § 5601 (5) False, forged, or fraudulent bond engages, or intends to engage, in the busi- ness of distiller, warehouseman, or processor of distilled spirits, and gives any false, forged, or fraudulent bond, under subchapter B; or (6) Distilling on prohibited premises uses, or possesses with intent to use, any still, boiler, or other utensil for the purpose of producing distilled spirits, or aids or assists therein, or causes or procures the same to be done, in any dwelling house, or in any shed, yard, or inclosure connected with such dwell- ing house (except as authorized under section 5178(a)(1)(C)), or on board any vessel or boat, or on any premises where beer or wine is made or produced, or where liquors of any descrip- tion are retailed, or on premises where any other business is carried on (except when au- thorized under section 5178(b)); or (7) Unlawful production, removal, or use of ma- terial fit for production of distilled spirits except as otherwise provided in this chapter, makes or ferments mash, wort, or wash, fit for distillation or for the production of distilled spirits, in any building or on any premises other than the designated premises of a dis- tilled spirits plant lawfully qualified to produce distilled spirits, or removes, without authorization by the Secretary, any mash, wort, or wash, so made or fermented, from the designated premises of such lawfully qualified plant before being distilled; or (8) Unlawful production of distilled spirits not being a distiller authorized by law to produce distilled spirits, produces distilled spirits by distillation or any other process from any mash, wort, wash, or other material; or (9) Unauthorized use of distilled spirits in manufacturing processes except as otherwise provided in this chapter, uses distilled spirits in any process of manu- facture unless such spirits— (A) have been produced in the United States by a distiller authorized by law to produce distilled spirits and withdrawn in compliance with law; or (B) have been imported (or otherwise brought into the United States) and with- drawn in compliance with law; or (10) Unlawful processing engages in or carries on the business of a processor— (A) with intent to defraud the United States of any tax on the distilled spirits processed by him; or (B) with intent to aid, abet, or assist any person or persons in defrauding the United States of the tax on any distilled spirits; or (11) Unlawful purchase, receipt, or processing of distilled spirits purchases, receives, or processes any dis- tilled spirits, knowing or having reasonable grounds to believe that any tax due on such spirits has not been paid or determined as re- quired by law; or (12) Unlawful removal or concealment of dis- tilled spirits removes, other than as authorized by law, any distilled spirits on which the tax has not been paid or determined, from the place of manufacture or storage, or from any instru- ment of transportation, or conceals spirits so removed; or (13) Creation of fictitious proof adds, or causes to be added, any ingredient or substance (other than ingredients or sub- stances authorized by law to be added) to any distilled spirits before the tax is paid thereon, or determined as provided by law, for the pur- pose of creating fictitious proof; or (14) Distilling after notice of suspension after the time fixed in the notice given under section 5221(a) to suspend operations as a distiller, carries on the business of a distiller on the premises covered by the notice of sus- pension, or has mash, wort, or beer on such premises, or on any premises connected there- with, or has in his possession or under his con- trol any mash, wort, or beer, with intent to distill the same on such premises; or (15) Unauthorized withdrawal, use, sale, or dis- tribution of distilled spirits for fuel use withdraws, uses, sells, or otherwise disposes of distilled spirits produced under section 5181 for other than fuel use; shall be fined not more than $10,000, or impris- oned not more than 5 years, or both, for each such offense. (b) Presumptions Whenever on trial for violation of subsection (a)(4) the defendant is shown to have been at the site or place where, and at the time when, the business of a distiller or processor was so en- gaged in or carried on, such presence of the de- fendant shall be deemed sufficient evidence to authorize conviction, unless the defendant ex- plains such presence to the satisfaction of the jury (or of the court when tried without jury). (Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1398; amended Pub. L. 94–455, title XIX, §§ 1905(a)(22), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1820, 1834; Pub. L. 96–39, title VIII, § 807(a)(52), July 26, 1979, 93 Stat. 288; Pub. L. 96–223, title II, § 232(e)(2)(A), Apr. 2, 1980, 94 Stat. 280; Pub. L. 115–141, div. U, title IV, § 401(a)(248), Mar. 23, 2018, 132 Stat. 1196.) Editorial Notes PRIOR PROVISIONS A prior section 5601, act Aug. 16, 1954, ch. 736, 68A Stat. 683, consisted of provisions similar to those com- prising subsec. (a)(1) of this section, and also related to forfeiture for possession of unregistered still or dis- tilling apparatus, prior to the general revision of this chapter by Pub. L. 85–859. See section 5615(1) of this title. Provisions similar to those comprising subsecs. (a)(2) to (8), (9)(A), (10) to (14) of this section were contained in prior sections of act Aug. 16, 1954, prior to the gen- eral revision of this chapter by Pub. L. 85–859, as fol- lows: Present subd. of subsec. (a): Prior sections (2) ........................................ 5172, 5603. Page 3240 TITLE 26—INTERNAL REVENUE CODE § 5602 Present subd. of subsec. (a): Prior sections (3) ........................................ 5603. (4) ........................................ 5172, 5604, 5606. (5) ........................................ 5604. (6) ........................................ 5171, 5607. (7) ........................................ 5216(a)(1), (4), 5608(a). (8) ........................................ 5216(a)(1), 5608(a). (9) ........................................ 5216(a)(1), 5608(a). (10) ....................................... 5628, 5629. (11) ....................................... 5629. (12) ....................................... 5608(a), 5631, 5632, 5643, 5647. (13) ....................................... 5634. (14) ....................................... 5650. The prior sections, act Aug. 16, 1954, ch. 736, are set out in 68A Stat. 627, 640, 641, 684, 685, 689, 690, 692, 693, 695. AMENDMENTS 2018—Subsec. (a)(15). Pub. L. 115–141 substituted ‘‘withdraws,’’ for ‘‘Withdraws,’’. 1980—Subsec. (a)(15). Pub. L. 96–223 added par. (15). 1979—Subsec. (a)(2). Pub. L. 96–39, § 807(a)(52)(A), struck out ‘‘distiller or rectifier’’ in heading and sub- stituted ‘‘processor’’ for ‘‘rectifier’’ and ‘‘section 5171(c)’’ for ‘‘section 5171(a)’’ in text. Subsec. (a)(3). Pub. L. 96–39, § 807(a)(52)(B), substituted ‘‘warehouseman, or processor’’ for ‘‘bonded warehouse- man, rectifier, or bottler’’. Subsec. (a)(4). Pub. L. 96–39, § 807(a)(52)(C), substituted ‘‘warehouseman, or processor’’ for ‘‘or rectifier’’ in heading and in text. Subsec. (a)(5). Pub. L. 96–39, § 807(a)(52)(B), substituted ‘‘warehouseman, or processor’’ for ‘‘bonded warehouse- man, rectifier, or bottler’’. Subsec. (a)(10). Pub. L. 96–39, § 807(a)(52)(D), sub- stituted ‘‘processing’’ for ‘‘rectifying or bottling’’ in par. (10) heading, ‘‘processor’’ for ‘‘rectifier, or a bottler of distilled spirits’’ in text preceding subpar. (A), and ‘‘processed’’ for ‘‘rectified or bottled’’ in subpar. (A). Subsec. (a)(11). Pub. L. 96–39, § 807(a)(52)(E), sub- stituted ‘‘or processing’’ for ‘‘rectification, or bottling’’ in heading and ‘‘or processes’’ for ‘‘rectifies, or bottles’’ in text. Subsec. (b). Pub. L. 96–39, § 807(a)(52)(F), substituted ‘‘processor’’ for ‘‘rectifier’’. 1976—Subsec. (a)(7). Pub. L. 94–455, § 1906(b)(13)(A), struck out ‘‘or his delegate’’ after ‘‘Secretary’’. Subsec. (b). Pub. L. 94–455, § 1905(a)(22), struck out par. (1) relating to presumptions in the matter of un- registered stills, par. (3) relating to presumptions in the matter of unlawful production, removal, or use of material fit for production of distilled spirits, and par. (4) relating to presumptions in the matter of unlawful production of distilled spirits, and struck out the num- ber designation ‘‘(2)’’ and heading for former par. (2), leaving only the text for former par. (2) relating to pre- sumptions in the matter of failure or refusal of distiller or rectifier to give bond. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1980 AMENDMENT Amendment 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 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 Pub. L. 94–455 effective on first day of first month which begins more than 90 days after Oct. 4, 1976, see section 1905(d) of 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. PROSECUTION AND PUNISHMENT OF OFFENSES COM- MITTED AND PENALTIES OR FORFEITURES INCURRED; SAVINGS PROVISION Pub. L. 85–859, title II, § 210(c), Sept. 2, 1958, 72 Stat. 1435, provided that: ‘‘All offenses committed, and all penalties or forfeitures incurred, under any provision of law amended by this title [enacting sections 5849, 5854, 5855 and 7608 of this title, amending this chapter, chap- ter 52 of this title and sections 5801, 5811, 5814, 7272, 7301, 7224 to 7326, 7609, 7652 and 7655 of this title, and enacting notes set out under this section and sections 5001, 5006, 5025, 5064, 5175, and 5304 of this title], may be prosecuted and punished in the same manner and with the same ef- fect as if this title had not been enacted.’’ § 5602. Penalty for tax fraud by distiller Whenever any person engaged in or carrying on the business of a distiller defrauds, attempts to defraud, or engages in such business with in- tent to defraud the United States of the tax on the spirits distilled by him, or of any part there- of, he shall be fined not more than $10,000, or im- prisoned not more than 5 years, or both. No dis- continuance or nolle prosequi of any prosecution under this section shall be allowed without the permission in writing of the Attorney General. (Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1400.) Editorial Notes PRIOR PROVISIONS A prior section 5602, act Aug. 16, 1954, ch. 736, 68A Stat. 863, related to penalty and forfeiture for setting up still without a permit, prior to the general revision of this chapter by Pub. L. 85–859. See sections 5615(2) and 5687 of this title. Provisions similar to those comprising this section were contained in prior sections 5606, 5626, act Aug. 16, 1954, ch. 736, 68A Stat. 684, 688, prior to the general revi- sion of this chapter by Pub. L. 85–859. § 5603. Penalty relating to records, returns, and reports (a) Fraudulent noncompliance Any person required by this chapter (other than subchapters F and G) or regulations issued pursuant thereto to keep or file any record, re- turn, report, summary, transcript, or other doc- ument, who, with intent to defraud the United States, shall— (1) fail to keep any such document or to make required entries therein; or (2) make any false entry in such document; or (3) cancel, alter, or obliterate any part of such document or any entry therein, or de- stroy any part of such document or any entry therein; or (4) hinder or obstruct any internal revenue officer from inspecting any such document or taking any abstracts therefrom; or (5) fail or refuse to preserve or produce any such document, as required by this chapter or regulations issued pursuant thereto; or who shall, with intent to defraud the United States, cause or procure the same to be done,