26 U.S.C. § 5114 — Drawback

Page 3177 TITLE 26—INTERNAL REVENUE CODE § 5114 Editorial Notes PRIOR PROVISIONS A prior section 5112, added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1340, defined ‘‘dealer’’, ‘‘wholesale dealer in liquors’’, and ‘‘wholesale dealer in beer’’, prior to repeal by Pub. L. 109–59, title XI, § 11125(a)(1)(C), (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 5112, act Aug. 16, 1954, ch. 736, 68A Stat. 618, contained definitions of wholesale deal- ers, prior to the general revision of this chapter by Pub. L. 85–859. AMENDMENTS 2005—Pub. L. 109–59 renumbered section 5132 of this title as this section. 1994—Pub. L. 103–465 substituted ‘‘flavoring extracts, or perfume’’ for ‘‘or flavoring extracts’’. 1976—Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’ wherever appearing. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1994 AMENDMENT Amendment 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. § 5113. Investigation of claims For the purpose of ascertaining the correct- ness of any claim filed under this subpart, the Secretary is authorized to examine any books, papers, records, or memoranda bearing upon the matters required to be alleged in the claim, to require the attendance of the person filing the claim or of any officer or employee of such per- son or the attendance of any other person hav- ing knowledge in the premises, to take testi- mony with reference to any matter covered by the claim, and to administer oaths to any person giving such testimony. (Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1346, § 5133; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; re- numbered § 5113, Pub. L. 109–59, title XI, § 11125(b)(3)(A), Aug. 10, 2005, 119 Stat. 1953.) Editorial Notes PRIOR PROVISIONS A prior section 5113, added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1340; amended Pub. L. 87–863, § 4(b), Oct. 23, 1962, 76 Stat. 1142; Pub. L. 94–455, title XIX, §§ 1905(a)(7), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1819, 1834; Pub. L. 100–647, title II, § 2004(t)(2), (4), Nov. 10, 1988, 102 Stat. 3609, 3610, related to exemptions from tax, prior to repeal by Pub. L. 109–59, title XI, § 11125(a)(1)(C), (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 5113, act Aug. 16, 1954, ch. 736, 68A Stat. 619, related to exemptions from tax, prior to the general revision of this chapter by Pub. L. 85–859. AMENDMENTS 2005—Pub. L. 109–59 renumbered section 5133 of this title as this section. 1976—Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’. § 5114. Drawback (a) Rate of drawback In the case of distilled spirits on which the tax has been paid or determined, and which have been used as provided in this subpart, a draw- back shall be allowed on each proof gallon at a rate of $1 less than the rate at which the dis- tilled spirits tax has been paid or determined. (b) Claims Such drawback shall be due and payable quar- terly upon filing of a proper claim with the Sec- retary; except that, where any person entitled to such drawback shall elect in writing to file monthly claims therefor, such drawback shall be due and payable monthly upon filing of a proper claim with the Secretary. The Secretary may require persons electing to file monthly draw- back claims to file with him a bond or other se- curity in such amount and with such conditions as he shall by regulations prescribe. Any such election may be revoked on filing of notice thereof with the Secretary. No claim under this subpart shall be allowed unless filed with the Secretary within the 6 months next succeeding the quarter in which the distilled spirits covered by the claim were used as provided in this sub- part. (c) Allowance of drawback even where certain requirements not met (1) In general No claim for drawback under this section shall be denied in the case of a failure to com- ply with any requirement imposed under this subpart or any rule or regulation issued there- under upon the claimant’s establishing to the satisfaction of the Secretary that distilled spirits on which the tax has been paid or de- termined were in fact used in the manufacture or production of medicines, medicinal prepara- tions, food products, flavors, flavoring ex- tracts, or perfume, which were unfit for bev- erage purposes. (2) Penalty (A) In general In the case of a failure to comply with any requirement imposed under this subpart or any rule or regulation issued thereunder, the claimant shall be liable for a penalty of $1,000 for each failure to comply unless it is shown that the failure to comply was due to reasonable cause. (B) Penalty may not exceed amount of claim The aggregate amount of the penalties im- posed under subparagraph (A) for failures de- scribed in paragraph (1) in respect of any claim shall not exceed the amount of such claim (determined without regard to sub- paragraph (A)). (3) Penalty treated as tax The penalty imposed by paragraph (2) shall be assessed, collected, and paid in the same manner as taxes, as provided in section 6665(a). (Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1346, § 5134; amended Pub. L. 90–615, § 2(a), Oct. 21, 1968, 82 Stat. 1210; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 98–369, div. A, title IV, § 452, July 18, 1984, 98 Stat. 819; Pub. L. 103–465, title I, § 136(b), Dec. 8, 1994, 108 Stat. 4841; Pub. L. 104–188, title I, § 1704(t)(12), Aug. 20, 1996, 110 Stat. 1888; renum- bered § 5114, Pub. L. 109–59, title XI, § 11125(b)(3)(A), Aug. 10, 2005, 119 Stat. 1953.) Page 3178 TITLE 26—INTERNAL REVENUE CODE § 5121 Editorial Notes PRIOR PROVISIONS A prior section 5114 was renumbered section 5432 of this title. Another prior section 5114, act Aug. 16, 1954, ch. 736, 68A Stat. 619, related to recordkeeping by wholesale dealers, prior to the general revision of this chapter by Pub. L. 85–859. A prior section 5115, added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1342; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834, re- lated to requirement that a sign be posted on premises where liquor is sold and penalty for noncompliance, prior to repeal by Pub. L. 105–34, title XIV, § 1415(a), Aug. 5, 1997, 111 Stat. 1047. Another prior section 5115, act Aug. 16, 1954, ch. 736, 68A Stat. 620, related to making and stamping packages filled on premises of wholesale dealers, prior to the general revision of this chapter by Pub. L. 85–859. A prior section 5116 was renumbered section 5131 of this title. Another prior section 5116, act Aug. 16, 1954, ch. 736, 68A Stat. 620, related to packaging of distilled spirits for industrial uses, prior to the general revision of this chapter by Pub. L. 85–859. A prior section 5117, added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1343; amended Pub. L. 94–455, title XIX, § 1905(a)(8), Oct. 4, 1976, 90 Stat. 1819; Pub. L. 108–357, title II, § 246(b), Oct. 22, 2004, 118 Stat. 1448, re- lated to prohibited purchases by wholesale dealers in liquors, prior to repeal by Pub. L. 109–59, title XI, § 11125(a)(1)(C), (c), Aug. 10, 2005, 119 Stat. 1953, 1957, ef- fective July 1, 2008, but inapplicable to taxes imposed for periods before such date. AMENDMENTS 2005—Pub. L. 109–59 renumbered section 5134 of this title as this section. 1996—Subsec. (c)(3). Pub. L. 104–188 substituted ‘‘sec- tion 6665(a)’’ for ‘‘section 6662(a)’’. 1994—Subsec. (c)(1). Pub. L. 103–465 substituted ‘‘fla- voring extracts, or perfume’’ for ‘‘or flavoring ex- tracts’’. 1984—Subsec. (c). Pub. L. 98–369 added subsec. (c). 1976—Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’ wherever appearing. 1968—Subsec. (b). Pub. L. 90–615 substituted ‘‘6 months’’ for ‘‘3 months’’ in last sentence. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1994 AMENDMENT Amendment 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 AMENDMENT Amendment by Pub. L. 98–369 applicable to products manufactured or produced after Oct. 31, 1984, see sec- tion 456(d) of Pub. L. 98–369, set out as an Effective Date note under section 5101 of this title. EFFECTIVE DATE OF 1968 AMENDMENT Pub. L. 90–615, § 2(b), Oct. 21, 1968, 82 Stat. 1210, pro- vided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply to claims filed on or after the date of the enactment of this Act [Oct. 21, 1968].’’ SUBPART C—RECORDKEEPING AND REGISTRATION BY DEALERS Sec. 5121. Recordkeeping by wholesale dealers. 5122. Recordkeeping by retail dealers. 5123. Preservation and inspection of records, and entry of premises for inspection. Sec. 5124. Registration by dealers. Editorial Notes PRIOR PROVISIONS A prior subpart C was redesignated subpart A of this part. Another prior subpart C, consisting of sections 5101 to 5106, related to manufacturers of stills, prior to the general revision of this subpart by Pub. L. 98–369, div. A, title IV, § 451(a), July 18, 1984, 98 Stat. 818. Another prior subpart C, consisting of sections 5101 to 5106, related to manufacturers of stills, 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)(4), Aug. 10, 2005, 119 Stat. 1954, added subpart heading and items 5121 to 5124. § 5121. Recordkeeping by wholesale dealers (a) Requirements (1) Distilled spirits Every wholesale dealer in liquors who sells distilled spirits to other dealers shall keep daily a record of distilled spirits received and disposed of by him, in such form and at such place and containing such information, and shall submit correct summaries of such records to the Secretary at such time and in such form and manner, as the Secretary shall by regulations prescribe. Such dealer shall also submit correct extracts from or copies of such records, at such time and in such form and manner as the Secretary may by regula- tions prescribe; however, the Secretary may on application by such dealer, in accordance with such regulations, relieve him from this requirement until further notice, whenever the Secretary deems that the submission of such extracts or copies serves no useful pur- pose in law enforcement or in protection of the revenue. (2) Wines and beer Every wholesale dealer in liquors and every wholesale dealer in beer shall provide and keep, at such place as the Secretary shall by regulations prescribe, a record in book form of all wines and beer received, showing the quan- tities thereof and from whom and the dates re- ceived, or shall keep all invoices of, and bills for, all wines and beer received. (b) Exemption of States, political subdivisions, etc. The provision of subsection (a) shall not apply to a State, to a political subdivision of a State, to the District of Columbia, or to liquor stores operated by any of them, if they maintain and make available for inspection by internal rev- enue officers such records as will enable such of- ficers to trace all distilled spirits, wines, and beer received, and all distilled spirits disposed of by them. Such States, subdivisions, District, or liquor stores shall, upon the request of the Sec- retary, furnish him such transcripts, summaries and copies of their records with respect to dis- tilled spirits as he shall require. (c) Wholesale dealers For purposes of this part—