26 U.S.C. § 5173 — Bonds

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). Page 3185 TITLE 26—INTERNAL REVENUE CODE § 5173 (e) Terms and conditions (1) In general Any bond furnished under this section shall be conditioned that the person furnishing the bond— (A) will faithfully comply with all provi- sions 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 im- posed on, such person for violation of any such provision. (2) Other terms and conditions Any bond furnished under this section shall contain such other terms and conditions as may be required by regulations prescribed by the Secretary. (f) Amount (1) In general The penal sum of any bond shall be the amount determined under regulations pre- scribed by the Secretary. (2) Maximum and minimum amount 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) Total amount available The total amount of any bond furnished under this section shall be available for the satisfac- tion of any liability incurred under the terms and conditions of such bond. (h) Special rules For purposes of this section— (1) Withdrawal bonds In the case of any bond furnished under this section which covers withdrawals but not op- erations— (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) Adjacent wine cellars (A) Requirements No wine cellar shall be treated as being ad- jacent 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 per- son (or, in the case of a corporation, by such corporation and its controlled sub- sidiaries). (B) Bond in lieu of wine cellar bond In the case of any adjacent wine cellar, a bond furnished under this section which cov- ers 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). (Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1349; amended Pub. L. 91–659, § 4, Jan. 8, 1971, 84 Stat. 1966; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 96–39, title VIII, § 805(c), July 26, 1979, 93 Stat. 276; Pub. L. 114–113, div. Q, title III, § 332(b)(2)(A), Dec. 18, 2015, 129 Stat. 3105.) Editorial Notes PRIOR PROVISIONS A prior section 5173, act Aug. 16, 1954, ch. 736, 68A Stat. 628, related to ‘‘distillery fixtures and equip- ment’’, prior to the general revision of this chapter by Pub. L. 85–859. See sections 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 chap- ter 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), sub- stituted ‘‘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 secur- ing tax payments and inserted provisions relating to the one plant operations bond, which will cover the op- erations at a bonded wine cellar which is adjacent to the distilled spirits plant and operated by the same per- son. 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 ex- ception 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 AMENDMENT Amendment by Pub. L. 114–113 applicable to any cal- endar 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 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 1971 AMENDMENT Amendment by Pub. L. 91–659 effective on first day of first calendar month which begins more than 90 days Page 3186 TITLE 26—INTERNAL REVENUE CODE [§ 5174 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 dis- tilled spirits plant on such premises on January 1, 1980.’’ [§ 5174. Repealed. Pub. L. 96–39, title VIII, § 807(a)(14), July 26, 1979, 93 Stat. 282] Section, added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1352; amended Pub. L. 94–455, title XIX, §§ 1905(a)(14), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1820, 1834, related to withdrawal bonds. A prior section 5174, act Aug. 16, 1954, ch. 736, 68A Stat. 630, related to ‘‘registry of stills’’, prior to the general revision of this chapter by Pub. L. 85–859. See sections 5179 and 5505(d) of this title. Provisions similar to those comprising subsec. (a)(1) of section 5174, added by Pub. L. 85–859, title I, § 201, Sept. 2, 1958, 725 Stat. 1352, relating to the withdrawal from bonded premises of distilled spirits on the fur- nishing of a bond by the proprietor of the bonded prem- ises to secure payment of the tax on such spirits, were contained in prior sections 5176(b) and 5232(b), act Aug. 16, 1954, ch. 736, 68A Stat. 629, 643, prior to the general revision of this chapter by Pub. L. 85–859. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal effective Jan. 1, 1980, see section 810 of Pub. L. 96–39, set out as an Effective Date of 1979 Amendment note under section 5001 of this title. § 5175. Export bonds (a) Requirements No distilled spirits shall be withdrawn from bonded premises for exportation, or for transfer to a customs bonded warehouse, without pay- ment of tax unless the exporter has furnished bond to cover such withdrawal under such regu- lations and conditions, and in such form and penal sum, as the Secretary may prescribe. (b) Exception where proprietor withdraws spir- its for exportation In the case of distilled spirits withdrawn from bonded premises by the proprietor for expor- tation without payment of tax, the bond of such proprietor required to be furnished under para- graph (1) of section 5173(a) covering such prem- ises shall cover such exportation, and subsection (a) shall not apply. (c) Cancellation or credit of export bonds The bonds given under subsection (a) shall be cancelled or credited and the bonds liable under subsection (b) credited if there is such proof of exportation as the Secretary may by regulations require. (Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1352; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 95–176, § 3(b), Nov. 14, 1977, 91 Stat. 1365; Pub. L. 96–39, title VIII, § 807(a)(15), July 26, 1979, 93 Stat. 282; Pub. L. 105–34, title XIV, § 1412(a), Aug. 5, 1997, 111 Stat. 1046.) Editorial Notes PRIOR PROVISIONS A prior section 5175, act Aug. 16, 1954, ch. 736, 68A Stat. 628, related to ‘‘notice of business of distiller’’, prior to the general revision of this chapter by Pub. L. 85–859. See sections 5171(a), (c) and 5172 of this title. Provisions similar to those comprising this section were contained in a prior section 5247(a), act Aug. 16, 1954, ch. 736, 68A Stat. 647, prior to the general revision of this chapter by Pub. L. 85–859. AMENDMENTS 1997—Subsec. (c). Pub. L. 105–34 substituted ‘‘if there is such proof of exportation as the Secretary may by regulations require.’’ for ‘‘on the submission of such evidence, records, and certification indicating expor- tation as the Secretary may by regulations prescribe.’’ 1979—Subsec. (a). Pub. L. 96–39, § 807(a)(15)(A), struck out ‘‘for storage therein pending exportation’’ after ‘‘customs bonded warehouse’’. Subsec. (b). Pub. L. 96–39, § 807(a)(15)(B), substituted ‘‘from bonded premises by the proprietor for expor- tation without payment of tax, the bond of such propri- etor required to be furnished under paragraph (1) of sec- tion 5173(a) covering such premises shall cover such ex- portation, and subsection (a) shall not apply’’ for ‘‘for exportation without payment of tax on application of the proprietor of bonded premises, the bond of such pro- prietor covering such bonded premises shall cover such exportation and subsection (a) shall not be applicable’’. 1977—Subsec. (a). Pub. L. 95–176 required export bonds for withdrawals from bonded premises, without pay- ment of tax, for transfer to a customs bonded ware- house for storage therein pending exportation. 1976—Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’ wherever appearing. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1997 AMENDMENT Pub. L. 105–34, title XIV, § 1412(b), Aug. 5, 1997, 111 Stat. 1046, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall take effect on the 1st day of the 1st calendar quarter that begins at least 180 days after the date of the enactment of this Act [Aug. 5, 1997].’’ 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 1977 AMENDMENT Amendment by Pub. L. 95–176 effective on first day of first calendar month beginning more than 90 days after Nov. 14, 1977, see section 7 of Pub. L. 95–176, set out as a note under section 5003 of this title. CONTINUATION OF DISTILLER’S NOTICE AND BOND Pub. L. 85–859, title II, § 210(f), Sept. 2, 1958, 72 Stat. 1436, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘Notwithstanding any provi- sion of section 5175 or 5176(a) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], the Secretary of the Treasury or his delegate may waive, as to registered distillers or registered fruit distillers qualified to oper- ate under bond on April 30, 1959, requirements for filing notice and executing new bond on May 1, 1959, if the distiller and the surety have executed consent to con- tinuation of the terms of the existing bond to cover op- erations from May 1, 1959, to June 30, 1959, both dates inclusive. Nothing in this subsection shall be construed as limiting the authority of the Secretary of the Treas- ury or his delegate under section 5176(b) or (c) of the In- ternal Revenue Code of 1986.’’