Internal Revenue Code:Sec. 5041. Imposition and rate of tax
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Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle E - Alcohol, Tobacco, and Certain Other Excise Taxes
CHAPTER 51 - DISTILLED SPIRITS, WINES, AND BEER
Subchapter A - Gallonage and Occupational Taxes
PART I - GALLONAGE TAXES
Subpart C - Wines
Statute
Sec. 5041. Imposition and rate of tax
(a) Imposition
There is hereby imposed on all wines (including imitation,
substandard, or artificial wine, and compounds sold as wine) having
not in excess of 24 percent of alcohol by volume, in bond in,
produced in, or imported into, the United States, taxes at the
rates shown in subsection (b), such taxes to be determined as of
the time of removal for consumption or sale. All wines containing
more than 24 percent of alcohol by volume shall be classed as
distilled spirits and taxed accordingly. Still wines shall include
those wines containing not more than 0.392 gram of carbon dioxide
per hundred milliliters of wine; except that the Secretary may by
regulations prescribe such tolerances to this maximum limitation as
may be reasonably necessary in good commercial practice.
(b) Rates of tax
(1) On still wines containing not more than 14 percent of alcohol
by volume, $1.07 per wine gallon;
(2) On still wines containing more than 14 percent and not
exceeding 21 percent of alcohol by volume, $1.57 per wine gallon;
(3) On still wines containing more than 21 percent and not
exceeding 24 percent of alcohol by volume, $3.15 per wine gallon;
(4) On champagne and other sparkling wines, $3.40 per wine
gallon;
(5) On artificially carbonated wines, $3.30 per wine gallon; and
(6) On hard cider which is a still wine derived primarily from
apples or apple concentrate and water, containing no other fruit
product, and containing at least one-half of 1 percent and less
than 7 percent alcohol by volume, 22.6 cents per wine gallon.
(c) Credit for small domestic producers
(1) Allowance of credit
Except as provided in paragraph (2), in the case of a person
who produces not more than 250,000 wine gallons of wine during
the calendar year, there shall be allowed as a credit against any
tax imposed by this title (other than chapters 2, 21, and 22) of
90 cents per wine gallon on the 1st 100,000 wine gallons of wine
(other than wine described in subsection (b)(4)) which are
removed during such year for consumption or sale and which have
been produced at qualified facilities in the United States. In
the case of wine described in subsection (b)(6), the preceding
sentence shall be applied by substituting ''5.6 cents'' for ''90
cents''.
(2) Reduction in credit
The credit allowable by paragraph (1) shall be reduced (but not
below zero) by 1 percent for each 1,000 wine gallons of wine
produced in excess of 150,000 wine gallons of wine during the
calendar year.
(3) Time for determining and allowing credit
The credit allowable by paragraph (1) -
(A) shall be determined at the same time the tax is
determined under subsection (a) of this section, and
(B) shall be allowable at the time any tax described in
paragraph (1) is payable as if the credit allowable by this
subsection constituted a reduction in the rate of such tax.
(4) Controlled groups
Rules similar to rules of section 5051(a)(2)(B) shall apply for
purposes of this subsection.
(5) Denial of deduction
Any deduction under subtitle A with respect to any tax against
which a credit is allowed under this subsection shall only be for
the amount of such tax as reduced by such credit.
(6) Credit for transferee in bond
If -
(A) wine produced by any person would be eligible for any
credit under paragraph (1) if removed by such person during the
calendar year,
(B) wine produced by such person is removed during such
calendar year by any other person (hereafter in this paragraph
referred to as the ''transferee'') to whom such wine was
transferred in bond and who is liable for the tax imposed by
this section with respect to such wine, and
(C) such producer holds title to such wine at the time of its
removal and provides to the transferee such information as is
necessary to properly determine the transferee's credit under
this paragraph,
then, the transferee (and not the producer) shall be allowed the
credit under paragraph (1) which would be allowed to the producer
if the wine removed by the transferee had been removed by the
producer on that date.
(7) Regulations
The Secretary may prescribe such regulations as may be
necessary to carry out the purposes of this subsection, including
regulations -
(A) to prevent the credit provided in this subsection from
benefiting any person who produces more than 250,000 wine
gallons of wine during a calendar year, and
(B) to assure proper reduction of such credit for persons
producing more than 150,000 wine gallons of wine during a
calendar year.
(d) Wine gallon
For the purpose of this chapter, the term ''wine gallon'' means a
United States gallon of liquid measure equivalent to the volume of
231 cubic inches. On lesser quantities the tax shall be paid
proportionately (fractions of less than one-tenth gallon being
converted to the nearest one-tenth gallon, and five-hundredths
gallon being converted to the next full one-tenth gallon).
(e) Tolerances
Where the Secretary finds that the revenue will not be endangered
thereby, he may by regulation prescribe tolerances (but not greater
than 1/2 of 1 percent) for bottles and other containers, and, if
such tolerances are prescribed, no assessment shall be made and no
tax shall be collected for any excess in any case where the
contents of a bottle or other container are within the limit of the
applicable tolerance prescribed.
(f) Illegally produced wine
Notwithstanding subsection (a), any wine produced in the United
States at any place other than the bonded premises provided for in
this chapter shall (except as provided in section 5042 in the case
of tax-free production) be subject to tax at the rate prescribed in
subsection (b) at the time of production and whether or not removed
for consumption or sale.
Sources
(Added Pub. L. 85-859, title II, Sec. 201, Sept. 2, 1958, 72 Stat.
1331; amended Pub. L. 86-75, Sec. 3(a)(5), June 30, 1959, 73 Stat.
157; Pub. L. 86-564, title II, Sec. 202(a)(7), June 30, 1960, 74
Stat. 290; Pub. L. 87-72, Sec. 3(a)(7), June 30, 1961, 75 Stat.
193; Pub. L. 87-508, Sec. 3(a)(6), June 28, 1962, 76 Stat. 114;
Pub. L. 88-52, Sec. 3(a)(7), June 29, 1963, 77 Stat. 72; Pub. L.
88-348, Sec. 2(a)(7), June 30, 1964, 78 Stat. 237; Pub. L. 89-44,
title V, Sec. 501(c), title VIII, Sec. 806(a), June 21, 1965, 79
Stat. 150, 162; Pub. L. 93-490, Sec. 6(a), Oct. 26, 1974, 88 Stat.
1468; Pub. L. 94-455, title XIX, Sec. 1906(b)(13)(A), Oct. 4, 1976,
90 Stat. 1834; Pub. L. 100-647, title VI, Sec. 6101(a), Nov. 10,
1988, 102 Stat. 3710; Pub. L. 101-508, title XI, Sec. 11201(b)(1),
(2), Nov. 5, 1990, 104 Stat. 1388-415, 1388-416; Pub. L. 104-188,
title I, Sec. 1702(b)(5), Aug. 20, 1996, 110 Stat. 1868; Pub. L.
105-34, title IX, Sec. 908(a), (b), Aug. 5, 1997, 111 Stat. 876;
Pub. L. 105-206, title VI, Sec. 6009(a), July 22, 1998, 112 Stat.
812.)
Miscellaneous
PRIOR PROVISIONS
A prior section 5041, acts Aug. 16, 1954, ch. 736, 68A Stat. 609;
Mar. 30, 1955, ch. 18, Sec. 3(a)(7), 69 Stat. 14; Mar. 29, 1956,
ch. 115, Sec. 3(a)(7), 70 Stat. 66; Mar. 29, 1957, Pub. L. 85-12,
Sec. 3(a)(5), 71 Stat. 9; June 30, 1958, Pub. L. 85-475, Sec.
3(a)(5), 72 Stat. 259, consisted of provisions similar to those
comprising this section, prior to the general revision of this
chapter by Pub. L. 85-859.
AMENDMENTS
1998 - Subsec. (b)(6). Pub. L. 105-206 inserted ''which is a
still wine'' after ''hard cider''.
1997 - Subsec. (b)(6). Pub. L. 105-34, Sec. 908(a), added par.
(6).
Subsec. (c)(1). Pub. L. 105-34, Sec. 908(b), inserted at end ''In
the case of wine described in subsection (b)(6), the preceding
sentence shall be applied by substituting '5.6 cents' for '90
cents'.''
1996 - Subsec. (c)(6), (7). Pub. L. 104-188 added pars. (6) and
(7) and struck out former par. (6) which read as follows:
''(6) Regulations. - The Secretary may prescribe such regulations
as may be necessary to prevent the credit provided in this
subsection from benefiting any person who produces more than
250,000 wine gallons of wine during a calendar year and to assure
proper reduction of such credit for persons producing more than
150,000 wine gallons of wine during a calendar year.''
1990 - Subsec. (b)(1). Pub. L. 101-508, Sec. 11201(b)(1)(A),
substituted ''$1.07'' for ''17 cents''.
Subsec. (b)(2). Pub. L. 101-508, Sec. 11201(b)(1)(B), substituted
''$1.57'' for ''67 cents''.
Subsec. (b)(3). Pub. L. 101-508, Sec. 11201(b)(1)(C), substituted
''$3.15'' for ''$2.25''.
Subsec. (b)(5). Pub. L. 101-508, Sec. 11201(b)(1)(D), substituted
''$3.30'' for ''$2.40''.
Subsecs. (c) to (f). Pub. L. 101-508, Sec. 11201(b)(2), added
subsec. (c) and redesignated former subsecs. (c) to (e) as (d) to
(f), respectively.
1988 - Subsecs. (d), (e). Pub. L. 100-647 added subsec. (d) and
redesignated former subsec. (d) as (e).
1976 - Subsec. (a). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
1974 - Subsec. (a). Pub. L. 93-490 substituted ''0.392'' for
''0.277''.
1965 - Subsec. (a). Pub. L. 89-44, Sec. 806(a), substituted
''0.277'' for ''0.256''.
Subsec. (b). Pub. L. 89-44, Sec. 501(c)(1)-(5), struck out
provisions at end of each par. setting out a specified reduced rate
to be applied on and after July 1, 1965.
1964 - Subsec. (b). Pub. L. 88-348 substituted ''July 1, 1965''
for ''July 1, 1964'' in five places.
1963 - Subsec. (b). Pub. L. 88-52 substituted ''July 1, 1964''
for ''July 1, 1963'' in five places.
1962 - Subsec. (b). Pub. L. 87-508 substituted ''July 1, 1963''
for ''July 1, 1962'' in five places.
1961 - Subsec. (b). Pub. L. 87-72 substituted ''July 1, 1962''
for ''July 1, 1961'' in five places.
1960 - Subsec. (b). Pub. L. 86-564 substituted ''July 1, 1961''
for ''July 1, 1960'' in five places.
1959 - Subsec. (b). Pub. L. 86-75 substituted ''July 1, 1960''
for ''July 1, 1959'' in five places.
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Section 908(c) of Pub. L. 105-34 provided that: ''The amendments
made by this section (amending this section) shall take effect on
October 1, 1997.''
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104-188 effective, except as otherwise
expressly provided, as if included in the provision of the Revenue
Reconciliation Act of 1990, Pub. L. 101-508, title XI, to which
such amendment relates, see section 1702(i) of Pub. L. 104-188, set
out as a note under section 38 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by Pub. L. 101-508 effective Jan. 1, 1991, see section
11201(d) of Pub. L. 101-508, set out as a note under section 5001
of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Section 6101(b) of Pub. L. 100-647 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to wine
removed after December 31, 1988.''
EFFECTIVE DATE OF 1974 AMENDMENT
Section 6(b) of Pub. L. 93-490 provided that: ''The amendment
made by this section (amending this section) shall take effect on
the first day of the first calendar month which begins more than 90
days after the date of enactment of this Act (Oct. 26, 1974).''
EFFECTIVE DATE OF 1965 AMENDMENT
Amendment by section 501(c) of Pub. L. 89-44 applicable on and
after July 1, 1965, see section 701(d) of Pub. L. 89-44, set out as
a note under section 5701 of this title.
Section 806(d)(1) of Pub. L. 89-44 provided that: ''The amendment
made by subsection (a) (amending this section) shall take effect on
July 1, 1965.''
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.
FLOOR STOCKS TAXES ON DISTILLED SPIRITS, WINE, AND BEER
Imposition of tax on wine, exception for small domestic
producers, exception for certain small wholesale or retail dealers,
credit against tax, liability for tax and method of payment,
controlled groups, other laws applicable, and definitions, see
section 11201(e) of Pub. L. 101-508, set out as a note under
section 5001 of this title.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 5010, 5044, 5061, 5354 of
this title.
