Internal Revenue Code:Sec. 5173. Bonds
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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 B - Qualification Requirements for Distilled Spirits
Plants
Statute
Sec. 5173. Bonds
(a) Operations at, and withdrawals from, distilled spirits plant
must be covered by bond
(1) Operations
No person intending to establish a distilled spirits plant may
commence operations at such plant unless such person has
furnished bond covering operations at such plant.
(2) Withdrawals
No distilled spirits (other than distilled spirits withdrawn
under section 5214 or 7510) may be withdrawn from bonded premises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 subsection (a) shall meet
the requirements of paragraph (1), (2), or (3) of this subsection:
(1) One plant bond
The bond covers operations at a single distilled 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 distilled 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 corporation and its controlled
subsidiaries).
(c) Withdrawal bonds
The bond required by paragraph (2) of subsection (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 withdrawals
from, 1 or more bonded premises which could be covered by the same
operations bond under subsection (b).
(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 provisions 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 imposed 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 prescribed 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 satisfaction 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 operations -
(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 adjacent 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 person (or, in the case of a
corporation, by such corporation and its controlled
subsidiaries).
(B) Bond in lieu of wine cellar bond
In the case of any adjacent wine cellar, a bond furnished
under this section which covers 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).
Sources
(Added Pub. L. 85-859, title II, Sec. 201, Sept. 2, 1958, 72 Stat.
1349; amended Pub. L. 91-659, Sec. 4, Jan. 8, 1971, 84 Stat. 1966;
Pub. L. 94-455, title XIX, Sec. 1906(b)(13)(A), Oct. 4, 1976, 90
Stat. 1834; Pub. L. 96-39, title VIII, Sec. 805(c), July 26, 1979,
93 Stat. 276.)
Miscellaneous
PRIOR PROVISIONS
A prior section 5173, act Aug. 16, 1954, ch. 736, 68A Stat. 628,
related to ''distillery fixtures and equipment'', 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 chapter by Pub. L. 85-859, as
follows:
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Present subsecs.: Prior sections
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(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).
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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
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 securing tax payments and inserted
provisions relating to the one plant operations bond, which will
cover the operations at a bonded wine cellar which is adjacent to
the distilled spirits plant and operated by the same person.
1976 - Pub. L. 94-455 struck out ''or his delegate'' after
''Secretary'' wherever appearing.
1971 - Subsec. (b)(1). Pub. L. 91-659, Sec. 4(b), extended
exception clause in parenthetical by making reference to cl. (4) of
this subsection.
Subsec. (b)(2). Pub. L. 91-659, Sec. 4(c), inserted reference to
par. (4).
Subsec. (b)(4). Pub. L. 91-659, Sec. 4(a), added par. (4).
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 section 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 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
Section 809(c) of Pub. L. 96-39, as amended by Pub. L. 99-514,
Sec. 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 distilled spirits plant on
such premises on January 1, 1980.''
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 5005, 5175, 5176, 5177,
5213 of this title.
