26 U.S.C. § 5173 — Bonds

(a) Plant operations and withdrawals must be covered by a bond.

(1) Operations. Except as provided in 26 U.S.C. § 5551(d), a person who plans to establish a distilled-spirits^* plant may not begin operating it until the person gives a bond covering its operations.

(2) Withdrawals. Except as provided in section 5551(d), a person may not withdraw distilled spirits^* from bonded premises without paying tax unless the proprietor has given a bond covering the withdrawal. This does not apply to spirits withdrawn under sections 5214 or 7510.

(b) Operations bonds. The bond required by subsection (a)(1) must be one of these:

(1) a bond covering operations at one plant;

(2) a bond covering a plant and an adjacent bonded wine cellar^*; or

(3) an area bond covering two or more plants, and adjacent bonded wine cellars, that are in the same geographic area designated by the Secretary’s regulations and operated by the same person, or by a corporation^* and its controlled subsidiaries.

(c) Withdrawal bonds. The bond required by subsection (a)(2) must cover withdrawals from one or more bonded premises whose operations could be covered by the same operations bond under subsection (b).

(d) Unit bonds. Under the Secretary’s regulations, a single unit bond covering both operations and withdrawals at one or more premises may satisfy subsection (a)(1) and (2) when those premises could be covered by the same operations bond under subsection (b).

(e) Terms and conditions.

(1) Every bond must promise that the person giving it will obey all laws and regulations governing the covered activities and will pay all taxes imposed by this chapter, plus all penalties and fines caused by that person’s violations.

(2) The bond must also contain any other terms and conditions required by the Secretary’s regulations.

(f) Amount.

(1) The Secretary’s regulations determine the bond’s penal amount.

(2) Those regulations must set a minimum and maximum amount for each type of bond allowed under this section.

(g) Total amount available. The entire bond amount may be used to satisfy any liability arising under the bond’s terms and conditions.

(h) Special rules.

(1) Withdrawal bonds. A bond covering withdrawals but not operations is in addition to the operations bond. Once spirits are withdrawn under it, the operations bond no longer covers liability for tax on those spirits.

(2) Adjacent wine cellars.

(A) A wine cellar is adjacent for this section only if the plant is qualified under this subchapter to produce distilled spirits and the same person, or a corporation and its controlled subsidiaries, operates the cellar and plant.

(B) For an adjacent wine cellar, an operations bond under this section replaces the bond otherwise required by section 5354, except for supplemental bonds required by that section’s second sentence.