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26 U.S.C. § 5173 — Bonds

submitted 68 years ago by Pub. L. 85-859 to r/title-26-INTERNAL-REVENUE-CODE · 676 words · no verdicts yet

in plain englishAI-generated · not legal advice

This section requires bonds for operating a distilled-spirits plant and for withdrawing distilled spirits without paying tax. It describes acceptable bond arrangements, required promises, bond amounts, and special rules for withdrawal bonds and adjacent wine cellars.

(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 This does not apply to spirits withdrawn under sections 5214 or 7510.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.

the actual law source: uscode.house.gov ↗public domain
(a) Operations at, and withdrawals from, distilled 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 covering 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 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).

Source credit: (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.)

history & why it existsrecord from the source credit
  • 1958Enacted · Pub. L. 85-859 · 72 Stat. 1349
  • 1971Amended · Pub. L. 91-659 · 84 Stat. 1966
  • 1976Amended · Pub. L. 94-455 · 90 Stat. 1834
  • 1979Amended · Pub. L. 96-39 · 93 Stat. 276
  • 2015Amended · Pub. L. 114-113 · 129 Stat. 3105

A history note hasn’t been published yet. The record shows enactment by Pub. L. 85-859 on 1958-09-02.

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