26 USC 5004 - Lien for tax

Collapse to view only § 5004. Lien for tax

§ 5001. Imposition, rate, and attachment of tax
§ 5002. Definitions
§ 5003. Cross references to exemptions, etc.
§ 5004. Lien for tax
§ 5005. Persons liable for tax
§ 5006. Determination of tax
§ 5007. Collection of tax on distilled spirits
§ 5008. Abatement, remission, refund, and allowance for loss or destruction of distilled spirits
[§ 5009. Repealed.
§ 5010. Credit for wine content and for flavors content
§ 5011. Income tax credit for average cost of carrying excise tax

§ 5001. Imposition, rate, and attachment of tax

(a) Rate of tax

(1) General

(2) Products containing distilled spirits

(3) Wines containing more than 24 percent alcohol by volume

(4) Distilled spirits withdrawn free of tax

(5) Denatured distilled spirits or articles

(6) Fruit-flavor concentrates

(7) Imported liqueurs and cordials

(8) Imported distilled spirits withdrawn for beverage purposes

(9) Alcoholic compounds from Puerto Rico

(b) Time of attachment on distilled spirits

(1) In generalIn the case of a distilled spirits operation, the otherwise applicable tax rate under subsection (a)(1) shall be—

(A) $2.70 per proof gallon on the first 100,000 proof gallons of distilled spirits, and

(B) $13.34 per proof gallon on the first 22,130,000 of 1

1 So in original.

proof gallons of distilled spirits to which subparagraph (A) does not apply,

which have been distilled or processed by such operation and removed during the calendar year for consumption or sale, or which have been imported by the importer into the United States during the calendar year but only if the importer is an electing importer under paragraph (3) and the proof gallons of distilled spirits have been assigned to the importer pursuant to such paragraph.

(2) Controlled groups

(A) In general

(B) Definition

(D) Single taxpayer

(3) Reduced tax rate for foreign manufacturers and importers

(A) In general

(B) AssignmentThe Secretary of the Treasury, after consultation with the Secretary of the Department of Homeland Security, shall, through such rules, regulations, and procedures as are determined appropriate, establish procedures for assignment of the reduced tax rate provided under this paragraph, which shall include—

(i) a limitation to ensure that the number of proof gallons of distilled spirits for which the reduced tax rate has been assigned by a distilled spirits operation—(I) to any importer does not exceed the number of proof gallons produced by such operation during the calendar year which were imported into the United States by such importer, and(II) to all importers does not exceed the 22,230,000 proof gallons of distilled spirits to which the reduced tax rate applies,

(ii) procedures that allow the election of a distilled spirits operation to assign and an importer to receive the reduced tax rate provided under this paragraph,

(iii) requirements that the distilled spirits operation provide any information as the Secretary determines necessary and appropriate for purposes of carrying out this paragraph, and

(iv) procedures that allow for revocation of eligibility of the distilled spirits operation and the importer for the reduced tax rate provided under this paragraph in the case of any erroneous or fraudulent information provided under clause (iii) which the Secretary deems to be material to qualifying for such reduced rate.

(i) In general

(ii) Apportionment

(4) Refunds in lieu of reduced rates for foreign production removed after December 31, 2022

(A) In generalIn the case of any proof gallons of distilled spirits which have been produced outside the United States and imported into the United States, if such proof gallons of distilled spirits are removed after December 31, 2022—

(i) paragraph (1) shall not apply, and

(ii) the amount determined under subparagraph (B) shall be allowed as a refund, determined for periods not less frequently than quarterly, to the importer in the same manner as if such amount were an overpayment of tax imposed by this section.

(B) Amount of refundThe amount determined under this subparagraph with respect to any importer for any period is an amount equal to the sum of—

(i) the excess (if any) of—(I) the amount of tax imposed under this subpart on proof gallons of distilled spirits referred to in subparagraph (A) which were removed during such period, over(II) the amount of tax which would have been imposed under this subpart on such proof gallons of distilled spirits if this section were applied without regard to this paragraph, plus

(ii) the amount of interest which would be allowed and paid on an overpayment of tax at the overpayment rate established under section 6621(a)(1) (without regard to the second sentence thereof) were such rate applied to the excess (if any) determined under clause (i) for the number of days in the filing period for which the refund under this paragraph is being determined.

(D) Rules for refunds within 90 days

(5) Processed distilled spirits

(d) Cross reference

(Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1314; amended Pub. L. 86–75, § 3(a)(2), (3), June 30, 1959, 73 Stat. 157; Pub. L. 86–564, title II, § 202(a)(4), (5), June 30, 1960, 74 Stat. 290; Pub. L. 87–72, § 3(a)(4), (5), June 30, 1961, 75 Stat. 193; Pub. L. 87–508, § 3(a)(3), (4), June 28, 1962, 76 Stat. 114; Pub. L. 88–52, § 3(a)(4), (5), June 29, 1963, 77 Stat. 72; Pub. L. 88–348, § 2(a)(4), (5), June 30, 1964, 78 Stat. 237; Pub. L. 89–44, title V, § 501(a), June 21, 1965, 79 Stat. 150; Pub. L. 96–39, title VIII, §§ 802, 805(d), July 26, 1979, 93 Stat. 273, 278; Pub. L. 98–369, div. A, title I, § 27(a)(1), July 18, 1984, 98 Stat. 507; Pub. L. 101–508, title XI, § 11201(a)(1), Nov. 5, 1990, 104 Stat. 1388–415; Pub. L. 103–465, title I, § 136(a), Dec. 8, 1994, 108 Stat. 4841; Pub. L. 115–97, title I, § 13807(a), (c), Dec. 22, 2017, 131 Stat. 2176; Pub. L. 116–94, div. Q, title I, § 144(g)(1), (2), Dec. 20, 2019, 133 Stat. 3235; Pub. L. 116–260, div. EE, title I, §§ 106(g)(1), 107(a)(1), 109(a), 110(c), Dec. 27, 2020, 134 Stat. 3044, 3045, 3049, 3050.)

§ 5002. Definitions

(a) In general

For purposes of this chapter—

(1) Distilled spirits plant

(2) Distilled spirits operation

(3) Bonded premises

(4) Distiller

The term “distiller” includes any person who—

(A) produces distilled spirits from any source or substance,

(B) brews or makes mash, wort, or wash fit for distillation or for the production of distilled spirits (other than the making or using of mash, wort, or wash in the authorized production of wine or beer, or the production of vinegar by fermentation),

(D) making or keeping mash, wort, or wash, has a still in his possession or use.

(5) Processor

(A) In general

The term “processor”, when used with respect to distilled spirits, means any person who—

(i) manufactures, mixes, or otherwise processes distilled spirits, or

(ii) manufactures any article.

(B) Rectifier, bottler, etc., included

(6) Certain operations not treated as processing

In applying paragraph (5), there shall not be taken into account—

(A) Operations as distiller

(B) Mixing of taxpaid spirits for immediate consumption

(7) Warehouseman

(8) Distilled spirits

(9) Bulk distilled spirits

(10) Proof spirits

(11) Proof gallon

(12) Container

(13) Approved container

(14) Article

(15) Export

(b) Cross references

(1) For definition of manufacturer of stills, see section 5102.

(2) For definition of dealer, see section 5121(c)(3).

(3) For definitions of wholesale dealers, see section 5121(c).

(4) For definitions of retail dealers, see section 5122(c).

(5) For definitions of general application to this title, see chapter 79.

(Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1315; amended Pub. L. 89–44, title VIII, § 807(a), June 21, 1965, 79 Stat. 164; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 96–39, title VIII, § 805(e), July 26, 1979, 93 Stat. 278; Pub. L. 103–465, title I, § 136(c)(1), Dec. 8, 1994, 108 Stat. 4841; Pub. L. 109–59, title XI, § 11125(b)(13), Aug. 10, 2005, 119 Stat. 1956.)

§ 5003. Cross references to exemptions, etc.

(1) For provisions authorizing the withdrawal of distilled spirits free of tax for use by Federal or State agencies, see sections 5214(a)(2) and 5313.

(2) For provisions authorizing the withdrawal of distilled spirits free of tax by nonprofit educational organizations, scientific universities or colleges of learning, laboratories, hospitals, blood banks, sanitariums, and charitable clinics, see section 5214(a)(3).

(3) For provisions authorizing the withdrawal of certain imported distilled spirits from customs custody without payment of tax, see section 5232.

(4) For provisions authorizing the withdrawal of denatured distilled spirits free of tax, see section 5214(a)(1).

(5) For provisions exempting from tax distilled spirits for use in production of vinegar by the vaporizing process, see section 5505(j).

(6) For provisions relating to the withdrawal of wine spirits without payment of tax for use in the production of wine, see section 5373.

(7) For provisions exempting from tax volatile fruit-flavor concentrates, see section 5511.

(8) For provisions authorizing the withdrawal of distilled spirits from bonded premises without payment of tax for export, see section 5214(a)(4).

(9) For provisions authorizing withdrawal of distilled spirits without payment of tax to customs bonded warehouses for export, see section 5214(a)(9).

(10) For provisions relating to withdrawal of distilled spirits without payment of tax as supplies for certain vessels and aircraft, see 19 U.S.C. 1309.

(11) For provisions authorizing regulations for withdrawal of distilled spirits for use of United States free of tax, see section 7510.

(12) For provisions relating to withdrawal of distilled spirits without payment of tax to foreign-trade zones, see 19 U.S.C. 81c.

(13) For provisions relating to exemption from tax of taxable articles going into the possessions of the United States, see section 7653(b).

(14) For provisions authorizing the withdrawal of distilled spirits without payment of tax for use in certain research, development, or testing, see section 5214(a)(10).

(15) For provisions authorizing the withdrawal of distilled spirits without payment of tax for transfer to manufacturing bonded warehouses for manufacturing for export, see section 5214(a)(6).

(16) For provisions authorizing the withdrawal of articles from the bonded premises of a distilled spirits plant free of tax when contained in an article, see section 5214(a)(11).

(17) For provisions relating to allowance for certain losses in bond, see section 5008(a).

(Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1316; amended Pub. L. 95–176, §§ 3(c), 4(f), Nov. 14, 1977, 91 Stat. 1365, 1366; Pub. L. 96–39, title VIII, § 807(a)(1), July 26, 1979, 93 Stat. 280.)

§ 5004. Lien for tax

(a) Distilled spirits subject to lien

(1) General

(2) Exceptions

The lien imposed by paragraph (1), or any similar lien imposed on the spirits under prior provisions of internal revenue law, shall terminate in the case of distilled spirits produced on premises qualified under internal revenue law for the production of distilled spirits when such distilled spirits are—

(A) withdrawn from bonded premises on determination of tax; or

(B) withdrawn from bonded premises free of tax under provisions of section 5214(a)(1), (2), (3), (11), or (12), or section 7510; or

(C) exported, deposited in a foreign-trade zone, used in the production of wine, laden as supplies upon, or used in the maintenance or repair of, certain vessels or aircraft, deposited in a customs bonded warehouse, or used in certain research, development, or testing, as provided by law.

(b) Cross reference

(Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1317; amended Pub. L. 89–44, title VIII, § 805(f)(1), June 21, 1965, 79 Stat. 161; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 95–176, § 4(c), Nov. 14, 1977, 91 Stat. 1366; Pub. L. 96–39, title VIII, § 807(a)(2), July 26, 1979, 93 Stat. 280; Pub. L. 96–223, title II, § 232(e)(2)(C), Apr. 2, 1980, 94 Stat. 280.)

§ 5005. Persons liable for tax

(a) General

(b) Domestic distilled spirits

(1) Liability of persons interested in distilling

(2) Exception

(1) Bonded storage

(2) Transfers in bond

(d) Withdrawals free of tax

(e) Withdrawals without payment of tax

(1) Liability for tax

(2) Relief from liability

(f) Cross references

(1) For provisions requiring bond covering operations at, and withdrawals from, distilled spirits plants, see section 5173.

(2) For provisions relating to transfer of tax liability to redistiller in case of redistillation, see section 5223.

(3) For liability for tax on denatured distilled spirits, articles, and volatile fruit-flavor concentrates, see section 5001(a)(5) and (6).

(4) For liability for tax on distilled spirits withdrawn free of tax, see section 5001(a)(4).

(5) For liability of wine producer for unlawfully using wine spirits withdrawn for the production of wine, see section 5391.

(6) For provisions relating to transfer of tax liability for wine, see section 5043(a)(1)(A).

(Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1318; amended Pub. L. 94–455, title XIX, § 1905(a)(1), Oct. 4, 1976, 90 Stat. 1818; Pub. L. 95–176, § 4(b), (d), Nov. 14, 1977, 91 Stat. 1366; Pub. L. 96–39, title VIII, § 807(a)(3), July 26, 1979, 93 Stat. 280; Pub. L. 96–223, title II, § 232(e)(2)(D), Apr. 2, 1980, 94 Stat. 280; Pub. L. 98–369, div. A, title IV, § 455(b), July 18, 1984, 98 Stat. 823; Pub. L. 103–465, title I, § 136(c)(2), Dec. 8, 1994, 108 Stat. 4841.)

§ 5006. Determination of tax

(a) Requirements

(1) In general

(2) Distilled spirits not accounted for

(b) Taxable loss

(1) On original quantity

(2) Alternative method

(3) Application of subsection

(1) General

(2) Production at other than qualified plants

(d) Unlawfully imported distilled spirits

(e) Cross reference

(Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1320; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 96–39, title VIII, §§ 804(a), 807(a)(4), July 26, 1979, 93 Stat. 274, 280.)

§ 5007. Collection of tax on distilled spirits

(a) Tax on distilled spirits removed from bonded premises

(b) Collection of tax on imported distilled spirits

(1) For authority of the Secretary to make determinations and assessments of internal revenue taxes and penalties, see section 6201(a).

(2) For authority to assess tax on distilled spirits not bonded, see section 5006(c).

(3) For provisions relating to payment of tax, under certain conditions, on distilled spirits withdrawn free of tax, denatured distilled spirits, articles, and volatile fruit-flavor concentrates, see section 5001(a)(4), (5), and (6).

(Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1322; amended Pub. L. 94–455, title XIX, §§ 1905(b)(2)(A), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1822, 1834; Pub. L. 96–39, title VIII, § 807(a)(5), July 26, 1979, 93 Stat. 280; Pub. L. 103–465, title I, § 136(c)(3), (4), Dec. 8, 1994, 108 Stat. 4841, 4842.)

§ 5008. Abatement, remission, refund, and allowance for loss or destruction of distilled spirits

(a) Distilled spirits lost or destroyed in bond

(1) Extent of loss allowance

No tax shall be collected in respect of distilled spirits lost or destroyed while in bond, except that such tax shall be collected—

(A) Theft

(B) Voluntary destruction

(2) Proof of loss

(3) Refund of tax

(4) Limitations

(5) Applicability

(b) Voluntary destruction

(1) In general

(2) Claim must be filed within 6 months of return of spirits

(d) Distilled spirits withdrawn without payment of tax

The provisions of subsection (a) shall be applicable to loss of distilled spirits occurring during transportation from bonded premises of a distilled spirits plant to—

(1) the port of export, in case of withdrawal under section 5214(a)(4);

(2) the customs manufacturing bonded warehouse, in case of withdrawal under section 5214(a)(6);

(3) the vessel or aircraft, in case of withdrawal under section 5214(a)(7);

(4) the foreign-trade zone, in case of withdrawal under section 5214(a)(8); and

(5) the customs bonded warehouse in the case of withdrawal under sections 5066 and 5214(a)(9).

The provisions of subsection (a) shall be applicable to loss of distilled spirits withdrawn from bonded premises without payment of tax under section 5214(a)(10) for certain research, development, or testing, until such distilled spirits are used as provided by law.

(e) Other laws applicable

(f) Cross reference

(Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1323; amended Pub. L. 89–44, title VIII, § 805(a), June 21, 1965, 79 Stat. 160; Pub. L. 90–630, § 1, Oct. 22, 1968, 82 Stat. 1328; Pub. L. 91–659, §§ 1, 2(a), (b), Jan. 8, 1971, 84 Stat. 1964; Pub. L. 94–273, § 47, Apr. 21, 1976, 90 Stat. 382; Pub. L. 94–455, title XIX, §§ 1905(a)(2), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1818, 1834; Pub. L. 95–176, §§ 2(f), 4(e), Nov. 14, 1977, 91 Stat. 1364, 1366; Pub. L. 96–39, title VIII, § 807(a)(6), July 26, 1979, 93 Stat. 281; Pub. L. 105–34, title XIV, § 1411(a), Aug. 5, 1997, 111 Stat. 1046.)

[§ 5009. Repealed. Pub. L. 96–39, title VIII, § 807(a)(7), July 26, 1979, 93 Stat. 281]

§ 5010. Credit for wine span and for flavors span

(a) Allowance of credit

(1) Wine span

On each proof gallon of the wine span of distilled spirits, there shall be allowed a credit against the tax imposed by section 5001 (or 7652) equal to the excess of—

(A) $13.50, over

(B) the rate of tax which would be imposed on the wine under section 5041(b) but for its removal to bonded premises.

(2) Flavors span

(3) Fractional part of proof gallon

(b) Time for determining and allowing credit

(1) In general

The credit allowable by subsection (a)—

(A) shall be determined at the same time the tax is determined under section 5006 (or 7652) on the distilled spirits containing the wine or flavors, and

(B) shall be allowable at the time the tax imposed by section 5001 (or 7652) on such distilled spirits is payable as if the credit allowable by this section constituted a reduction in the rate of tax.

(2) Determination of span in the case of imports

For purposes of this section—

(1) Wine span

(A) In general

(B) Wine

The term “wine”—

(i) means wine on which tax would be imposed by paragraph (1), (2), or (3) of section 5041(b) but for its removal to bonded premises, and

(ii) does not include any substance which has been subject to distillation at a distilled spirits plant after receipt in bond.

(2) Flavors span

(A) In general

(B) Exceptions

The term “flavors span” does not include—

(i) alcohol derived from flavors made at a distilled spirits plant,

(ii) alcohol derived from flavors distilled at a distilled spirits plant, and

(iii) in the case of any distilled spirits product, alcohol derived from flavors to the extent such alcohol exceeds (on a proof gallon basis) 2½ percent of the finished product.

(Added Pub. L. 96–598, § 6(a), Dec. 24, 1980, 94 Stat. 3488; amended Pub. L. 98–369, div. A, title I, § 27(a)(2), July 18, 1984, 98 Stat. 507; Pub. L. 100–647, title V, § 5063(a), Nov. 10, 1988, 102 Stat. 3681; Pub. L. 101–508, title XI, § 11201(a)(2), Nov. 5, 1990, 104 Stat. 1388–415; Pub. L. 109–59, title XI, § 11125(b)(14), Aug. 10, 2005, 119 Stat. 1956.)

§ 5011. Income tax credit for average cost of carrying excise tax

(a) In generalFor purposes of section 38, the amount of the distilled spirits credit for any taxable year is the amount equal to the product of—

(1) in the case of—

(A) any eligible wholesaler, the number of cases of bottled distilled spirits—

(i) which were bottled in the United States, and

(ii) which are purchased by such wholesaler during the taxable year directly from the bottler of such spirits, or

(B) any person which is subject to section 5005 and which is not an eligible wholesaler, the number of cases of bottled distilled spirits which are stored in a warehouse operated by, or on behalf of, a State or political subdivision thereof, or an agency of either, on which title has not passed on an unconditional sale basis, and

(2) the average tax-financing cost per case for the most recent calendar year ending before the beginning of such taxable year.

(b) Eligible wholesaler

(1) In general

(2) Deemed financing rate

(3) Deemed Federal excise tax per case

(d) Other definitions and special rulesFor purposes of this section—

(1) Case

(2) Number of cases in lot

(Added Pub. L. 109–59, title XI, § 11126(a), Aug. 10, 2005, 119 Stat. 1957.)