
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC5173]

 
                     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
 
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        No distilled spirits (other than distilled spirits withdrawn 
    under section 5214 or 7510) may be withdrawn from bonded premises 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).

(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.)


                            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:

------------------------------------------------------------------------
      Present subsecs.:                      Prior sections
------------------------------------------------------------------------
(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).
------------------------------------------------------------------------

    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.''

                  Section Referred to in Other Sections

    This section is referred to in sections 5005, 5175, 5176, 5177, 5213 
of this title.
