26 U.S.C. § 5001: Imposition, rate, and attachment of tax

There is hereby imposed on all distilled spirits produced in or imported into the United States a tax at the rate of $13.50 on each proof gallon and a proportionate tax at the like rate on all fractional parts of a proof gallon. All products of distillation, by whatever name known, which contain distilled spirits, on which the tax imposed by law has not been paid, and any alcoholic ingredient added to such products, shall be considered and taxed as distilled spirits. Wines containing more than 24 percent of alcohol by volume shall be taxed as distilled spirits. Any person who removes, sells, transports, or uses distilled spirits, withdrawn free of tax under section 5214(a) or section 7510, in violation of laws or regulations now or hereafter in force pertaining thereto, and all such distilled spirits shall be subject to all provisions of law relating to distilled spirits subject to tax, including those requiring payment of the tax thereon; and the person so removing, selling, transporting, or using the distilled spirits shall be required to pay such tax. Any person who produces, withdraws, sells, transports, or uses denatured distilled spirits or articles in violation of laws or regulations now or hereafter in force pertaining thereto, and all such denatured distilled spirits or articles shall be subject to all provisions of law pertaining to distilled spirits that are not denatured, including those requiring the payment of tax thereon; and the person so producing, withdrawing, selling, transporting, or using the denatured distilled spirits or articles shall be required to pay such tax. If any volatile fruit-flavor concentrate (or any fruit mash or juice from which such concentrate is produced) containing one-half of 1 percent or more of alcohol by volume, which is manufactured free from tax under section 5511, is sold, transported, or used by any person in violation of the provisions of this chapter or regulations promulgated thereunder, such person and such concentrate, mash, or juice shall be subject to all provisions of this chapter pertaining to distilled spirits and wines, including those requiring the payment of tax thereon; and the person so selling, transporting, or using such concentrate, mash, or juice shall be required to pay such tax. Imported liqueurs and cordials, or similar compounds, containing distilled spirits, shall be taxed as distilled spirits. There is hereby imposed on all imported distilled spirits withdrawn from customs custody under section 5232 without payment of the internal revenue tax, and thereafter withdrawn from bonded premises for beverage purposes, an additional tax equal to the duty which would have been paid had such spirits been imported for beverage purposes, less the duty previously paid thereon. Except as provided in section 5314, upon bay rum, or any article containing distilled spirits, brought from Puerto Rico into the United States for consumption or sale there is hereby imposed a tax on the spirits contained therein at the rate imposed on distilled spirits produced in the United States. The tax shall attach to distilled spirits as soon as this substance is in existence as such, whether it be subsequently separated as pure or impure spirits, or be immediately, or at any subsequent time, transferred into any other substance, either in the process of original production or by any subsequent process. $2.70 per proof gallon on the first 100,000 proof gallons of distilled spirits, and $13.34 per proof gallon on the first 22,130,000 of 1 proof gallons of distilled spirits to which subparagraph (A) does not apply, 1 So in original. In the case of a controlled group, the proof gallon quantities specified under subparagraphs (A) and (B) of paragraph (1) shall be applied to such group and apportioned among the members of such group in such manner as the Secretary or their delegate shall by regulations prescribe. For purposes of subparagraph (A), the term “controlled group” shall have the meaning given such term by subsection (a) of section 1563, except that “more than 50 percent” shall be substituted for “at least 80 percent” each place it appears in such subsection. Under regulations prescribed by the Secretary, principles similar to the principles of subparagraphs (A) and (B) shall be applied to a group under common control where one or more of the persons is not a corporation. Pursuant to rules issued by the Secretary, two or more entities (whether or not under common control) that produce or process distilled spirits under a license, franchise, or other arrangement shall be treated as a single taxpayer for purposes of the application of this subsection. In the case of any proof gallons of distilled spirits which have been produced outside of the United States and imported into the United States, the rate of tax applicable under paragraph (1) (referred to in this paragraph as the “reduced tax rate”) may be assigned by the distilled spirits operation (provided that such operation makes an election described in subparagraph (B)(ii)) to any electing importer of such proof gallons pursuant to the requirements established by the Secretary under subparagraph (B). 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 to all importers does not exceed the 22,230,000 proof gallons of distilled spirits to which the reduced tax rate applies, 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, requirements that the distilled spirits operation provide any information as the Secretary determines necessary and appropriate for purposes of carrying out this paragraph, and 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. For purposes of this section, any importer making an election described in subparagraph (B)(ii) shall be deemed to be a member of the controlled group of the distilled spirits operation, as described under paragraph (2). For purposes of this paragraph, in the case of a controlled group, rules similar to section 5051(a)(5)(B) shall apply. paragraph (1) shall not apply, and 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. 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 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 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. Subparagraph (A)(ii) shall apply 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. For purposes of refunds allowed under this paragraph, section 6611(e) shall be applied by substituting “90 days” for “45 days” each place it appears. A distilled spirit shall not be treated as processed for purposes of this subsection unless a process described in section 5002(a)(5)(A) (other than bottling) is performed with respect to such distilled spirit. For provisions relating to the tax on shipments to the United States of taxable articles from Puerto Rico and the Virgin Islands, see section 7652. Except as provided in paragraph (2), the amendments made by this section [amending this section and section 5010 of this title and enacting provisions set out as a note under this section] shall take effect on October 1, 1985 . The amendments made by subsection (c) [amending sections 5061 and 5703 of this title] shall apply to taxes required to be paid on or after September 30, 1984 .” on which tax was determined under part I of subchapter A of chapter 51 of the Internal Revenue Code of 1986 or section 7652 of such Code before January 1, 1991 , and which is held on such date for sale by any person, $1 per proof gallon in the case of distilled spirits, $0.90 per wine gallon in the case of wine described in paragraph (1), (2), (3), or (5) of section 5041(b) of such Code, and $9 per barrel in the case of beer. For purposes of this subsection, the term ‘tax-increased article’ means distilled spirits, wine described in paragraph (1), (2), (3), or (5) of section 5041(b) of such Code, and beer. In the case of wine held by the producer thereof on January 1, 1991 , if a credit would have been allowable under section 5041(c) of such Code (as added by this section) on such wine had the amendments made by subsection (b) [amending sections 5041 and 5061 of this title] applied to all wine removed during 1990 and had the wine so held been removed for consumption on December 31, 1990 , the tax imposed by paragraph (1) on such wine shall be reduced by the credit which would have been so allowable. In the case of beer held by the producer thereof on January 1, 1991 , if the rate of the tax imposed by section 5051 of such Code would have been determined under subsection (a)(2) thereof had the beer so held been removed for consumption on December 31, 1990 , the tax imposed by paragraph (1) on such beer shall not apply. For purposes of this paragraph, an article shall not be treated as held by the producer if title thereto had at any time been transferred to any other person. the aggregate liquid volume of tax-increased articles held by such dealer on such date does not exceed 500 wine gallons, and such dealer submits to the Secretary (at the time and in the manner required by the Secretary) such information as the Secretary shall require for purposes of this paragraph. $240 to the extent such taxes are attributable to distilled spirits, $270 to the extent such taxes are attributable to wine, and $87 to the extent such taxes are attributable to beer. A person holding any tax-increased article on January 1, 1991 , to which the tax imposed by paragraph (1) applies shall be liable for such tax. The tax imposed by paragraph (1) shall be paid in such manner as the Secretary shall prescribe by regulations. The tax imposed by paragraph (1) shall be paid on or before June 30, 1991 . the 500 wine gallon amount specified in paragraph (3), and the $240, $270, and $87 amounts specified in paragraph (4), Under regulations prescribed by the Secretary, principles similar to the principles of subparagraph (A) shall apply to a group of dealers under common control where 1 or more of such dealers is not a corporation. All provisions of law, including penalties, applicable to the comparable excise tax with respect to any tax-increased article shall, insofar as applicable and not inconsistent with the provisions of this subsection, apply to the floor stocks taxes imposed by paragraph (1) to the same extent as if such taxes were imposed by the comparable excise tax. the tax imposed by section 5001 of such Code in the case of distilled spirits, the tax imposed by section 5041 of such Code in the case of wine, and the tax imposed by section 5051 of such Code in the case of beer. Terms used in this subsection which are also used in subchapter A of chapter 51 of such Code shall have the respective meanings such terms have in such part. The term ‘person’ includes any State or political subdivision thereof, or any agency or instrumentality of a State or political subdivision thereof. The term ‘Secretary’ means the Secretary of the Treasury or his delegate. For purposes of this subsection, any article described in section 5001(a)(3) of such Code shall be treated as distilled spirits; except that the tax imposed by paragraph (1) shall be imposed on a wine gallon basis in lieu of a proof gallon basis. To the extent provided by regulations prescribed by the Secretary, the preceding sentence shall not apply to any article held on January 1, 1991 , on the premises of a retail establishment.” internal revenue taxes have been determined, or customs duties liquidated, with respect to such article before such date pursuant to a request made under the 1st proviso of section 3(a) of such Act [ 19 U.S.C. 81c(a) ], or such article is held on such date under the supervision of a customs officer pursuant to the 2d proviso of such section 3(a).” On distilled spirits on which tax was imposed under section 5001 or 7652 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] before October 1, 1985 , and which were held on such date for sale by any person, there shall be imposed a tax at the rate of $2.00 for each proof gallon and a proportionate tax at the like rate on all fractional parts of a proof gallon. the aggregate liquid volume of distilled spirits held by such dealer on such date does not exceed 500 wine gallons, and such dealer submits to the Secretary (at the time and in the manner required by the Secretary) such information as the Secretary shall require for purposes of this paragraph. Each dealer shall be allowed as a credit against the taxes imposed by paragraph (1) an amount equal to $800. Such credit shall not exceed the amount of taxes imposed by paragraph (1) for which the dealer is liable. A person holding distilled spirits on October 1, 1985 , to which the tax imposed by paragraph (1) applies shall be liable for such tax. The tax imposed by paragraph (1) shall be paid in such manner as the Secretary shall by regulations prescribe. Except as provided in clause (ii), the tax imposed by paragraph (1) shall be paid on or before April 1, 1986 . The first installment shall be paid on or before April 1, 1986 . The second installment shall be paid on or before July 1, 1986 . The third installment shall be paid on or before October 1, 1986 . For purposes of clause (ii), the term ‘small or middle-sized dealer’ means any dealer if the aggregate gross sales receipts of such dealer for its most recent taxable year ending before October 1, 1985 , does not exceed $500,000. the 500 wine gallon amount specified in paragraph (2), the $800 amount specified in paragraph (3), and the $500,000 amount specified in paragraph (4)(C)(iii), Under regulations prescribed by the Secretary, principles similar to the principles of subparagraph (A) shall apply to a group of dealers under common control where 1 or more of such dealers is not a corporation. All provisions of law, including penalties, applicable with respect to the taxes imposed by section 5001 of the Internal Revenue Code of 1986 shall, insofar as applicable and not inconsistent with the provisions of this subsection, apply in respect of the taxes imposed by paragraph (1) to the same extent as if such taxes were imposed by such section 5001. any wholesale dealer in liquors (as defined in section 5112(b) of the Internal Revenue Code of 1986), and any retail dealer in liquors (as defined in section 5122(a) of such Code). The term ‘distilled spirits’ has the meaning given such term by section 5002(a)(8) of the Internal Revenue Code of 1986. The term ‘person’ includes any State or political subdivision thereof, or any agency or instrumentality of a State or political subdivision thereof. The term ‘Secretary’ means the Secretary of the Treasury or his delegate. Any article described in section 5001(a)(3) of such Code shall be treated as distilled spirits; except that the tax imposed by paragraph (1) shall be imposed on a wine gallon basis in lieu of a proof gallon basis. To the extent provided in regulations prescribed by the Secretary, the preceding sentence shall not apply to any article held on October 1, 1985 , on the premises of a retail establishment. internal revenue taxes have been determined, or customs duties liquidated, with respect to such distilled spirits before such date pursuant to a request made under the first proviso of section 3(a) of such Act [ 19 U.S.C. 81c(a) ], or such distilled spirits are held on such date under the supervision of customs pursuant to the second proviso of such section 3(a).