1513-0075 Laws and Reg

-14-

1513-0075

26 U.S.C.

Sec. 5001. Imposition, rate, and attachment of tax

(a) Rate of tax

(1) General

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.

(2) Products containing distilled spirits

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.

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

Wines containing more than 24 percent of alcohol by volume shall

be taxed as distilled spirits.

(4) Distilled spirits withdrawn free of tax

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spirits, withdrawn free of tax under section 5214(a) or section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.

(5) Denatured distilled spirits or articles

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.

(6) Fruit-flavor concentrates

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.

(7) Imported liqueurs and cordials

Imported liqueurs and cordials, or similar compounds, containing

distilled spirits, shall be taxed as distilled spirits.

(8) Imported distilled spirits withdrawn for beverage

purposes

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.

(9) Alcoholic compounds from Puerto Rico

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.

(b) Time of attachment on distilled spirits

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.

(c) Cross reference

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.

(Added Pub. L. 85-859, title II, Sec. 201, Sept. 2, 1958, 72 Stat. 1314;

amended Pub. L. 86-75, Sec. 3(a)(2), (3), June 30, 1959, 73 Stat. 157;

Pub. L. 86-564, title II, Sec. 202(a)(4), (5), June 30, 1960, 74 Stat.

290; Pub. L. 87-72, Sec. 3(a)(4), (5), June 30, 1961, 75 Stat. 193; Pub.

L. 87-508, Sec. 3(a)(3), (4), June 28, 1962, 76 Stat. 114; Pub. L. 88-

52, Sec. 3(a)(4), (5), June 29, 1963, 77 Stat. 72; Pub. L. 88-348,

Sec. 2(a)(4), (5), June 30, 1964, 78 Stat. 237; Pub. L. 89-44, title V,

Sec. 501(a), June 21, 1965, 79 Stat. 150; Pub. L. 96-39, title VIII,

Secs. 802, 805(d), July 26, 1979, 93 Stat. 273, 278; Pub. L. 98-369,

div. A, title I, Sec. 27(a)(1), July 18, 1984, 98 Stat. 507; Pub. L.

101-508, title XI, Sec. 11201(a)(1), Nov. 5, 1990, 104 Stat. 1388-415;

Pub. L. 103-465, title I, Sec. 136(a), Dec. 8, 1994, 108 Stat. 4841.)

Sec. 5041. Imposition and rate of tax

(a) Imposition

There is hereby imposed on all wines (including imitation,

substandard, or artificial wine, and compounds sold as wine) having not

in excess of 24 percent of alcohol by volume, in bond in, produced in,

or imported into, the United States, taxes at the rates shown in

subsection (b), such taxes to be determined as of the time of removal

for consumption or sale. All wines containing more than 24 percent of

alcohol by volume shall be classed as distilled spirits and taxed

accordingly. Still wines shall include those wines containing not more

than 0.392 gram of carbon dioxide per hundred milliliters of wine;

except that the Secretary may by regulations prescribe such tolerances

to this maximum limitation as may be reasonably necessary in good

commercial practice.

(b) Rates of tax

(1) On still wines containing not more than 14 percent of alcohol by

volume, $1.07 per wine gallon;

(2) On still wines containing more than 14 percent and not exceeding

21 percent of alcohol by volume, $1.57 per wine gallon;

(3) On still wines containing more than 21 percent and not exceeding

24 percent of alcohol by volume, $3.15 per wine gallon;

(4) On champagne and other sparkling wines, $3.40 per wine gallon;

(5) On artificially carbonated wines, $3.30 per wine gallon; and

(6) On hard cider which is a still wine derived primarily from

apples or apple concentrate and water, containing no other fruit

product, and containing at least one-half of 1 percent and less than 7

percent alcohol by volume, 22.6 cents per wine gallon.

(c) Credit for small domestic producers

(1) Allowance of credit

Except as provided in paragraph (2), in the case of a person who

produces not more than 250,000 wine gallons of wine during the

calendar year, there shall be allowed as a credit against any tax

imposed by this title (other than chapters 2, 21, and 22) of 90

cents per wine gallon on the 1st 100,000 wine gallons of wine (other

than wine described in subsection (b)(4)) which are removed during

such year for consumption or sale and which have been produced at

qualified facilities in the United States. In the case of wine

described in subsection (b)(6), the preceding sentence shall be

applied by substituting ``5.6 cents'' for ``90 cents''.

(2) Reduction in credit

The credit allowable by paragraph (1) shall be reduced (but not

below zero) by 1 percent for each 1,000 wine gallons of wine

produced in excess of 150,000 wine gallons of wine during the

calendar year.

(3) Time for determining and allowing credit

The credit allowable by paragraph (1)--

(A) shall be determined at the same time the tax is

determined under subsection (a) of this section, and

(B) shall be allowable at the time any tax described in

paragraph (1) is payable as if the credit allowable by this

subsection constituted a reduction in the rate of such tax.

(4) Controlled groups

Rules similar to rules of section 5051(a)(2)(B) shall apply for

purposes of this subsection.

(5) Denial of deduction

Any deduction under subtitle A with respect to any tax against

which a credit is allowed under this subsection shall only be for

the amount of such tax as reduced by such credit.

(6) Credit for transferee in bond

If--

(A) wine produced by any person would be eligible for any

credit under paragraph (1) if removed by such person during the

calendar year,

(B) wine produced by such person is removed during such

calendar year by any other person (hereafter in this paragraph

referred to as the ``transferee'') to whom such wine was

transferred in bond and who is liable for the tax imposed by

this section with respect to such wine, and

(C) such producer holds title to such wine at the time of

its removal and provides to the transferee such information as

is necessary to properly determine the transferee's credit under

this paragraph,

then, the transferee (and not the producer) shall be allowed the

credit under paragraph (1) which would be allowed to the producer if

the wine removed by the transferee had been removed by the producer

on that date.

(7) Regulations

The Secretary may prescribe such regulations as may be necessary

to carry out the purposes of this subsection, including

regulations--

(A) to prevent the credit provided in this subsection from

benefiting any person who produces more than 250,000 wine

gallons of wine during a calendar year, and

(B) to assure proper reduction of such credit for persons

producing more than 150,000 wine gallons of wine during a

calendar year.

(d) Wine gallon

For the purpose of this chapter, the term ``wine gallon'' means a

United States gallon of liquid measure equivalent to the volume of 231

cubic inches. On lesser quantities the tax shall be paid proportionately

(fractions of less than one-tenth gallon being converted to the nearest

one-tenth gallon, and five-hundredths gallon being converted to the next

full one-tenth gallon).

(e) Tolerances

Where the Secretary finds that the revenue will not be endangered

thereby, he may by regulation prescribe tolerances (but not greater than

\1/2\ of 1 percent) for bottles and other containers, and, if such

tolerances are prescribed, no assessment shall be made and no tax shall

be collected for any excess in any case where the contents of a bottle

or other container are within the limit of the applicable tolerance

prescribed.

(f) Illegally produced wine

Notwithstanding subsection (a), any wine produced in the United

States at any place other than the bonded premises provided for in this

chapter shall (except as provided in section 5042 in the case of tax-

free production) be subject to tax at the rate prescribed in subsection

(b) at the time of production and whether or not removed for consumption

or sale.

(Added Pub. L. 85-859, title II, Sec. 201, Sept. 2, 1958, 72 Stat. 1331;

amended Pub. L. 86-75, Sec. 3(a)(5), June 30, 1959, 73 Stat. 157; Pub.

L. 86-564, title II, Sec. 202(a)(7), June 30, 1960, 74 Stat. 290; Pub.

L. 87-72, Sec. 3(a)(7), June 30, 1961, 75 Stat. 193; Pub. L. 87-508,

Sec. 3(a)(6), June 28, 1962, 76 Stat. 114; Pub. L. 88-52, Sec. 3(a)(7),

June 29, 1963, 77 Stat. 72; Pub. L. 88-348, Sec. 2(a)(7), June 30, 1964,

78 Stat. 237; Pub. L. 89-44, title V, Sec. 501(c), title VIII,

Sec. 806(a), June 21, 1965, 79 Stat. 150, 162; Pub. L. 93-490,

Sec. 6(a), Oct. 26, 1974, 88 Stat. 1468; Pub. L. 94-455, title XIX,

Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 100-647, title

VI, Sec. 6101(a), Nov. 10, 1988, 102 Stat. 3710; Pub. L. 101-508, title

XI, Sec. 11201(b)(1), (2), Nov. 5, 1990, 104 Stat. 1388-415, 1388-416;

Pub. L. 104-188, title I, Sec. 1702(b)(5), Aug. 20, 1996, 110 Stat.

1868; Pub. L. 105-34, title IX, Sec. 908(a), (b), Aug. 5, 1997, 111

Stat. 876; Pub. L. 105-206, title VI, Sec. 6009(a), July 22, 1998, 112

Stat. 812.)

Sec. 5051. Imposition and rate of tax

(a) Rate of tax

(1) In general

A tax is hereby imposed on all beer brewed or produced, and

removed for consumption or sale, within the United States, or

imported into the United States. Except as provided in paragraph

(2), the rate of such tax shall be $18 for every barrel containing

not more than 31 gallons and at a like rate for any other quantity

or for fractional parts of a barrel.

(2) Reduced rate for certain domestic production

(A) $7 a barrel rate

In the case of a brewer who produces not more than 2,000,000

barrels of beer during the calendar year, the per barrel rate of

the tax imposed by this section shall be $7 on the first 60,000

barrels of beer which are removed in such year for consumption

or sale and which have been brewed or produced by such brewer at

qualified breweries in the United States.

(B) Controlled groups

In the case of a controlled group, the 2,000,000 barrel

quantity specified in subparagraph (A) shall be applied to the

controlled group, and the 60,000 barrel quantity specified in

subparagraph (A) shall be apportioned among the brewers who are

component members of such group in such manner as the Secretary

or his delegate shall by regulations prescribed. For purposes of

the preceding sentence, the term ``controlled group'' has the

meaning assigned to it by subsection (a) of section 1563, except

that for such purposes the phrase ``more than 50 percent'' shall

be substituted for the phrase ``at least 80 percent'' in each

place it appears in such subsection. Under regulations

prescribed by the Secretary or his delegate, principles similar

to the principles of the preceding two sentences shall be

applied to a group of brewers under common control where one or

more of the brewers is not a corporation.

(C) Regulations

The Secretary may prescribe such regulations as may be

necessary to prevent the reduced rates provided in this

paragraph from benefiting any person who produces more than

2,000,000 barrels of beer during a calendar year.

(3) Tolerances

Where the Secretary or his delegate finds that the revenue will

not be endangered thereby, he may by regulations prescribe

tolerances for barrels and fractional parts of barrels, and, if such

tolerances are prescribed, no assessment shall be made and no tax

shall be collected for any excess in any case where the contents of

a barrel or a fractional part of a barrel are within the limit of

the applicable tolerance prescribed.

(b) Assessment on materials used in production in case of fraud

Nothing contained in this subpart or subchapter G shall be construed

to authorize an assessment on the quantity of materials used in

producing or purchased for the purpose of producing beer, nor shall the

quantity of materials so used or purchased be evidence, for the purpose

of taxation, of the quantity of beer produced; but the tax on all beer

shall be paid as provided in section 5054, and not otherwise; except

that this subsection shall not apply to cases of fraud, and nothing in

this subsection shall have the effect to change the rules of law

respecting evidence in any prosecution or suit.

(c) Illegally produced beer

The production of any beer at any place in the United States shall

be subject to tax at the rate prescribed in subsection (a) and such tax

shall be due and payable as provided in section 5054(a)(3) unless--

(1) such beer is produced in a brewery qualified under the

provisions of subchapter G, or

(2) such production is exempt from tax under section 5053(e)

(relating to beer for personal or family use).

(Added Pub. L. 85-859, title II, Sec. 201, Sept. 2, 1958, 72 Stat. 1333;

amended Pub. L. 86-75, Sec. 3(a)(6), June 30, 1959, 73 Stat. 157; Pub.

L. 86-564, title II, Sec. 202(a)(8), June 30, 1960, 74 Stat. 290; Pub.

L. 87-72, Sec. 3(a)(8), June 30, 1961, 75 Stat. 193; Pub. L. 87-508,

Sec. 3(a)(7), June 28, 1962, 76 Stat. 114; Pub. L. 88-52, Sec. 3(a)(8),

June 29, 1963, 77 Stat. 72; Pub. L. 88-348, Sec. 2(a)(8), June 30, 1964,

78 Stat. 237; Pub. L. 89-44, title V, Sec. 501(d), June 21, 1965, 79

Stat. 150; Pub. L. 94-529, Sec. 1, Oct. 17, 1976, 90 Stat. 2485; Pub. L.

95-458, Sec. 2(b)(2)(A), Oct. 14, 1978, 92 Stat. 1256; Pub. L. 101-508,

title XI, Sec. 11201(c), Nov. 5, 1990, 104 Stat. 1388-416.)

Sec. 5053. Exemptions

(a) Removals for export

Beer may be removed from the brewery, without payment of tax, for

export, in such containers and under such regulations, and on the giving

of such notices, entries, and bonds and other security, as the Secretary

may by regulations prescribe.

(b) Removals when unfit for beverage use

When beer has become sour or damaged, so as to be incapable of use

as such, a brewer may remove the same from his brewery without payment

of tax, for manufacturing purposes, under such regulations as the

Secretary may prescribe.

(c) Removals for laboratory analysis

Beer may be removed from the brewery, without payment of tax, for

laboratory analysis, subject to such limitations and under such

regulations as the Secretary may prescribe.

(d) Removals for research, development, or testing

Under such conditions and regulations as the Secretary may

prescribe, beer may be removed from the brewery without payment of tax

for use in research, development, or testing (other than consumer

testing or other market analysis) of processes, systems, materials, or

equipment relating to beer or brewery operations.

(e) Beer for personal or family use

Subject to regulation prescribed by the Secretary, any adult may,

without payment of tax, produce beer for personal or family use and not

for sale. The aggregate amount of beer exempt from tax under this

subsection with respect to any household shall not exceed--

(1) 200 gallons per calendar year if there are 2 or more adults

in such household, or

(2) 100 gallons per calendar year if there is only 1 adult in

such household.

For purposes of this subsection, the term ``adult'' means an individual

who has attained 18 years of age, or the minimum age (if any)

established by law applicable in the locality in which the household is

situated at which beer may be sold to individuals, whichever is greater.

(f) Removal for use as distilling material

Subject to such regulations as the Secretary may prescribe, beer may

be removed from a brewery without payment of tax to any distilled

spirits plant for use as distilling material.

(g) Removals for use of foreign embassies, legations, etc.

(1) In general

Subject to such regulations as the Secretary may prescribe--

(A) beer may be withdrawn from the brewery without payment

of tax for transfer to any customs bonded warehouse for entry

pending withdrawal therefrom as provided in subparagraph (B),

and

(B) beer entered into any customs bonded warehouse under

subparagraph (A) may be withdrawn for consumption in the United

States by, and for the official and family use of, such foreign

governments, organizations, and individuals as are entitled to

withdraw imported beer from such warehouses free of tax.

Beer transferred to any customs bonded warehouse under subparagraph

(A) shall be entered, stored, and accounted for in such warehouse

under such regulations and bonds as the Secretary may prescribe, and

may be withdrawn therefrom by such governments, organizations, and

individuals free of tax under the same conditions and procedures as

imported beer.

(2) Other rules to apply

Rules similar to the rules of paragraphs (2) and (3) of section

5362(e) shall apply for purposes of this subsection.

(h) Removals for destruction

Subject to such regulations as the Secretary may prescribe, beer may

be removed from the brewery without payment of tax for destruction.

(i) Removal as supplies for certain vessels and aircraft

For exemption as to supplies for certain vessels and

aircraft, see section 309 of the Tariff Act of 1930, as amended

(19 U.S.C. 1309).

(Added Pub. L. 85-859, title II, Sec. 201, Sept. 2, 1958, 72 Stat. 1334;

amended Pub. L. 89-44, title VIII, Sec. 807(b), June 21, 1965, 79 Stat.

164; Pub. L. 91-673, Sec. 2, Jan. 12, 1971, 84 Stat. 2056; Pub. L. 94-

455, title XIX, Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub.

L. 95-458, Sec. 2(b)(1), Oct. 14, 1978, 92 Stat. 1255; Pub. L. 105-34,

title XIV, Secs. 1414(b), 1418(a), 1419(a), Aug. 5, 1997, 111 Stat.

1047-1049.)

Sec. 5214. Withdrawal of distilled spirits from bonded premises free of tax or without payment of tax

(a) Purposes

Distilled spirits on which the internal revenue tax has not been paid or determined may, subject to such regulations as the Secretary shall prescribe, be withdrawn from the bonded premises of any distilled spirits plant in approved containers--

(1) free of tax after denaturation of such spirits in the manner prescribed by law for--

(A) exportation;

(B) use in the manufacture of ether, chloroform, or other definite chemical substance where such distilled spirits are changed into some other chemical substance and do not appear in the finished product; or

(C) any other use in the arts and industries (except for uses prohibited by section 5273(b) or (d)) and for fuel, light, and power; or

(2) free of tax by, and for the use of, the United States or any governmental agency thereof, any State, any political subdivision of a State, or the District of Columbia, for nonbeverage purposes; or

(3) free of tax for nonbeverage purposes and not for resale or use in the manufacture of any product for sale--

(A) for the use of any educational organization described in section 170(b)(1)(A)(ii) which is exempt from income tax under section 501(a), or for the use of any scientific university or college of learning;

(B) for any laboratory for use exclusively in scientific research;

(C) for use at any hospital, blood bank, or sanitarium), (including use in making any analysis or test at such hospital, blood bank, or sanitarium), or at any pathological laboratory exclusively engaged in making analyses, or tests, for hospitals or sanitariums; or

(D) for the use of any clinic operated for charity and not for profit (including use in the compounding of bona fide medicines for treatment outside of such clinics of patients thereof); or

(4) without payment of tax for exportation, after making such application and entries, filing such bonds as are required by section 5175, and complying with such other requirements as may by regulations be prescribed; or

(5) without payment of tax for use in wine production, as authorized by section 5373; or

(6) without payment of tax for transfer to manufacturing bonded warehouses for manufacturing in such warehouses for export, as authorized by law; or

(7) without payment of tax for use of certain vessels and aircraft, as authorized by law; or

(8) without payment of tax for transfer to foreign-trade zones, as authorized by law; or

(9) without payment of tax, for transfer (for the purpose of storage pending exportation) to any customs bonded warehouse from which distilled spirits may be exported, and distilled spirits transferred to a customs bonded warehouse under this paragraph shall be entered, stored, and accounted for under such regulations and bonds as the Secretary may prescribe; or

(10) without payment of tax by a proprietor of bonded premises for use in research, development, or testing (other than consumer testing or other market analysis) of processes, systems, materials, or equipment, relating to distilled spirits or distilled spirits operations, under such limitations and conditions as to quantities, use, and accountability as the Secretary may by regulations require for the protection of the revenue; or

(11) free of tax when contained in an article (within the meaning of section 5002(a)(14)); or

(12) free of tax in the case of distilled spirits produced under section 5181; or

(13) without payment of tax for use on bonded wine cellar premises in the production of wine or wine products which will be rendered unfit for beverage use and removed pursuant to section 5362(d).

(b) Cross references

(1) For provisions relating to denaturation, see sections 5241 and 5242.

(2) For provisions requiring permit for users of distilled spirits withdrawn free of tax and for users of specially denatured distilled spirits, see section 5271.

(3) For provisions relating to withdrawal of distilled spirits without payment of tax for use of certain vessels and aircraft, as authorized by law, see 19 U.S.C. 1309.

(4) For provisions relating to withdrawal of distilled spirits without payment of tax for manufacture in manufacturing bonded warehouse, see 19 U.S.C. 1311.

(5) For provisions relating to foreign-trade zones, see 19 U.S.C. 81c.

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

(7) For provisions authorizing removal of distillates to bonded wine cellars for use in the production of distilling material, see section 5373(c).

(8) For provisions relating to distilled spirits for use of foreign embassies, legations, etc., see section 5066.

(Added Pub. L. 85-859, title II, Sec. 201, Sept. 2, 1958, 72 Stat. 1362; Amended Pub. L. 91-172, title I, Sec. 101(j)(29), Dec. 30, 1969, 83 Stat. 529; Pub. L. 94-455, title XIX, Secs. 1905(c)(2), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1823, 1834; Pub. L. 95-176, Secs. 3(a), (d), 4(a), Nov. 14, 1977, 91 Stat. 1365; Pub. L. 96-39, title VIII, Sec. 807(a)(28), July 26, 1979, 93 Stat. 285; Pub. L. 96-223, title II, Sec. 232(e)(2)(B), Apr. 2, 1980, 94 Stat. 280; Pub. L. 98-369, div. A, title IV, Sec. 455(a), July 18, 1984, 98 Stat. 823.)

Sec. 5362. Removals of wine from bonded wine cellars

(a) Withdrawals on determination of tax

Wine may be withdrawn from bonded wine cellars on payment or

determination of the tax thereon, under such regulations as the

Secretary shall prescribe.

(b) Transfers of wine between bonded premises

(1) In general

Wine on which the tax has not been paid or determined may, under

such regulations as the Secretary shall prescribe, be transferred in

bond between bonded premises.

(2) Wine transferred to a distilled spirits plant may not be

removed for consumption or sale as wine

Any wine transferred to the bonded premises of a distilled

spirits plant--

(A) may be used in the manufacture of a distilled spirits

product, and

(B) may not be removed from such bonded premises for

consumption or sale as wine.

(3) Continued liability for tax

The liability for tax on wine transferred to the bonded premises

of a distilled spirits plant pursuant to paragraph (1) shall (except

as otherwise provided by law) continue until the wine is used in a

distilled spirits product.

(4) Transfer in bond not treated as removal for consumption

or sale

For purposes of this chapter, the removal of wine for transfer

in bond between bonded premises shall not be treated as a removal

for consumption or sale.

(5) Bonded premises

For purposes of this subsection, the term ``bonded premises''

means a bonded wine cellar or the bonded premises of a distilled

spirits plant.

(c) Withdrawals of wine free of tax or without payment of tax

Wine on which the tax has not been paid or determined may, under

such regulations and bonds as the Secretary may deem necessary to

protect the revenue, be withdrawn from bonded wine cellars--

(1) without payment of tax for export by the proprietor or by

any authorized exporter;

(2) without payment of tax for transfer to any foreign-trade

zone;

(3) without payment of tax for use of certain vessels and

aircraft as authorized by law;

(4) without payment of tax for transfer to any customs bonded

warehouse;

(5) without payment of tax for use in the production of vinegar;

(6) without payment of tax for use in distillation in any

distilled spirits plant authorized to produce distilled spirits;

(7) free of tax for experimental or research purposes by any

scientific university, college of learning, or institution of

scientific research;

(8) free of tax for use by or for the account of the proprietor

or his agents for analysis or testing, organoleptic or otherwise;

and

(9) free of tax for use by the United States or any agency

thereof, and for use for analysis, testing, research, or

experimentation by the governments of the several States and the

District of Columbia or of any political subdivision thereof or by

any agency of such governments. No bond shall be required of any

such government or agency under this paragraph.

(d) Withdrawal free of tax of wine and wine products unfit for beverage

use

Under such regulations as the Secretary may deem necessary to

protect the revenue, wine, or wine products made from wine, when

rendered unfit for beverage use, on which the tax has not been paid or

determined, may be withdrawn from bonded wine cellars free of tax. The

wine or wine products to be so withdrawn may be treated with methods or

materials which render such wine or wine products suitable for their

intended use. No wine or wine products so withdrawn shall contain more

than 21 percent of alcohol by volume, or be used in the compounding of

distilled spirits or wine for beverage use or in the manufacture of any

product intended to be used in such compounding.

(e) Withdrawal from customs bonded warehouses for use of foreign

embassies, legations, etc.

(1) In general

Notwithstanding any other provision of law, wine entered into

customs bonded warehouses under subsection (c)(4) may, under such

regulations as the Secretary may prescribe, be withdrawn from such

warehouses for consumption in the United States by and for the

official or family use of such foreign governments, organizations,

and individuals who are entitled to withdraw imported wines from

such warehouses free of tax. Wines transferred to customs bonded

warehouses under subsection (c)(4) shall be entered, stored, and

accounted for in such warehouses under such regulations and bonds as

the Secretary may prescribe, and may be withdrawn therefrom by such

governments, organizations, and individuals free of tax under the

same conditions and procedures as imported wines.

(2) Withdrawal for domestic use

Wine entered into customs bonded warehouses under subsection

(c)(4) for purposes of removal under paragraph (1) may be withdrawn

therefrom for domestic use. Wines so withdrawn shall be treated as

American goods exported and returned.

(3) Sale or unauthorized use prohibited

Wine withdrawn from customs bonded warehouses or otherwise

brought into the United States free of tax for the official or

family use of foreign governments, organizations, or individuals

authorized to obtain wine free of tax shall not be sold and shall

not be disposed of or possessed for any use other than an authorized

use. The provisions of paragraphs (1)(B) and (3) of section 5043(a)

are hereby extended and made applicable to any person selling,

disposing of, or possessing any wine in violation of the preceding

sentence, and to the wine involved in any such violation.

(Added Pub. L. 85-859, title II, Sec. 201, Sept. 2, 1958, 72 Stat. 1380;

amended Pub. L. 90-73, Sec. 1(a), Aug. 29, 1967, 81 Stat. 175; Pub. L.

94-455, title XIX, Secs. 1905(c)(4), 1906(b)(13)(A), Oct. 4, 1976, 90

Stat. 1823, 1834; Pub. L. 96-39, title VIII, Sec. 807(a)(44), July 26,

1979, 93 Stat. 287; Pub. L. 96-601, Sec. 2(a), (b), Dec. 24, 1980, 94

Stat. 3495.)

27 CFR

Sec. 28.45 Retention of records.

File copies of forms required by this part to be retained by any

proprietor or claimant, and all records, documents, or copies of records and documents supporting such forms, shall be preserved by such

proprietor or claimant for a period of not less than two years, and

during such period shall be available, during business hours, for inspection and the taking of abstracts therefrom by appropriate TTB officers.

(Approved by the Office of Management and Budget under control number

1513-0075)

(Sec. 201, Pub. L. 85-859, 72 Stat. 1342, as amended, 1381, as amended,

1390, as amended, 1395, as amended (26 U.S.C. 5114, 5367, 5415, 5555);

sec. 807, Pub. L. 96-39, 93 Stat. 283 (26 U.S.C. 5207))

[25 FR 5734, June 23, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975,

and amended by T.D. ATF-62, 44 FR 71721, Dec. 11, 1979; T.D. ATF-172, 49 FR 14943, Apr. 16, 1984; T.D. TTB-8, 69 FR 3832, Jan. 27, 2004]