# 26 U.S.C. § 5173: Bonds Source: OLRC release point 119-134 . Cite pinpoints as 26 U.S.C. § 5173(a)(1). ## § 5173(a) Operations at, and withdrawals from, distilled spirits plant must be covered by bond **§ 5173(a)(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. **§ 5173(a)(2) Withdrawals.** Except as provided under section 5551(d), no distilled spirits (other than distilled spirits withdrawn under section 5214 or 7510) may be withdrawn from bonded premises except on payment of tax unless the proprietor of the bonded premises has furnished bond covering such withdrawal. ## § 5173(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: **§ 5173(b)(1) One plant bond.** The bond covers operations at a single distilled spirits plant. **§ 5173(b)(2) Adjacent wine cellar bond.** The bond covers operations at a distilled spirits plant and at an adjacent bonded wine cellar. **§ 5173(b)(3) Area bond.** The bond covers operations at 2 or more distilled spirits plants (and adjacent bonded wine cellars) which— **§ 5173(b)(3)(A)** are located in the same geographical area (as designated in regulations prescribed by the Secretary), and **§ 5173(b)(3)(B)** are operated by the same person (or, in the case of a corporation, by such corporation and its controlled subsidiaries). ## § 5173(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). ## § 5173(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). ## § 5173(e) Terms and conditions **§ 5173(e)(1) In general.** Any bond furnished under this section shall be conditioned that the person furnishing the bond— **§ 5173(e)(1)(A)** will faithfully comply with all provisions of law and regulations relating to the activities covered by such bond, and **§ 5173(e)(1)(B)** will pay— **§ 5173(e)(1)(B)(i)** all taxes imposed by this chapter, and **§ 5173(e)(1)(B)(ii)** all penalties incurred by, or fines imposed on, such person for violation of any such provision. **§ 5173(e)(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. ## § 5173(f) Amount **§ 5173(f)(1) In general.** The penal sum of any bond shall be the amount determined under regulations prescribed by the Secretary. **§ 5173(f)(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. ## § 5173(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. ## § 5173(h) Special rules For purposes of this section— **§ 5173(h)(1) Withdrawal bonds.** In the case of any bond furnished under this section which covers withdrawals but not operations— **§ 5173(h)(1)(A)** such bond shall be in addition to the operations bond, and **§ 5173(h)(1)(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. **§ 5173(h)(2) Adjacent wine cellars.** **§ 5173(h)(2)(A) Requirements.** No wine cellar shall be treated as being adjacent to a distilled spirits plant unless— **§ 5173(h)(2)(A)(i)** such distilled spirits plant is qualified under this subchapter for the production of distilled spirits, and **§ 5173(h)(2)(A)(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). **§ 5173(h)(2)(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). ## Leading cases - [United States v. Fidelity & Deposit Co., 10 F.3d 1150 (5th Cir. 1994)](https://www.courtlistener.com/opinion/658324/united-states-v-fidelity-and-deposit-company-etc-fidelity-and-deposit/) - [United States v. Johnson, 434 F.2d 816 (6th Cir. 1970)](https://www.courtlistener.com/opinion/293353/united-states-v-edward-johnson-and-lonnie-eugene-johnson/) ## Connections Cites: § 5214 Withdrawal of distilled spirits from bonded premises free of tax or without payment of tax; § 5354 Bond; § 5551 General provisions relating to bonds Cited by: § 5005 Persons liable for tax; § 5175 Export bonds; § 5176 New or renewed bonds; § 5213 Withdrawal of distilled spirits from bonded premises on determination of tax ## 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 - 1958-09-02: [Pub. L. 85-859](/26/act/85-859.md), 72 Stat. 1349 - 1971-01-08: [Pub. L. 91-659](/26/act/91-659.md), 84 Stat. 1966 - 1976-10-04: [Pub. L. 94-455](/26/act/94-455.md), 90 Stat. 1834 - 1979-07-26: [Pub. L. 96-39](/26/act/96-39.md), 93 Stat. 276 - 2015-12-18: [Pub. L. 114-113](/26/act/114-113.md), 129 Stat. 3105