# § 5173. Bonds
**(a)** **Operations at, and withdrawals from, distilled spirits plant must be covered by bond**
**(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.
**(2)** **Withdrawals** Except as provided under section 5551(d), no distilled spirits (other than distilled spirits withdrawn under section 5214 or 7510) may be withdrawn from bonded premises except on payment of tax unless the proprietor of the bonded premises has furnished bond covering such withdrawal.
**(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).
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**Source Credit**: (Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1349; amended Pub. L. 91–659, § 4, Jan. 8, 1971, 84 Stat. 1966; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 96–39, title VIII, § 805(c), July 26, 1979, 93 Stat. 276; Pub. L. 114–113, div. Q, title III, § 332(b)(2)(A), Dec. 18, 2015, 129 Stat. 3105.)
## Editorial Notes
### Prior Provisions
A prior section 5173, , , related to “distillery fixtures and equipment”, prior to the general revision of this chapter by . See sections 5178(a)(1)(A), (2)(B)(C), (c)(1) and 5202(b) of this title.
> | 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). |
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 , prior to the general revision of this chapter by , as follows:
The prior sections, , are set out in , 629 to 631, 643, 650, 654, 655, 657, 662.
### Amendments
2015—Subsec. (a)(1). , substituted “Except as provided under section 5551(d), no person” for “No person”.
Subsec. (a)(2). , substituted “Except as provided under section 5551(d), no distilled spirits” for “No distilled spirits”.
1979—, 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— struck out “or his delegate” after “Secretary” wherever appearing.
1971—Subsec. (b)(1). , extended exception clause in parenthetical by making reference to cl. (4) of this subsection.
Subsec. (b)(2). , inserted reference to par. (4).
Subsec. (b)(4). , added par. (4).
## Statutory Notes and Related Subsidiaries
### Effective Date of 2015 Amendment
Amendment by applicable to any calendar quarters beginning more than 1 year after , see , set out as a note under .
### Effective Date of 1979 Amendment
Amendment by effective , see , set out as a note under .
### Effective Date of 1971 Amendment
Amendment by effective on first day of first calendar month which begins more than 90 days after , see , set out as an Effective Date note under .
### Transitional Rules Relating to All-In-Bond Method
> “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
>
> , shall be treated as intending to establish a distilled spirits plant on such premises on
>
> .”
, , , as amended by , , , provided that: