TITLE V—DISTILLED SPIRITS 
SEC. 501. REDUCED RATE OF EXCISE TAX ON CERTAIN DIS-
TILLED SPIRITS. 
(a) IN GENERAL.—Section 5001 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
(c) as subsection (d) and by inserting after subsection (b) 
the following new subsection: 
‘‘(c) REDUCED RATE.— 
‘‘(1) IN GENERAL.—In the case of a distilled 
spirits operation, the otherwise applicable tax rate 
under subsection (a)(1) on the first 100,000 of proof 
gallons of distilled spirits which are removed in the 
calendar year and which have been distilled or proc-
essed by such operation at a qualified facility in the 
United States shall be $2.70 per proof gallon. 
‘‘(2) CONTROLLED GROUPS.— 
‘‘(A) IN GENERAL.—In the case of a con-
trolled group, the 100,000 proof gallon quantity 
specified in paragraph (1) shall be applied to 
the controlled group. 
‘‘(B) DEFINITION.—For purposes of sub-
paragraph (A), the term ‘controlled group’ shall 
have the meaning given such term by subsection 
(a) of section 1563, except that— 
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‘‘(i) ‘more than 50 percent’ shall be 
substituted for ‘at least 80 percent’ each 
place it appears in such subsection, and 
‘‘(ii) such determination shall be made 
without regard to section 1563(b)(2)(C). 
‘‘(C) RULES
FOR
NON-CORPORATIONS.— 
Under regulations prescribed by the Secretary, 
principles similar to the principles of subpara-
graphs (A) and (B) shall be applied to a group 
under common control where one or more of the 
persons is not a corporation. 
‘‘(D) SINGLE
TAXPAYER.—Pursuant to 
rules issued by the Secretary, any distilled spir-
its operation which produces distilled spirits 
marketed under a similar brand, license, fran-
chise, or other arrangement shall be treated as 
a single taxpayer for purposes of the application 
of this paragraph.’’. 
(b) CONFORMING AMENDMENT.—Section 7652(f)(2) 
of such Code is amended by striking ‘‘section 5001(a)’’ 
and inserting ‘‘sections 5001(a)(1) and 5001(c)(1)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to distilled spirits removed in cal-
endar years beginning after December 31, 2016. 
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SEC. 502. EXEMPTION OF HOME DISTILLERY ESTABLISH-
MENTS FROM CERTAIN TAXATION AND BOND-
ING REQUIREMENTS. 
(a) IN GENERAL.—Section 5001 of the Internal Rev-
enue Code of 1986, as amended by section 501, is amend-
ed by redesignating subsection (d) as subsection (e), and 
by inserting after subsection (c) the following new sub-
section: 
‘‘(d) EXEMPTION
FOR DISTILLED SPIRITS PRO-
DUCED AT A HOME DISTILLERY ESTABLISHMENT.—Sub-
ject to regulations prescribed by the Secretary, the tax im-
posed by subsection (a) shall not apply to distilled spirits 
produced at a home distillery establishment (as defined 
in section 5002(a)(16)).’’. 
(b) DEFINITION OF HOME DISTILLERY ESTABLISH-
MENT.—Section 5002(a) of such Code is amended by add-
ing at the end the following new paragraph: 
‘‘(16) HOME DISTILLERY ESTABLISHMENT.— 
‘‘(A) IN GENERAL.—The term ‘home dis-
tillery establishment’ means an establishment 
that— 
‘‘(i) is located in the dwelling house of 
the owner of such establishment or in any 
shed, yard, enclosure, or other property 
connected with such dwelling house, and 
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‘‘(ii) produces distilled spirits solely 
for personal or family use by the owner of 
such establishment. 
‘‘(B) PERSONAL OR FAMILY USE.— 
‘‘(i) IN GENERAL.—A home distillery 
establishment shall be treated as producing 
distilled spirits for personal or family use 
if— 
‘‘(I) 
any 
stills 
or 
distilling 
apparatuses contained in such estab-
lishment have a mash capacity of not 
greater than 15.5 gallons, 
‘‘(II) such establishment pro-
duces no more than— 
‘‘(aa) in the case of a house-
hold with 1 adult, 24 proof gal-
lons of distilled spirits during the 
calendar year, or 
‘‘(bb) in the case of a house-
hold with 2 or more adults, 48 
proof gallons of distilled spirits 
during the calendar year, and 
‘‘(III) no distilled spirits pro-
duced by such establishment are sold 
to any person, or transferred to any 
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person (for payment or otherwise) for 
sale by such person. 
‘‘(ii) ADULT.—For purposes of this 
paragraph, the term ‘adult’ means an indi-
vidual 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 distilled 
spirits may be sold to individuals, which-
ever is greater.’’. 
(c) EXEMPTION FROM ESTABLISHMENT REQUIRE-
MENTS.—Section 5171 of such Code is amended— 
(1) in subsection (a), by striking ‘‘Except as 
otherwise provided by law’’ and inserting ‘‘Except as 
provided by subsection (e) or any other provision of 
law’’, and 
(2) by redesignating subsection (e) as sub-
section (f), and by inserting after subsection (d) the 
following new subsection: 
‘‘(e) EXCEPTION
FOR HOME DISTILLERY ESTAB-
LISHMENT.—The requirements of this section shall not 
apply in the case of a home distillery establishment (as 
described in section 5002(a)(16)).’’. 
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(d) CRIMINAL PENALTIES.—Section 5601(a)(6) of 
such Code is amended by inserting ‘‘or section 5171(e)’’ 
after ‘‘5178(a)(1)(C)’’. 
(e) LIMITATION ON SALES FOR PERSONAL OR FAM-
ILY USE.—Section 5101 of such Code is amended— 
(1) by redesignating subsection (b) as sub-
section (c), and 
(2) by inserting after subsection (a) the fol-
lowing new subsection: 
‘‘(b) LIMITATION ON SALES FOR HOME DISTILLERY 
ESTABLISHMENTS.—The Secretary shall, pursuant to reg-
ulations, require that no still, boiler, or other vessel with 
a mash capacity of greater than 15.5 gallons be sold or 
transferred to any person who intends to use such still, 
boiler, or vessel solely as part of a home distillery estab-
lishment (as described in section 5002(a)(16)).’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date that is 1 year 
after the date of the enactment of this Act. 
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TITLE VI—PROGRAM INTEGRITY 
AND EXCISE TAX ADMINIS-
TRATION 
SEC. 601. PROGRAM INTEGRITY CAP ADJUSTMENT FOR 
THE 
ALCOHOL 
AND 
TOBACCO 
TAX 
AND 
TRADE BUREAU. 
Section 251(b)(2) of the Balanced Budget and Emer-
gency Deficit Control Act of 1985 (2 U.S.C. 901(b)(2)) 
is amended by adding at the end the following new sub-
paragraphs: 
‘‘(E) ENFORCEMENT AND COMPLIANCE AC-
TIVITIES CONDUCTED BY THE ALCOHOL AND 
TOBACCO TAX AND TRADE BUREAU.— 
‘‘(i) IN GENERAL.—If a bill or joint 
resolution is enacted making appropria-
tions for a fiscal year to the Alcohol and 
Tobacco Tax and Trade Bureau of not less 
than the first amount specified in sub-
clauses (I) through (VI) of clause (ii) for 
tax activities for that fiscal year, including 
tax compliance to address the Federal tax 
gap (taxes owed but not paid), and pro-
vides an additional appropriation for tax 
activities, including tax compliance to ad-
dress the Federal tax gap, the adjustment 
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shall be the amount of the additional ap-
propriation, except that the adjustment 
shall not exceed the second amount speci-
fied in that subclause. 
‘‘(ii) 
AMOUNTS
SPECIFIED.—The 
amounts specified are— 
‘‘(I) for fiscal year 2016, an ap-
propriation of $101,000,000, and an 
additional 
appropriation 
of 
$5,000,000; 
‘‘(II) for fiscal year 2017, an ap-
propriation of $103,000,000, and an 
additional 
appropriation 
of 
$9,000,000; 
‘‘(III) for fiscal year 2018, an 
appropriation of $106,000,000, and 
an 
additional 
appropriation 
of 
$14,000,000; 
‘‘(IV) for fiscal year 2019, an ap-
propriation of $108,000,000, and an 
additional 
appropriation 
of 
$18,000,000; 
‘‘(V) for fiscal year 2020, an ap-
propriation of $111,000,000, and an 
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additional 
appropriation 
of 
$24,000,000; and 
‘‘(VI) for fiscal year 2021, an ap-
propriation of $113,000,000, and an 
additional 
appropriation 
of 
$24,000,000. 
‘‘(iii) DEFINITIONS.—As used in this 
subparagraph— 
‘‘(I) the term ‘additional appro-
priation for tax activities, including 
tax compliance to address the Federal 
tax gap’ means new and continuing 
investments in expanding and improv-
ing the effectiveness and efficiency of 
the overall tax enforcement and com-
pliance program of the Alcohol and 
Tobacco Tax and Trade Bureau and 
fully funding operational support ac-
tivities at the Alcohol and Tobacco 
Tax and Trade Bureau; and 
‘‘(II) the term ‘new and con-
tinuing investments’ includes addi-
tional resources for implementing new 
authorities and for conducting addi-
tional examinations and audits. 
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‘‘(iv) 
APPROPRIATION.—The 
first 
amount specified in subclauses (I) through 
(VI) of clause (ii) is the amount under the 
heading in an appropriations Act for the 
Alcohol and Tobacco Tax and Trade Bu-
reau that is specified to pay for the costs 
of tax activities, including tax compliance 
to address the Federal tax gap, and to pay 
for regulatory activities that protect the 
public. 
‘‘(v) 
ADDITIONAL
AMOUNT.—The 
amounts further specified in subclauses (I) 
through (VI) of clause (ii) are the amounts 
under the heading in an appropriations act 
for the Alcohol and Tobacco Tax and 
Trade Bureau for the amount of the addi-
tional appropriation for tax activities, in-
cluding tax compliance to address the Fed-
eral tax gap. 
‘‘(F) ACTIVITIES THAT PROTECT THE PUB-
LIC
CONDUCTED
BY
THE
ALCOHOL
AND
TO-
BACCO TAX AND TRADE BUREAU.— 
‘‘(i) IN GENERAL.—If a bill or joint 
resolution is enacted making appropria-
tions for a fiscal year to the Alcohol and 
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Tobacco Tax and Trade Bureau of not less 
than the first amount specified in sub-
clauses (I) through (VI) of subparagraph 
(E)(ii) for tax activities for that fiscal 
year, including tax compliance to address 
the Federal tax gap (taxes owed but not 
paid), and regulatory activities conducted 
by the Alcohol and Tobacco Tax and Trade 
Bureau, and making appropriations in the 
amount and for the purpose of the adjust-
ment in the second amount specified in 
subclauses (I) through (VI) of subpara-
graph (E)(ii), then the further additional 
adjustment for that fiscal year shall be the 
further additional appropriation provided 
in that Act for regulatory activities that 
protect the public for that fiscal year, but 
shall not exceed $5,000,000 in additional 
new budget authority. 
‘‘(ii) DEFINITIONS.—As used in this 
subparagraph— 
‘‘(I) the term ‘regulatory activi-
ties that protect the public’ means 
new budget authority for new and 
continuing investments in expanding 
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and improving programs at the Alco-
hol and Tobacco Tax and Trade Bu-
reau, such as regulating permitting, 
labeling, advertising, distribution and 
trade of alcohol and tobacco products; 
and 
‘‘(II) the term ‘further additional 
new budget authority’ means the 
amount provided for a fiscal year in 
excess of the first amount specified in 
subclauses (I) through (VI) of sub-
paragraph (E)(ii) and the adjustment 
in the second amount specified in sub-
clauses (I) through (VI) of subpara-
graph 
(E)(ii), 
not 
to 
exceed 
$5,000,000.’’. 
SEC. 602. INCREASE INFORMATION SHARING TO ADMIN-
ISTER EXCISE TAXES. 
(a) IN GENERAL.—Section 6103(o) of the Internal 
Revenue Code of 1986 is amended by adding at the end 
the following new paragraph: 
‘‘(3) TAXES IMPOSED BY SECTION 4481.—Re-
turns and return information with respect to taxes 
imposed by section 4481 shall be open to inspection 
by or disclosure to officers and employees of United 
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States Customs and Border Protection of the De-
partment of Homeland Security whose official duties 
require such inspection or disclosure for purposes of 
administering such section.’’. 
(b) 
CONFORMING
AMENDMENTS.—Section 
6103(p)(4) of such Code is amended by striking ‘‘or 
(o)(1)(A)’’ each place it appears and inserting ‘‘, (o)(1)(A) 
or (o)(3)’’. 
Æ 
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