An Act to amend provisions of the Internal Revenue Code of 1954 relating to distilled spirits, and for other purposes.
PL 95-176 (H.R.4458), enacted 11/14/1977

PUBLIC LAW 95-176_NOV. 14, 1977 
91 STAT. 1363 
Public Law 95-176 
95th Congress 
An Act 
To amend certain provisions of tlie Internal Revenue Code of 1954 relating to 
distilled spirits, and for otlier purposes. 
Nov. 14, 1977 
[H.R. 4458] 
Taxes. 
Distilled spirits 
or wines. 
26 use 5062. 
Regulations. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America 
in Congress assembled, That section 5062 
(b) of the Internal Revenue Code of 195i is amended to read as 
follows: 
"(b) DRAWBACK.—On the exportation of distilled spirits or wines 
manufactured, produced, bottled, or packaged in casks or other bulk 
containers in the United States on which an internal revenue tax has 
been paid or determined, and which are contained in any cask or 
other bulk container, or in bottles packed in cases or other containers, 
there shall be allowed, under regulations prescribed by the Secretary, 
a drawback equal in amount to the tax found to have been paid or 
determined on such distilled spirits or wines. In the case of distilled 
Claim, filing 
spirits, the preceding sentence shall not apply unless the claim for 
drawback is filed by the bottler or packager of the spirits and unless 
such spirits have been stamped or restamped, and marked, especially 
for export, under regulations prescribed by the Secretary. The Secre-
tary is authorized to prescribe regulations governing the determina-
tion and payment or crediting of drawback of internal revenue tax 
on spirits and wines eligible for drawback under this subsection, 
including the requirements of such notices, bonds, bills of lading, and 
other evidence indicating payment or determination of tax and expor-
tation as shall be deemed necessary." 
SEC. 2. (a) Section 5215 of the Internal Revenue Code of 1954 is 26 USC 5215 
amended to read as follows: 
"SEC. 5215. RETURN OF TAX DETERMINED DISTILLED SPIRITS TO 
BONDED PREMISES. 
"(a) GENERAL.—On such application and under such regulations Application. 
as the Secretary may prescribe, distilled spirits withdrawn from 
bonded premises on payment or determination of tax (other than 
products to which any alcoholic ingredients other than such distilled 
spirits have been added) may be returned to the bonded premises of 
a distilled spirits plant. Snch returned distilled spirits shall be 
destroyed, denatured, or redistilled, or shall be mingled as authorized 
in section 5234(a) (1) (other than subparagraph (C) thereof). 
"(b) 
DISTILLED SPIRITS RETURNED TO BONDED PREMISES FOR STOR-
AGE P:ENDING EXPORTATION.—On such application and under such 
conditions as the Secretary may by regulations prescribe, distilled 
spirits which would be eligible for allowance of drawback under 
section 5062(b) on exportation, may be returned by the bottler or 
packager of such distilled spirits to an export storage facility on the 
bonded premises of the distilled spirits plant where bottled or pack-
aged, solely for the purpose of storage pending withdrawal without 
payment of tax under section 5214(a) (4), (7), (8), or (9), or free of 
tax under section 7510. 
"(c) 
DISTILLED SPIRITS STAMPED AND LABELED AS BOTTLED IN 
BOND.—On such application and under such regulations as the Sec- Application, 
retary may prescribe, a proprietor of bonded premises who has bottled 
26 USC 5234. 
Application. 
Supra. 
Post, p. 1365. 
26 USC 7510. 
91 STAT. 1364 
PUBLIC LAW 95-176—NOV. 14, 1977 
26 use 5178. 
Bonded 
warehousing 
facilities, 
export storage. 
26 use 5178. 
Ante, p. 1363. 
Stamps. 
26 use 5205. 
Distilled spirits, 
foreign embassy 
use. 
26 u s e 5066. 
26 u s e 5233. 
26 u s e 5214. 
Records and 
reports. 
26 u s e 5207. 
Abatement, 
remittance, 
credit or refund. 
26 u s e 5008. 
26 u s e 5001. 
26 u s e 7652. 
distilled spirits under section 5178(a) (4) (A) (ii), which are stamped 
and labeled as bottled in bond for domestic consumption, may return 
cases of such bottled distilled spirits to appropriate storage facilities 
on the bonded premises of the distilled spirits plant where bottled for 
storage pending withdrawal for any purpose for which distilled spirits 
bottled under section 5178(a) (4) (A) (i) may be withdrawn from 
bonded premises. 
"(d) 
APPLICABILITY OF CHAPTER TO DISTILLED SPIRITS RETURNED 
TO BONDED PREMISES.—Except as otherwise provided in this section, 
all provisions of this chapter applicable to distilled spirits in bond 
shall be applicable to distilled spirits returned to bonded premises 
under the provisions of this section on such return. 
"(e) 
CROSS REFERENCES,— 
"(1) For provisions relating to the remission, abatement, credit, or 
refund of tax on distilled spirits returned to bonded premises under this 
' section, see section 5008(d). 
"(2) For provisions relating to the establishment of an export storage 
facility on the bonded premises of a distilled spirits plant, see section 
5178(a)(3)(D)." 
(b) Section 5178(a) (3) of such Code is amended by adding at the 
end thereof the following new subparagraph: 
" ( D ) A proprietor who has established facilities for the 
storage on bonded premises of distilled spirits under sub-
paragraph (C) may establish a portion of such premises 
as an export storage facility for the storage of distilled spirits 
returned to bonded premises under section 5215(b)." 
(c) Section 5205(c) (2) of such Code is amended by adding at the 
end thereof the following new sentence: "This paragraph shall also 
apply to every container of distilled spirits returned to the bonded 
premises under the provisions of section 5215 (b).". 
(d) The heading and the first sentence of paragraph (1) of section 
5066(a) of such Code are amended to read as follows: 
" (1) 
BOTTLED DISTILLED SPIRITS WITHDRAWN FROM BONDED PREM-
ISES.—Under such regulations as the Secretary may prescribe, dis-
tilled spirits bottled in bond for export under the provisions of 
section 5233, or bottled distilled spirits returned to bonded prem-
ises under section 5215(b), may be withdrawn from bonded prem-
ises as provided in section 5214(a)(4) for transfer to customs 
bonded warehouses in which imported distilled spirits are per-
mitted to be stored in bond for entry therein pending withdrawal 
therefrom as provided in subsection (b)." 
(e) Section 5207 (a) of such Code is amended— 
(1) by striking out "and" at the end of paragraph (9), 
(2) by redesignating present paragraph (10) as (11), and 
(3) by inserting after paragraph 
(9) the following new 
paragraph: 
"(10) the kind and quantity of distilled spirits returned to 
bonded premises, and". 
(f) Section 5008(d) of such Code is amended to read as follows; 
"(d) 
DISTILLED SPIRITS RETURNED TO BONDED PREMISES.— 
"(1) GENERAL.—^Whenever any distilled spirits 
withdrawn 
from bonded premises on payment or determination of tax are 
returned to the bonded premises of a distilled spirits plant under 
section 5215 (a), the Secretary shall abate, remit, or (without inter-
est) credit or refund the tax imposed under section 5001(a) (1) 
(or the tax equal to such tax imposed under section 7652) on the 
spirits so returned. 
PUBLIC LAW 95-176—NOV. 14, 1977 
91 STAT. 1365 
"(2) 
DISTILLED 
SPIRITS RETURNED TO BONDED PREMISES FOR 
STORAGE PENDING EXPORTATION.—Whenever any distilled spirits are 
returned under section 5215(b) to the bonded premises of a dis-
tilled spirits plant, the Secretary shall (without interest) credit 
or refund the internal revenue tax found to have been paid or 
determined with respect to such distilled spirits. Such amount of 
tax shall be the same amount which would be allowed as a draw-
back under section 5062(b) on the exportation of such distilled 
spirits. 
"(3) 
DISTILLED 
SPIRITS 
STAMPED AND LABELED AS BOTTLED 
IN BOND.—Whenever any distilled spirits are returned under sec-
tion 5215(c) to the bonded premises of a distilled spirits plant, 
the Secretary shall (without interest) credit or refund the tax 
imposed under section 5001(a) (1) on the spirits so returned. 
"(4) LIMITATION.—No allowance under paragraph (1), (2), or 
(3) shall be made unless a claim is filed under such regulations 
as the Secretary may prescribe, by the proprietor of the distilled 
spirits plant to which the distilled spirits are returned within 6 
months of the date of return." 
SEC. 3. (a) Section 5214(a)(9) of the Internal Revenue Code of 
1954 is amended to read as follows: 
"(9) without payment of tax, in the case of distilled spirits 
bottled in bond for export under section 5233 or distilled spirits 
returned to bonded premises under section 5215(b), 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". 
(b) Section 5175(a) of such Code is amended to read as follows: 
"(a) REQUIREMENTS.—No distilled spirits shall be withdrawn from 
bonded premises for exportation, or for transfer to a customs bonded 
warehouse for storage therein pending exportation, without payment 
of tax unless the exporter has furnished bond to cover such withdrawal 
under such regulations and conditions, and in such form and penal 
sum, as the Secretary may prescribe." 
(c) Section 5003 of such Code is amended by striking out "manu-
facturing" in paragraph (9) and inserting before the period at the 
end of paragraph (9) "and section 5214(a) (9)". 
(d) Section 5214(b) of such Code is amended by adding at the end 
thereof the following new paragraph: 
"(7) For provisions relating to distilled spirits for use of foreign 
embassies, legations, etc., see section 5066." 
SEC. 4. (a) Section 5214(a) of the Internal Revenue Code of 1954 
is amended by adding at the end thereof the following new paragraph: 
" (10) without payment of tax by a proprietor of bonded prem-
ises for use in research, development, or testing (other than con-
sumer testing or other market analysis) of processes, systems, 
materials, or equipment, relating to distilled spirits or distillery 
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." 
Credit or refund. 
Ante, p. 1363. 
Amount. 
Ante, p. 1363. 
Credit or refund. 
26 u s e 5001. 
Claim, filing. 
26 u s e 5214. 
26 u s e 5233. 
Export bonds. 
26 u s e 5175. 
26 u s e 5003. 
Supra. 
Supra. 
91 STAT. 1366 
PUBLIC LAW 95-176—NOV. 14, 1977 
Liability. 
26 use 5005. 
Liens. 
26 use 5004. 
26 use 5008. 
Ante, pp. 1364, 
1365. 
26 use 5003. 
Mingling and 
blending. 
26 use 5234. 
Rectification tax, 
exemption. 
26 use 5025. 
(b) Section 5005(e) (2) of such Code is amended to read as follows: 
"(2) RELIEF FROM LIABILITY.—All persons liable for the tax on 
distilled spirits under paragraph (1) of this subsection, or under 
subsection (a) or (b), or under any similar prior provisions of 
internal revenue law, shall be relieved of any such liability at the 
time, as the case may be, the distilled spirits are exported, depos-
ited in a foreign-trade zone, used in the production of wine, 
deposited in customs bonded warehouses, laden as supplies upon, 
or used in the maintenance or repair of, certain vessels or air-
craft, or used in certain research, development, or testing, as 
provided by law." 
(c) (1) Section 5004(a) (2) (B) of such Code is amended by strik-
ing out" (9), or" and inserting "or" after " (2),". 
(2) Section 5004(a) (2) (C) of such Code is amended to read as 
follows: 
"(C) exported, deposited in a foreign-trade zone, used in 
the production of wine, laden as supplies upon, or used in the 
maintenance or repair of, certain vessels or aircraft, deposited 
in a customs bonded warehouse, or used in certain research, 
development, or testing, as provided by law." 
(d) (1) Section 5005(d) of such Code is amended by striking out 
" (3), or (9)" and inserting "or (3)" after " (2),". 
(2) Section 5005(e)(1) of such Code is amended by striking out 
"section 5214(a) (4), (5), (6), (7), or (8)," and inserting "section 
5214(a) (4), (5), (6), (7), (8), (9),or (10),". 
(e)(1) Section 5008(f)(3) of such Code is amended by striking 
"and" at the end thereof. 
(2) Section 5008(f) (4) of such Code is amended by striking out 
the period at the end thereof and inserting in lieu thereof "; and". 
(3) Section 5008(f) of such Code is amended by adding at the end 
thereof the following: 
"(5) the customs bonded warehouse in the case of withdrawal 
under sections 5066 and 5214(a) (9). 
The provisions of subsection (a) shall be applicable to loss of dis-
tilled spirits withdrawn from bonded premises without payment of 
tax under section 5214(a) (10) for certain research, development, or 
testing, until such distilled spirits are used as provided by law." 
(f) Paragraph (14) of section 5003 of such Code is amended to read 
as follows: 
"(14) For provisions authorizing the withdrawal of distilled spirits 
without payment of tax for use in certain research, development, or test-
ing, see section 5214(a) (10)." 
SEC. 5. (a)(1) Section 5234(a)(2) of such Code is amended by 
striking from the heading "FOR FURTHER STORAGE IN BOND.". 
(2) So much of the first sentence of section 5234 (a) (2) of such Code 
as follows subparagraph (C) thereof is amended to read as follows: 
"(D) which have been stored in internal revenue bond in 
the same kind of cooperage for not less than 4 years (or 2 years 
in the case of rum or brandy), 
may, within 20 years of the date of original entry for deposit of 
the spirits, be mingled on bonded premises." 
(b) Section 5025(e) (7) of such Code is amended by striking out 
"for further storage in bond". 
PUBLIC LAW 95-176—NOV. 14, 1977 
91 STAT. 1367 
SEC. 6. Section 5025(b) of the Internal Revenue Code of 1954 is 26 USC 5025,. 
amended by inserting ", or the extracted oils of such," after "other 
natural aromatics". 
SEC. 7. The amendments made by this Act shall take effect on the Effective date, 
first day of the first calendar month which begins more than 90 days 26 USC 5003 
after the date of the enactment of this Act. 
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Approved November 14, 1977. 
LEGISLATIVE HISTORY: 
HOUSE REPORT No. 95-761 (Comm. on Ways and Means). 
CONGRESSIONAL RECORD, Vol 123 (1977): 
Oct. 31, considered and passed House. 
Nov. 1, considered and passed Senate.