Internal Revenue Code (Title 26 U.S.C.)
26 U.S.C. § 5181 (2024) — Distilled spirits for fuel use
In general
(1) Purposes for which plant may be established On such application and bond and in such manner as the Secretary may prescribe by regulation, a person may establish a distilled spirits plant solely for the purpose of— (A) producing, processing, and storing, and (B) using or distributing, distilled spirits to be used exclusively for fuel use. (2) Regulations In prescribing regulations under paragraph (1) and in carrying out the provisions of this section, the Secretary shall, to the greatest extent possible, take steps to— (A) expedite all applications; (B) establish a minimum bond; and (C) generally encourage and promote (through regulation or otherwise) the production of alcohol for fuel purposes.
Authority to exempt
The Secretary may by regulation provide for the waiver of any provision of this chapter (other than this section or any provision requiring the payment of tax) for any distilled spirits plant described in subsection (a) if the Secretary finds it necessary to carry out the provisions of this section.
Special rules for small plant production
(1) Applications (A) In general An application for an operating permit for an eligible distilled spirits plant shall be in such a form and manner, and contain such information, as the Secretary may by regulations prescribe; except that the Secretary shall, to the greatest extent possible, take steps to simplify the application so as to expedite the issuance of such permits. (B) Receipt of application Within 15 days of receipt of an application under subparagraph (A), the Secretary shall send a written notice of receipt to the applicant, together with a statement as to whether the application meets the requirements of subparagraph (A). If such a notice is not sent and the applicant has a receipt indicating that the Secretary has received an application, paragraph (2) shall apply as if a written notice required by the preceding sentence, together with a statement that the application meets the requirements of subparagraph (A), had been sent on the 15th day after the date the Secretary received the application. (C) Multiple applications If more than one application is submitted with respect to any eligible distilled spirits plant in any calendar quarter, the provisions of this section shall apply only to the first application submitted with respect to such plant during such quarter. For purposes of the preceding sentence, if a corrected or amended first application is filed, such application shall not be considered as a separate application, and the 15-day period referred to in subparagraph (A) shall commence with receipt of the corrected or amended application. (2) Determination (A) In general In any case in which the Secretary under paragraph (1)(B) has notified an applicant of receipt of an application which meets the requirements of paragraph (1)(A), the Secretary shall make a determination as to whether such operating permit is to be issued, and shall notify the applicant of such determination, within 45 days of the date on which notice was sent under paragraph (1)(B). (B) Failure to make determination If the Secretary has not notified an applicant within the time prescribed under subparagraph (A), the application shall be treated as approved. (C) Rejection of application If the Secretary determines under subparagraph (A) that a permit should not be issued— (i) the Secretary shall include in the notice to the applicant of such determination under subparagraph (A) detailed reasons for such determination, and (ii) such determination shall not prejudice any further application for such operating permit. (3) Bond No bond shall be required for an eligible distilled spirits plant. For purposes of section 5212 and subsection (e)(2) of this section, the premises of an eligible distilled spirits plant shall be treated as bonded premises. (4) Eligible distilled spirits plant The term "eligible distilled spirits plant" means a plant which is used to produce distilled spirits exclusively for fuel use and the production from which does not exceed 10,000 proof gallons per year.
Withdrawal free of tax
Distilled spirits produced under this section may be withdrawn free of tax from the bonded premises (and any premises which are not bonded by reason of subsection (c)(3)) of a distilled spirits plant exclusively for fuel use as provided in section 5214(a)(12).
Prohibited withdrawal, use, sale, or disposition
(1) In general Distilled spirits produced under this section shall not be withdrawn, used, sold, or disposed of for other than fuel use. (2) Rendering unfit for use For protection of the revenue and under such regulations as the Secretary may prescribe, distilled spirits produced under this section shall, before withdrawal from the bonded premises of a distilled spirits plant, be rendered unfit for beverage use by the addition of substances which will not impair the quality of the spirits for fuel use.
Definition of distilled spirits
For purposes of this section, the term "distilled spirits" does not include distilled spirits produced from petroleum, natural gas, or coal.
Source: official text