paragraph arising under prior provisions of internal revenue law shall not be assertable as to the tax on any distilled spirits in respect to which the persons liable for the tax have been relieved of liability therefor by reason of the provisions_of_section_5005 (c) (2), (c) (3), (d), or (e).

(2) EXCEPTION DURING TERM OF BOND.-No lien shall attach to any lot or tract of land, distillery, building, or distilling apparatus, under this subsection, by reason of distilling done during any period included within the term of any bond given under section 5173 (b) (1) (C).

(3) EXTINGUISHMENT OF LIEN.-Any lien under paragraph (1), or any similar lien imposed on the property described in paragraph (1) under prior provisions of internal revenue law, shall be held to be extinguished

(A) if the property is no longer used for distilling and there is no outstanding liability against any person referred to in section 5005 (a) or (b) for taxes or penalties imposed by law on the distilled spirits produced thereon, and no litigation is pending in respect of any such tax or penalty; or

(B) if an indemnity bond given under the provisions of section 5173 (b) (1) (C), further conditioned to stand in lieu of such lien or liens and to indemnify the United States for the payment of all taxes and penalties which otherwise could be asserted against such property by reason of such lien or liens, is accepted and approved by the Secretary or his delegate. Such bond shall not be accepted or approved if there is any pending litigation or outstanding assessment with respect to such taxes or penalties, or if the Secretary or his delegate has knowledge of any circumstances indicating that such bond is tendered with intent to evade payment or defeat collection of any tax or penalty.

(4) CERTIFICATE OF DISCHARGE.-Any person claiming any interest in the property subject to lien under paragraph (1) may apply to the Secretary or his delegate for a duly acknowledged certificate to the effect that such lien is discharged and, if the Secretary or his delegate determines that such lien is extinguished, the Secretary or his delegate shall issue such certificate, and any such certificate may be recorded.

(c) CROSS REFERENCE.

For provisions relating to extinguishing of lien in case of redistillation, see section 5223 (d).

SEC. 5005. PERSONS LIABLE FOR TAX.

(a) GENERAL.-The distiller or importer of distilled spirits shall be liable for the taxes imposed thereon by section 5001 (a) (1). (b) DOMESTIC DISTILLED SPIRITS.

(1) LIABILITY OF PERSONS INTERESTED IN DISTILLING.-Every proprietor or possessor of, and every person in any manner interested in the use of, any still, distilling apparatus, or distillery, shall be jointly and severally liable for the taxes imposed by law on the distilled spirits produced therefrom.

(2) EXCEPTION.-A person owning or having the right of control of not more than 10 percent of any class of stock of a corporate proprietor of a distilled spirits plant shall not be deemed to be a person liable for the tax for which such proprietor is liable under the pro

visions of paragraph (1). This exception shall not apply to an officer or director of such corporate proprietor.

(c) PROPRIETORS OF DISTILLING SPIRITS PLANTS.

(1) BONDED STORAGE.-Every person operating bonded premises of a distilled spirits plant shall be liable for the internal revenue tax on all distilled spirits while the distilled spirits are stored on such premises, and on all distilled spirits which are in transit to such premises (from the time of removal from the transferor's bonded premises) pursuant to application made by him. Such liability for the tax on distilled spirits shall continue until the distilled spirite are transferred or withdrawn from bonded premises as authorized by law, or until such liability for tax is relieved by reason of the provisions of section 5008 (a). Nothing in the paragraph shall relieve any person from any liability imposed by subsection (a) or (b).

(2) TRANSFERS IN BOND.-When distilled spirits are transferred in bond in accordance with the provisions of section 5212, persons liable for the tax on such spirits under subsection (a) or (b), or under any similar prior provisions of internal revenue law, shall be relieved of such liability, if proprietors of transferring and receiving premises are independent of each other and neither has a proprietary interest, directly or indirectly, in the business of the other, and all persons liable for the tax under subsection (a) or (b), or under any similar prior provisions of internal revenue law, have divested themselves of all interest in the spirits so transferred. Such relief from liability shall be effective from the time of removal from the transferor's bonded premises, from the time of such divestment of interest, or on July 1, 1959, whichever is later. The provisions of this paragraph shall be construed to apply to distilled spirits transferred in bond, whether such transfers occur prior to or on or after July 1, 1959, but shall not apply in any case in which the tax was paid or determined prior to such date.

(3) WITHDRAWALS ON DETERMINATION OF TAX.

(A) Any person who withdraws distilled spirits from the bonded premises of a distilled spirits plant on determination of tax, upon giving of a withdrawal bond as provided for in section 5174, shall be liable for payment of the internal revenue tax on the distilled spirits so withdrawn, from the time of such withdrawal.

(B) All persons liable for the tax on distilled spirits under subsection (a) or (b), or under any similar prior provisions of internal revenue law, shall be relieved of liability with respect to the tax on any distilled spirits withdrawn on determination of tax under withdrawal bond (as provided for in section 5174) if the person withdrawing such spirits and the person, or persons, liable for the tax under subsection (a) or (b), or under any similar prior provisions of internal revenue law, are independent of each other and neither has a proprietary interest, directly or indirectly, in the business of the other, and all persons liable for the tax under subsection (a) or (b), or under any similar prior provisions of internal revenue law, have divested themselves of all interest in the spirits so withdrawn.

(d) WITHDRAWALS FREE OF TAX.-All persons liable for the tax under subsection (a) or (b), or under any similar prior provisions of

internal revenue law, shall be relieved of such liability as to distilled spirits withdrawn free of tax under the provisions of section 5214 (a) (1), (2), (3), or (9), or under section 7510, at the time such spirits are so withdrawn from bonded premises.

(e) WITHDRAWALS WITHOUT PAYMENT OF TAX.

(1) LIABILITY FOR TAX.-Any person who withdraws distilled spirits from the bonded premises of a distilled spirits plant without payment of tax, as provided in section 5214 (a) (4), (5), (6), (7), or (8), shall be liable for the internal revenue tax on such distilled spirits, from the time of such withdrawal; and all persons liable for the tax on such distilled spirits under subsection (a) or (b), or under any similar prior provisions of internal revenue law, shall, at the time of such withdrawal, be relieved of any such liability on the distilled spirits so withdrawn if the person withdrawing such spirits and the person, or persons, liable for the tax under subsection (a) or (b), or under any similar prior provisions of internal revenue law, are independent of each other and neither has a proprietary interest, directly or indirectly, in the business of the other, and all persons liable for the tax under subsection (a) or (b), or under any similar prior provisions of internal revenue law, have divested themselves of all interest in the spirits so withdrawn.

(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, deposited in a foreign-trade zone, used in the production of wine, deposited in customs manufacturing bonded warehouses, or laden as supplies upon, or used in the maintenance or repair of, certain vessels or aircraft, as provided by law.

(f) CROSS REFERENCES.

(1) For provisions conditioning warehousing bonds on the payment of the tax, see section 5173 (c).

(2) For provisions relating to transfer of tax liability to redistiller in case of redistillation, see section 5223.

(3) For liability for tax on denatured distilled, spirits, articles, and volatile fruit-flavor concentrates, see section 5001 (a) (6) and (7).

(4) For liability for tax on distilled spirits withdrawn free of tax, see section 5001 (a) (5).

(5) For liability of wine producer for unlawfully using wine spirits withdrawn for the production of wine, see section 5391.

SEC. 5006. DETERMINATION OF TAX.

(a) REQUIREMENTS.

(1) GENERAL.-Except as otherwise provided in this section, the internal revenue tax on distilled spirits shall be determined when the spirits are withdrawn from bond. Such tax shall be determined by such means as the Secretary or his delegate shall by regulations prescribe, and with the use of such devices and apparatus (including but not limited to storage, gauging, and bottling tanks and pipelines) as the Secretary or his delegate may require. The tax on distilled spirits withdrawn from the bonded premises of a distilled spirits plant shall be determined upon completion of the gauge for determination of tax and before withdrawal from bonded premises, under such regulations as the Secretary or his delegate shall prescribe.

(2) DISTILLED SPIRITS ENTERED FOR STORAGE.

(A) BONDING PERIOD LIMITATION.-Except as provided in subparagraph (B), the tax on distilled spirits entered for deposit in storage in internal revenue bond shall be determined within 20 years from the date of original entry for deposit in such storage. (B) EXCEPTIONS.-Subparagraph (A) and section 5173 (c) (1) (A) shall not apply in the case of

(i) distilled spirits of 190 degrees or more of proof;

(ii) denatured distilled spirits; or

(iii) distilled spirits which on July 26, 1936, were 8 years of age or older and which were in bonded warehouses on that date. (C) DISTILLED SPIRITS MINGLED IN INTERNAL REVENUE BOND. In applying subparagraph (A) and section 5173 (c) (1) (A) to distilled spirits entered for deposit in storage on different dates and lawfully mingled in internal revenue bond, the Secretary or his delegate shall, by regulations, provide for the application of the 20-year period to such spirits in such manner that no more spirits will remain in bond than would have been the case had such mingling not occurred.

(3) DISTILLED SPIRITS NOT ACCOUNTED FOR.-If the Secretary or his delegate finds that the distiller has not accounted for all the distilled spirits produced by him, he shall, from all the evidence he can obtain, determine what quality of distilled spirits was actually produced by such distiller, and an assessment shall be made for the difference between the quantity reported and the quantity shown to have been actually produced, at the rate of tax imposed by law for every proof gallon.

(b) TAXABLE LOSS.

(1) ON ORIGINAL QUANTITY.-Where there is evidence satisfactory to the Secretary or his delegate that there has been any loss of distilled spirits from any cask or other package deposited in storage in internal revenue bond, other than a loss which by reason of section 5008 (a) is not taxable, the Secretary or his delegate may require the withdrawal from bonded premises of such distilled spirits, and direct the officer designated by him to collect the tax accrued on the original quantity of distilled spirits entered for deposit in storage in internal revenue bond in such cask or package, notwithstanding that the time specified in any bond given for the withdrawal of the spirits entered in storage in such cask or package has not expired, except that, under regulations prescribed by the Secretary or his delegate, when the extent of any loss from causes other than theft or unauthorized voluntary destruction can be established by the proprietor to the satisfaction of the Secretary or his delegate, an allowance of the tax on the loss so established may be credited against the tax on the original quantity. If such tax is not paid on demand it shall be assessed and collected as other taxes are assessed and collected.

(2) ALTERNATIVE METHOD.-Where there is evidence satisfactory to the Secretary or his delegate that there has been access, other than is authorized by law, to the contents of casks or packages stored on bonded premises, and the extent of such access is such as to evidence a lack of due diligence or a failure to employ necessary and effective controls on the part of the proprietor, the Secretary

or his delegate (in lieu of requiring the casks or packages to which such access has been had to be withdrawn and tax paid on the original quantity of distilled spirits entered for deposit in storage in internal revenue bond in such casks or packages as provided in paragraph (1)) may assess an amount equal to the tax on 5 proof gallons of distilled spirits at the prevailing rate on each of the total number of such casks or packages as determined by him.

(3) APPLICATION OF SUBSECTION.-The provisions of this subsection shall apply to distilled spirits which are filled into casks or packages, as authorized by law, after entry and deposit in storage in internal revenue bond, whether by recasking, filling from storage tanks, consolidation of packages, or otherwise; and the quantity filled into such casks or packages shall be deemed to be the original quantity for the purpose of this subsection, in the case of loss from such casks or packages.

(c) DISTILLED SPIRITS NOT BONDED.

(1) GENERAL.-The tax on any distilled spirits, removed from the place where they were distilled and (except as otherwise provided by law) not deposited in storage on bonded premises of a distilled spirits plant, shall, at any time within the period of limitation provided in section 6501, when knowledge of such fact is obtained by the Secretary or his delegate, be assessed on the distiller of such distilled spirits (or other person liable for the tax) and payment of such tax immediately demanded and, on the neglect or refusal of payment, the Secretary or his delegate shall proceed to collect the same by distraint. This paragraph shall not exclude any other remedy or proceeding provided by law.

(2) PRODUCTION AT OTHER THAN QUALIFIED PLANTS.-Except as otherwise provided by law, the tax on any distilled spirits produced in the United States at any place other than a qualified distilled spirits plant shall be due and payable immediately upon production. (d) UNLAWFULLY IMPORTED DISTILLED SPIRITS.-Distilled spirits smuggled or brought into the United States unlawfully shall, for purposes of this chapter, be held to be imported into the United States. and the internal revenue tax shall be due and payable at the time of such importation.

(e) CROSS REFERENCE.

For provisions relating to removal of distilled spirits from bonded premises on determination of tax, see section 5213.

SEC. 5007. COLLECTION OF TAX ON DISTILLED SPIRITS.

(a) TAX ON DISTILLED SPIRITS REMOVED FROM BONDED PREM

ISES.

(1) GENERAL.-The tax on domestic distilled spirits and on distilled spirits removed from customs custody under section 5232 shall be paid in accordance with section 5061.

(2) DISTILLED SPIRITS WITHDRAWN TO BOTTLING PREMISES UNDER WITHDRAWAL BOND.-If distilled spirits are withdrawn from bonded premises under section 5213 and a withdrawal bond is posted under section 5174 (a) (2), the Secretary or his delegate shall, in fixing the time for filing the return and the time for payment of the tax under section 5061 (a), make allowance for the period of transportation of the distilled spirits from the bonded premises to the bottling prem