All terms
Distillery glossary
Bonded Warehouse
A bonded warehouse is a storage area where spirits are held under bond, meaning the federal excise tax has not yet been paid. Tax becomes due when spirits are removed from bond.
Holding spirits in bond lets distilleries age inventory for years without paying tax until the product is actually removed for sale. The distillery must maintain bond coverage against the spirits in storage and report removals, which drive the excise tax owed.
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