Sixth Circuit holds home-distilling ban is constitutional

The ban on home distilling of spirits was first enacted in 1868 to combat perceived rampant evasion of the federal excise tax on spirits — what a House select committee then described as among “the most stupendous frauds” committed against the government. The ban survived a constitutional challenge brought in the Sixth Circuit by a home brewer who sought to distill whiskey for personal consumption. However, the Fifth Circuit, in McNutt, No. 24-10760 (5th Cir. 4/10/26), another case with similar facts, found the ban unconstitutional, setting up a circuit split on the issue.

Facts: In the Sixth Circuit case, John Ream developed a beer-brewing hobby over nine years before opening his own brewery and taproom. Desiring to distill his own whisky at home, Ream “extensively researched” the process. He did not purchase a still or apply for a permit because federal law prohibits distilling spirits in a dwelling house (Sec. 5178(a)(1)(B); 27 C.F.R. §19.51). Violations are felonies, with each offense punishable by a fine of up to $10,000, imprisonment for up to five years, or both (Sec. 5601(a)).

The home-distilling ban was intended to “secure the revenue” from federal excise taxes on distilled spirits (Act of July 20, 1868, ch. 186, 15 Stat. 125). The current excise tax attaches the moment a distilled spirit comes into “existence as such,” generally at $13.50 per proof gallon (100 proof, or 50% alcohol by volume; Secs. 5001(a)(1) and (b)). Operations as a distiller may “be conducted only on the bonded premises of a distilled spirits plant” (Sec. 5171(a)). A person may commence such operations only after registering with Treasury and obtaining a permit, and large-scale distillers must furnish a bond securing the taxes and penalties owed (Secs. 5171(c)(1) and (d)(1); Secs. 5173(a)(1) and (e)(1)(B)). Every proprietor must “furnish [Treasury] such keys as may be required for internal revenue officers to gain access to the premises” at “all times, as well by night as by day” (Secs. 5203(a) and (b)) and must keep a conspicuous sign posted outside the place of business (Sec. 5180(a)). Sec. 5178(a)(1)(B) provides, “No distilled spirits plant for the production of distilled spirits shall be located in any dwelling house, in any shed, yard, or inclosure connected with any dwelling house, or on board any vessel or boat, or on premises where beer or wine is made or produced, or liquors of any description are retailed.”

Ream filed suit in district court against Treasury and the Alcohol and Tobacco Tax and Trade Bureau, alleging that the ban on possessing a still in a dwelling house exceeds Congress’s enumerated powers. The district court granted the government’s motion to dismiss, holding that Ream lacked standing because he had not yet bought a still or been specifically threatened with prosecution. Ream appealed the district court’s decision to the Sixth Circuit.

Issues: The Sixth Circuit first addressed whether Ream had standing to bring his claim. A plaintiff challenging a statute in advance of an enforcement action must plausibly allege “an intention to engage in a course of conduct arguably affected with a constitutional interest, but proscribed by a statute, and there exists a credible threat of prosecution thereunder” (Susan B. Anthony List v. Driehaus, 573 U.S. 149 (2014)). The district court read the “constitutional interest” element narrowly, requiring conduct specifically protected by the Constitution, and dismissed for lack of standing. The Sixth Circuit rejected that reading, citing Bond, 564 U.S. 211 (2011). In that case, a criminal defendant had standing to assert that the statute regulating her conduct was beyond Congress’s power to enact. The Supreme Court found that the fact that her claim concerned a structural principle rather than a specific guarantee was “immaterial” because an injured individual “has a direct interest in objecting to laws that upset the constitutional balance between the National Government and the States.” Conduct, the Court stated, is “arguably affected with a constitutional interest” when the Constitution invalidates a statute that proscribes the conduct, “for if the claim is meritorious, then the conduct is lawful.”

The remaining standing elements in Ream’s case were also satisfied, the Sixth Circuit found. The home-distilling ban expressly proscribes the precise conduct Ream sought to undertake (Sec. 5178(a)(1)(B); Sec. 5601(a)(6)). As to a credible threat of prosecution, although the government had not sent Ream a warning letter and the ban “apparently has not been enforced in court for a long while,” the court found that the threat was sufficiently real. It noted that the statute carries felony penalties of which the government in the litigation “conspicuously declined to disavow enforcement.” In addition, a 2011 Treasury rulemaking “which remains on the books today” reiterated that “[a] person may not produce distilled spirits at home for personal use” (27 C.F.R. §19.51), and the Alcohol and Tobacco Tax and Trade Bureau’s website continues to warn that home distilling is a felony. The court reasoned that a citizen need not “defy an express statutory ban — twice reiterated by executive organs charged with its enforcement — and potentially subject himself to conviction as a felon, and to a sentence of years in prison, simply to be heard on his claim that the ban violates the federal Constitution.” In Ream’s case, the court concluded, the legislative and executive branches “speak with one voice,” and Ream “may take them at their word.”

The Sixth Circuit then considered whether the home-distilling ban is a necessary and proper means of collecting the federal excise tax on distilled spirits and thus constitutional. The Constitution’s Taxing Clause vests Congress with the “Power to lay and collect Taxes, Duties, Imposts and Excises” (Art. I, §8, cl. 1), but “Congress’s authority under the taxing power is limited to requiring an individual to pay money into the Federal Treasury, no more” (NFIB v. Sebelius, 567 U.S. 519, 574 (2012)). The home-distilling ban exceeds that boundary, the court held, because it proscribes conduct rather than requires payment. The court then analyzed whether the Necessary and Proper Clause (U.S. Const. art. I, §8, cl. 18) supported the ban.

The Sixth Circuit identified Chief Justice John Marshall’s formulation in McCulloch v. Maryland, 17 U.S. 316, 421 (1819), as the touchstone of the scope of the Necessary and Proper Clause: “Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.” The Sixth Circuit stated that whether a law is “necessary” and “proper” are two separate questions, but both were covered by Marshall’s formulation.

Under McCulloch, to be necessary, a means must be “plainly adapted” to a legitimate constitutional end. The Supreme Court later explained that formulation in a case specifically concerning securing the payment of taxes (Felsenheld, 186 U.S. 126, 132 (1902)), stating that “in the rules and regulations for the manufacture and handling of goods which are subjected to an internal revenue tax, Congress may prescribe any rule or regulation which is not in itself unreasonable.”

Applying this standard, the Sixth Circuit found that the home-distilling ban is “necessary” in the constitutional sense. Evasion of excise taxes on spirits had been rampant “for literally all of the nation’s history,” culminating in an 1867 House select committee’s finding that “the most stupendous frauds are practiced against the government in the collection of its revenue” (H.R. Rep’t No. 39-24, 39th Cong., 2d Sess., p. 1 (1867)). The 1868 Act’s rationale for the home-distilling ban was “almost self-evident” in that stills are more easily hidden in homes than on bonded premises dedicated to distilling spirits, and dwelling houses are far harder to search at “all times, as well by night as by day” than bonded premises. Agreeing with this reasoning, the Sixth Circuit determined that the home-distilling ban was necessary to the collection of taxes on revenue at the time it was enacted. It further stated it had no reason to conclude otherwise now, as Ream had made no argument that any change in circumstances had “rendered unnecessary today what was necessary then.”

The Sixth Circuit also rejected Ream’s argument that, because he would gladly pay tax on his home-distilled whiskey, the ban reduces rather than raises that revenue. The court found that Congress could “take account of causal chains longer than that” and could easily conclude that home-distilled spirits would substitute for spirits produced in taxed distilleries and, further, had ample reason to conclude that “for every at-home distiller who pays the tax, many others would not.” The court thus determined that the home-distilling ban shifts consumption from untaxed to taxed spirits, increasing revenue overall.

The court also noted that Ream had not volunteered to comply with the statute’s other provisions applicable to distillers, including the requirement to furnish keys to revenue officers for round-the-clock inspection of his home and to post a conspicuous sign announcing his distilling operations (Sec. 5180(a); Secs. 5203(a) and (b)). Absent compliance with these provisions, the court stated, Congress could easily have concluded that “home distillers would evade the tax all the more.”

As to whether the home-distilling ban was proper, the court echoed the Supreme Court’s early observation that the 1868 Act’s “well-considered and minute provisions” were “adopted with one purpose only, namely, to secure the payment of the tax imposed by law upon distilled spirits” (Ulrici, 111 U.S. 38, 40 (1884)). The ban was not expressly prohibited by the Constitution and did not seek to regulate conduct indirectly or to circumvent some other limit on Congress’s power.

Ream further made the slippery-slope argument that the court’s reasoning could expand Congress’s power beyond its proper limits, but the court found that his concerns were misplaced. According to Ream, under the court’s reasoning, Congress could impose a nominal excise tax on baking bread or making clothing and then prohibit home bread-baking or home sewing.

The Sixth Circuit, emphasizing that the necessary-and-proper inquiry is empirical and “factbound,” observed that “[w]hat limits the application of a factbound judgment to other cases are the relevant facts themselves.” In the court’s view, the relevant facts — a history of tax evasion “as old as the Republic itself,” a month of testimony before a select House committee, and conclusions “peculiar to distilling spirits” — are not readily transferable to other activities. Empirically, alcohol “is sui generis, or very close to it.” The court closed its opinion by observing that its own power, like Congress’s, is bounded by constitutional limits, and inquiring further than it had “into the degree of [a law’s] necessity, would be to pass the line which circumscribes the judicial department, and to tread on legislative ground” (McCulloch, 17 U.S. at 423).

Holding: The Sixth Circuit reversed the district court’s dismissal for lack of jurisdiction, holding that Ream had standing to bring his pre-enforcement challenge. On the merits, the court held that the home-distilling ban was constitutional because it was a necessary and proper means of collecting the federal excise tax on distilled spirits and remanded the case to the district court with instructions to enter judgment in favor of the government.

However, less than two weeks before the Sixth Circuit issued its opinion in Ream’s case, the Fifth Circuit held in McNutt that the home-distilling ban was unconstitutional. Like the Sixth Circuit in Ream’s case, the Fifth Circuit held in McNutt that the plaintiffs had standing and that the ban exceeded Congress’s power under the Constitution’s Taxing Clause. Contrary to the Sixth Circuit, though, the Fifth Circuit held that the ban violated the Necessary and Proper Clause because it was not plainly adapted to executing Congress’s taxing power.

• Ream, No. 25-3259 (6th Cir. 4/21/26)

— Thomas Godwin, CPA, CGMA, Ph.D., and John McKinley, CPA, CGMA, J.D., LL.M., are both professors of the practice in accounting and taxation in the SC Johnson College of Business at Cornell University in Ithaca, N.Y. To comment on this column, contact Paul Bonner, the JofA‘s tax editor.