The Flag Code doesn't prescribe any penalties, but it does give instructions on the time and occasions for display, the position and manner of display, and on how to show respect for the flag. Here are five rules to follow:
Display the flag at the right time. Traditionally, you're supposed to publicly display the flag only from sunrise to sunset. However, the flag may be displayed at all times if it's illuminated during darkness. The flag shouldn't be subject to weather damage, so don't display it during rain, snow and wind storms unless it is an all-weather flag. The flag should also never touch anything beneath it, such as the ground, the floor or water.
Don't use the flag as clothing. The flag should never be used as wearing apparel, bedding, or drapery. No part of the flag should ever be used as a costume or athletic uniform. So all of you in your flag togas or sarongs are breaking the flag rules. However, a flag patch or lapel flag pin may be affixed to the uniform of military personnel, firemen, policemen, and members of patriotic organizations.
Displaying the flag from a car. When the flag is displayed on a car, the staff shall be fixed firmly to the chassis or clamped to the right fender. It should not be draped over a vehicle.
Hanging the flag in a window. When displayed in a window where it can be viewed from the street, make sure the union (blue field) is at the observer's upper-left.
Displaying the flag flat. If you're not planning on using a pole to wave the ol' red, white and blue, make sure the flag is displayed flat, whether indoors or out. When displayed either horizontally or vertically against a wall, the union should be to the observer's upper-left.
Enjoy the fireworks, BBQ and sun while you proudly (and properly) display your flag. Happy Fourth of July!