How to Fill out Form 720: A Guide to Reporting Excise Tax

Excise taxes are often included in the price of products such as gasoline or alcohol. The biodiesel mixture credit may not be claimed for biodiesel produced outside the United States for use as a fuel outside the United States. The United States includes any territory of the United States.

The person receiving the payment for air transportation services must do all of the following. Collectors using the alternative method for deposits must adjust their separate accounts for the credit or refund. For more form 720 preparation information, see Alternative method (IRS Nos. 22, 26, 27, and 28) , later. It does not mean that a software package includes every possible schedule or attachment, or that it will meet the needs of all filers.

Find out why you should get connected with a Pro to file your taxes. Proper understanding and compliance can lead to both financial and operational advantages for businesses. All features, services, support, prices, offers, terms and conditions are subject to change without notice.

  1. Records of your deposits will be sent to the IRS for crediting to your accounts.
  2. We’ve received your job requirements, and our team is working hard to find the perfect candidate for you.
  3. These products are regulated by the Alcohol and Tobacco Tax and Trade Bureau, and taxes must be filed using the return form on its website.
  4. The person who pays the premium to the foreign insurer (or to any nonresident person such as a foreign broker) must pay the tax and file the return.

If you don’t have an EIN, you may apply for one online by going to You may also apply for an EIN by faxing or mailing Form SS-4, Application for Employer Identification Number, to the IRS. If you receive a notice about a penalty after you file this return, reply to the notice with an explanation and we will determine if you meet reasonable-cause criteria. If you have adjustments to liabilities reported for prior quarters, see Form 720-X, Amended Quarterly Federal Excise Tax Return.

Many excise taxes should be paid on a semi-monthly basis, not quarterly. But, if the amount is under certain thresholds, the IRS allows you to delay payment until you accumulate a sufficient tax liability. Generally, most excise taxes are required to be paid on a semi-monthly basis.

The report must contain all the information as shown in the Model Certificate B in the Appendix of Pub. The percentage and domestic segment taxes don’t apply on a flight if the surtax on fuel used in a fractional ownership program aircraft is imposed. For more information, see Surtax on any liquid used in a fractional ownership program aircraft as fuel (IRS No. 13), later. Many taxpayers and practitioners use the services of our industry partners, such as paid preparers, Electronic Return Originators (ERO) and Transmitters, as part of the tax return preparation and filing process. If you reported tax liabilities in part one, jump down a couple of pages on Form 720 to Schedule A. You have to break down your part one excise tax liability semi-monthly for the entire quarter. Form 720 is for businesses to report excise taxes paid on goods and activities listed in parts one and two of the form.

Benefits of Compliance and Timely Filing

They can ensure compliance, maximize deductions, recommend strategies to reduce tax liability, and provide personalized guidance. Airlines and related commercial aviation businesses do not need to collect excise tax on taxable transportation during the holiday period. Taxpayers should not pay or have excise tax collected on such amounts. You must file Form 720 even if no tax is due, to avoid penalties. Most filers need to submit Form 720 quarterly, by the last day of the month following the end of the quarter.

How To Fill Out IRS Form 720

Schedule C gives taxpayers the chance to claim credits against their fuel excise taxes, potentially lowering their tax liabilities. The fuel taxes section has you enter the number of gallons subject to the excise tax. You’ll multiply that number by the tax rate to arrive at the tax liability. Enlisting an accountant, enrolled agent, or other qualified tax expert can save time and hassle dealing with this complex quarterly tax return.

Understanding Form 720: The Quarterly Federal Excise Tax Return

The IRS is committed to enabling all taxpayers and practitioners to comply with their tax filing obligations. Whether you choose to file a return electronically or on paper, you should rest assured that the IRS is fully committed to protecting your information on our tax processing systems and by working with our industry partners. ICHRA, QSEHRA and EBHRA are employer-funded plans that may be designed to offer employees pre-tax assistance toward the cost of individual health care premiums, excepted benefits, and/or qualified medical expenses. A Medicare HRA is an employer-funded plan for businesses with under 20 employees that can offer pre-tax assistance towards Medicare premiums. Due to the pandemic, you may experience delays in processing paper Federal Excise Tax forms, including Forms 720, 2290, and 8849. Do not file duplicate forms, but for future filings we encourage taxpayers to consider the ease, convenience and speed of electronically filing Forms  720, 2290, and 8849.

IRS Form 720, Quarterly Federal Excise Tax Return, is a tax form that allows taxpayers to calculate, file, and pay federal excise taxes to the IRS. Small businesses that sell goods and services that are usually seen as a luxury or harmful to society may be required to pay excise tax. File Form 720 annually to report and pay the fee on the second quarter Form 720 no later than July 31 of the calendar year immediately following the last day of the policy year or plan year to which the fee applies. Because the rate used to determine the fee varies from year to year, you should determine the fee using the instructions for the second quarter Form 720. If you file Form 720 only to report the fee, don’t file Form 720 for the first, third, or fourth quarter of the year. Form 720, known as the Quarterly Federal Excise Tax Return, is a tax form used by businesses and certain taxpayers to report and remit federal excise taxes on specific goods, services, or activities.

What Goods Are Subject to Excise Tax?

The U.S. Surgeon General suggests the tobacco excise tax has effectively curbed cigarette smoking in the U.S. The Carrier Summary Report, IRS Form 720-CS, must be filed by rail carriers, inland water transportation carriers, and pipeline operators along with Form 720. It provides details on amounts subject to tax on transportation of property by rail, inland waterways, and pipeline. An excise tax is generally not deductible if it is incurred for personal consumption or use. However, in certain cases, an excise tax related to your trade or business may be deductible as a business expense. Limited liability companies (LLCs) may also have to file if they operate in one of the above industries or provide applicable services.

For filing Form 720, having an Employer Identification Number (EIN) is mandatory. This part of the article explains the role of the EIN in the filing process and how businesses can obtain one if they don’t already have it. This is particularly important for new or small businesses unfamiliar with tax filing requirements. For instance, the tax on gasoline contributes to road maintenance and infrastructure projects. By paying these taxes, businesses are directly contributing to public welfare. Non-US Citizens and Green Card Holders who have U.S income and require filing tax returns.