IRS Form 720, officially titled the Quarterly Federal Excise Tax Return, is a pivotal tax form for reporting and remitting federal excise taxes. These taxes are levied on various goods, 720 quarterly federal excise tax return services, and activities, including environmental products, air transportation, and indoor tanning services. The form is segmented into several parts, each corresponding to different types of excise taxes.

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Generally, the claim rate for the nontaxable use of a diesel-water emulsion taxed at $.198 (credit reference number (CRN) 309) is $.197. The fuel must have been used during the period of claim for type of use 1, 2, 3, 5, 6, 7, 8, or 12. For type of use 3 (exported), the claim rate is $.198 (CRN 306) and is reported on line 14d. For the semimonthly period for which the additional deposit is required (September 1–11 and 16–26), the additional deposit must be at least 11/90 (12.23%) of the net tax liability reported for the lookback quarter.

Navigating the filing process of Form 720 can be complex. Our step-by-step guide simplifies this task, covering everything from gathering the necessary information to meticulously filling out each form section. This approach emphasizes the importance of accuracy and thoroughness to avoid common errors, ensuring a smooth filing process. Save time with automated accounting—ideal for individuals and small businesses. Maximize eligible deductions, file accurately with an expert. In cases of willful neglect or fraud, the penalties can be even more severe, potentially including criminal prosecution for egregious cases.

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• If you are liable for the diesel fuel tax on removal at the terminal rack, report these gallons on line 60(a).
• The IRS takes excise tax compliance seriously, and the penalties for noncompliance can add up quickly.
• Understanding its purpose, who it applies to, and how to file it correctly ensures compliance and contributes to the smooth operation of various government programs funded by these excise taxes.
• This makes staying on top of your Form 720 obligations a year-round responsibility rather than just a quarterly task.
• 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.

Attach Form 6627 to the Form 720 that is due July 31 of each year. For more information, including methods for calculating the average number of lives covered, see sections 4375, 4376, and 4377. If you import a gas guzzling automobile, you may be eligible to make a one-time filing of Form 720 and Form 6197 if you meet all of the following conditions. Use Form 6197, Gas Guzzler Tax, to figure the liability for this tax. The tax rates for the gas guzzler tax are shown on Form 6197. At the top of Form 720, enter “Section 6114 Treaty.” If you have no other transactions reportable on Form 720, complete Form 720 as follows.

Fuel used in a fractional ownership program aircraft is also subject to a surtax of $.141 per gallon. Tax is imposed at $.001 per gallon on removals, entries, and sales of gasoline, diesel, and kerosene described as exempt transactions. Multiply the total number of gallons subject to tax for each fuel by $.001 and enter the amount in the tax column for the following IRS Nos.

Communications Services (IRS No.

Collectors using the regular method for deposits must use Form 720-X to request a credit or refund. You aren’t authorizing the designee to receive any refund check, bind you to anything (including additional tax liability), or otherwise represent you before the IRS. If you want to expand the designee’s authority, see Pub. If you want to allow an employee of your business, a return preparer, or another third party to discuss your Form 720 with the IRS, check the “Yes” box on Form 720 under Third Party Designee.

• See Alternative method (IRS Nos. 22, 26, 27, and 28) below.
• Also, you are certifying the applicable statement(s) on Schedule C when you make a claim.
• If none of the excise taxes in Part I apply to your business, go to Part II.
• The taxes on transportation of persons by air are the percentage tax and the domestic segment tax.
• Attach your Form 7208 to your Form 720, due for the first full quarter after the close of your tax year.

Additionally, as of October 2024, taxpayers can use IRS Direct Pay to make payments directly from their checking or savings accounts, without registering or enrolling with EFTPS. IRS Direct Pay for businesses is a free and secure payment application available at IRS.gov/Directpay. If you don’t want to use EFTPS or IRS Direct Pay, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make deposits on your behalf. EFTPS and IRS Direct Pay are free services provided by the Department of the Treasury.

If any one of these conditions isn’t met, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser can make the claim. Claims for exported gasoline blendstocks taxed at $.184 per gallon are made on line 1b. The IRS may withdraw the right to make deposits of tax using the safe harbor rule from any person not complying with these rules. If a deposit is due on a day that isn’t a business day or that is a legal holiday, see When To Make Deposits , later. The term “legal holiday” means any legal holiday in the District of Columbia.

Generally, the claim must be filed within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever is later. Also, a credit or refund (without interest) is allowable on tax-paid tires sold by any person on, or in connection with, any other article that is sold or used in an activity listed above. If requirements 1–3 above aren’t met, see Annual Claims, later. However, annual claims can’t be made for gasoline and aviation gasoline. To make an ultimate vendor claim on lines 7–11, you must be registered. Enter your registration number, including the prefix (for prefixes, see the instructions for Form 637, Application for Registration), on the applicable line for your claim.

Internal Revenue Code section 4611(b) imposes a tax on certain domestic crude oil exports. As a result of a recent court case and the IRS’ acquiescence in the court’s decision, the section 4611(b) tax no longer applies to crude oil exports. For faster processing, electronically file Forms 720, 2290 and 8849. The following table will help you determine which boxes to complete on Schedule A.

Schedules in IRS Form 720

Each of these categories follows its own distinct rules and rate structures. Therefore, a thorough grasp of these various excise tax types is essential for precise tax reporting and compliance, especially as they apply to the tax year 2023. Many businesses find that working with a tax professional experienced in excise taxes simplifies compliance, especially during the first few filing periods when you’re still learning the requirements. If you’ve recently heard the term excise tax mentioned by your accountant, you might be wondering if this is yet another tax obligation your business needs to worry about. Unlike income taxes that most businesses are familiar with, excise taxes operate differently and apply to specific industries and activities, often catching business owners by surprise. The 720 form, known formally as the “Quarterly Federal Excise Tax Return,” is a document used by the IRS for the collection of excise taxes.

This form is submitted to the IRS along with payment for any excise taxes due during the quarter. In box 5, enter your excise tax deposits made for the quarter. If you overpaid in previous quarters, write this amount in box 6 and box 7. Box 8 is the total of boxes 5 and 6, and box 9 is the total of boxes 4 and 8. If your total tax in box 3 is greater than box 9, enter the difference, which is your balance due, in box 10.

However, electronic filing is strongly encouraged, when possible. To make this process easier for taxpayers, the contact information for all approved e-file transmitters of excise forms is listed on IRS.gov. The tax on sport fishing equipment is 10% of the sales price. The tax is paid by the manufacturer, producer, or importer. Add the tax on each sale during the quarter and enter the total on the line for IRS No. 41. With TurboTax Live Business, you can get expert help with your quarterly federal excise tax return and file with confidence.

Line 14. Other Claims

Generally, issuers of specified health insurance policies must use one of the following four alternative methods to determine the average number of lives covered under a policy for the policy year. If any taxable vaccine is combined with one or more additional taxable vaccines, then the tax is imposed on each vaccine included in the combination. A taxable tire is any tire of the type used on highway vehicles if wholly or partially made of rubber and if marked according to federal regulations for highway use. A bias ply tire is a pneumatic tire on which the ply cords that extend to the beads are laid at alternate angles substantially less than 90 degrees to the centerline of the tread. A super single tire is a tire greater than 13 inches in cross section width designed to replace two tires in a dual fitment, but doesn’t include any tire designed for steering.

Add the tax on each sale during the quarter and enter the total on the line for IRS No. 44. In such situations, the flight isn’t commercial aviation. Instead, the tax on the fuel used in the flight is imposed at the noncommercial aviation rate.

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. This isn’t a form most businesses are familiar with — until they need to file it. Whether you’re running a fuel distribution company, an air transport service, or even a local tanning salon, excise taxes are part of your tax responsibilities. Understanding how the form works, who must file, and how to avoid mistakes can protect your business from costly penalties. If you’re unsure, don’t take chances — get help from a qualified tax professional or trusted partner like My Count Solutions.

The tax on fishing rods and fishing poles (and component parts) taxed at a rate of 10% will have a maximum tax of $10 per article. Add the tax on each sale during the quarter and enter the total on the line for IRS No. 110. Figure the tax for each tire sold in each category, as shown in the following chart, and enter the total for the quarter on the line for IRS No. 108, 109, or 113. 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. Otherwise, any person who issued or sold the policy, or who is insured under the policy, is required to pay the tax and file the return. A tax credit may be claimed equal to the amount of tax that has been imposed on each tire that is sold on or in connection with the first retail sale of a taxable vehicle reported on IRS No. 33.