If any due date for filing a return falls on a Saturday, Sunday, or legal holiday, you may file the return on the next business day. The section 6426(k) credit for SAF mixtures doesn’t expire. The section 4261 tax on the amount paid for each domestic segment of taxable air transportation is increased to $5.20. A company manufacturing heavy-duty trucks must report a 12% excise tax on the sale price of those vehicles. If your fuel business falls under one of the use cases in this chart, you can fill in Schedule C by indicating the use case number, the tax rate, gallons amount and the total dollar amount of your claim. Part I (as well as the IRS Form 720 instructions) details specifically what products fall into this section.
Key Takeaways: Navigating IRS Form 720 Quarterly Federal Excise Tax Return
Small errors in filing can have significant consequences, including delays and penalties. This section addresses common filing mistakes such as incorrect calculations, incomplete information, and missed deadlines. Awareness of these pitfalls is key to a successful filing experience. For late payment, the penalty is 0.5% of the unpaid tax for each month or part of a month the tax remains unpaid, up to a maximum of 25%. Ensuring you’re equipped with the right information and resources is paramount. This guide serves as a foundational resource to navigate the complexities of the 720 form, aiding in your compliance and tax filing journey.
About Form720
For claims on line 7a, attach a separate sheet with the name and TIN of each governmental unit to whom the diesel was sold and the number of gallons sold to each. The fuel must have been sold during the period of claim for the exclusive use by a state or local government (including essential government use by an Indian tribal government). The alternative fuel must have been used during the period of claim for type of use 1, 2, 4, 5, 6, 7, 11, 13, 14, or 15. The ultimate purchaser of the taxed alternative fuel is the only person eligible to make this claim.
Go to TaxpayerAdvocate.IRS.gov to help you understand what these rights mean to you and how they apply. TAS is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. Their job is to ensure that every taxpayer is treated fairly and that you know and understand your rights under the Taxpayer Bill of Rights. Ultimate purchasers use line 3d to make claims for diesel used on a farm for farming purposes. The safe harbor rule doesn’t apply to the following quarters.
See Alternative method (IRS Nos. 22, 26, 27, and 28) below. The person receiving the payment for indoor tanning services (collector) must collect and remit the tax and file the return. If the tax isn’t collected for any reason, the collector is liable for the tax. The tax on fishing tackle boxes is 3% of the sales price.
Why Does the IRS Have Excise Taxes?
Section 6109 requires you to provide your identifying number. We may also disclose this information to other countries under a tax treaty, to federal and state agencies to enforce federal nontax criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism. Failure to provide this information in a timely manner or providing false or fraudulent information may subject you to penalties.
Private Delivery Services (PDSs)
For line 4a, the kerosene must have been used during the period of claim for type of use 2, 6, 7, 8, or 12. For exported undyed kerosene, see Exported taxable fuel, earlier. Type of use 2 doesn’t include any personal use or use in a motorboat. Type of use 8 includes use as heating oil and use in a motorboat. For line 3a, the diesel must have been used during the period of claim for type of use 2, 6, 7, 8, or 12.
If you’re running a business that might fall under excise tax requirements, understanding this form is essential to stay compliant and avoid penalties. In a two-party exchange, the person receiving the fuel, not the person delivering it, is liable for the tax imposed on the removal of taxable fuel from the terminal. If your business deals with any of these fuel types according to the IRS definition of a two-party exchange, complete Schedule T. You can connect with a licensed CPA or EA who can file your business tax returns. Not sure if your business activities trigger Form 720 filing requirements?
Generally, references to taxes on Form 720 include this fee. Enter the amount of premiums paid during the quarter on policies issued by foreign insurers. Multiply the premiums paid by the rates listed on Form 720 and enter the total for the three types of insurance on the line for IRS No. 30. Multiply the total number of gallons subject to tax on lines 62(a) and 62(b) by $.184. Combine the tax for lines 62(a) and 62(b) and make one entry in the tax column.
- Claimant certifies that the right to make the claim hasn’t been waived.
- The device must be affixed to the tractor and determined by the Administrator of the EPA, in consultation with the Secretary of Energy and Secretary of Transportation, to reduce idling while parked or stationary.
- This form serves as both a reporting mechanism and a payment voucher, making it a critical document for businesses in affected industries.
- 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.
- However, a lower rate of tax applies to a domestic segment beginning or ending in Alaska or Hawaii, and that tax applies only to departures.
- Generally, you must use EFT to make federal tax deposits, such as deposits of employment tax, excise tax (for exceptions, see Payment of Taxes, later), and corporate income tax.
Before moving to Part III, determine if you need to fill out Schedule T or Schedule C of IRS Form 720. Both Schedule T and Schedule C are related to businesses that deal with fuel. Ryan Lane is an editor on NerdWallet’s small-business team. He joined NerdWallet in 2019 as a student loans writer, serving as an authority on that topic after spending more than a decade at student loan guarantor American Student Assistance. In that role, Ryan co-authored the Student Loan Ranger blog in partnership with U.S. News & World Report, as well as wrote and edited content about education financing and financial literacy for multiple online properties, e-courses and more.
Small businesses that sell goods or services that incur excise taxes need to file IRS Form 720 quarterly. For example, if you operate a small regional airline, you’d need to file Form 720 to report the 7.5% excise tax on passenger tickets and the $4.50 flight segment tax. Similarly, if you own a chain of tanning salons, you’d use Form 720 to report the 10% excise tax on indoor tanning services. Many business owners discover their Form 720 filing requirement only after making a transaction that triggers an excise tax, sometimes months after the fact. This delayed realization can lead to penalties and interest that could have been easily avoided. Here’s a comprehensive guide to help you understand whether Form 720 applies to your business and how to handle this specialized tax return correctly.
IRS Provides Tax Relief for Victims of Hurricane Ida
If you aren’t registered, use Form 637 to apply for a registration number. For line 5e, the kerosene must have been used during the period of claim for type of use 9. This claim is made in addition to the claim made on lines 5c and 5d for type of use 9.
Our small business tax experts are always up-to-date with the latest tax laws and will ensure you get every credit and deduction possible, so you can put more money back into your business. Form 720 includes a line for each type of excise tax that you may be responsible for paying. A majority of the excise taxes are charged based on unit sales or weight. For example, if you sell diesel fuel, you’ll need to input the number of gallons sold and multiply it by the rate per gallon. You need to complete the Schedule T section of Form 720 only if your business produces or sells diesel fuel, kerosene, gasoline or aviation gasoline. Schedule T reports the total taxable fuel gallons received or delivered in a two-party exchange within a terminal.
- At the bottom of Part I, add up all of the taxes and fill in the total.
- Multiply the total number of gallons subject to tax on lines 35(a) and 35(b) by $.244 and make one entry in the tax column.
- This delayed realization can lead to penalties and interest that could have been easily avoided.
- The deposit of tax is due by the third business day after the seventh day of that period.
- The price includes the $240 fare and $28.40 excise tax ($240 × 7.5%) + (2 × $5.20) for which Frank is liable.
A. Electronic filing of Form 720 is optional for any taxpayer who chooses to e-file. The required certificates or waivers for lines 7–11 are listed in the line instructions and are available in Pub. Enter “Bus” in the space to the left of the Type of use 720 quarterly federal excise tax return column. Enter all gallons of fuel received or delivered in a two-party exchange within a terminal for the applicable fuel. To avoid a penalty, make your deposits timely and don’t mail your deposits directly to the IRS. Records of your deposits will be sent to the IRS for crediting to your accounts.
Like Schedule T, Schedule C applies to businesses that deal with one of the fuel types (and a few tire types) indicated in Parts I and II of IRS Form 720. The first part of IRS Form 720 asks for basic business information such as your name, address, end date of the respective quarter and your employer identification number, or EIN. When you’re a Pro, you’re able to pick up tax filing, consultation, and bookkeeping jobs on our platform while maintaining your flexibility. Get started with Taxfyle today, and see how filing taxes can be simplified. When filing by paper, consider using certified mail with a return receipt to prove timely filing in case questions arise later.