Fillable Form 720 IRS

The primary way governments raise money is through taxes. In the United States, aside from major taxes, including income, sales, and property taxes, its federal government collects an excise tax, or simply excise, which is an indirect tax levied on the sale of particular goods or services that are manufactured in or imported into the U.S.

If you are a business owner, you have perhaps filed tax forms, learning the difficulties and complexities the responsibility involves. If your business deals goods and services that are subject to excise tax like crude oil and petroleum products, air transportation, and fishing equipment, you will have to complete and send a Form 720 to the Internal Revenue Service (IRS), a government agency responsible for the collection of taxes and enforcement of all tax-related laws. All the products and services that qualify a business to pay excise taxes are listed on Form 720 instructions document. If your business does not deal with any of the products and services listed, you are not responsible for excise taxes; therefore, you do not have to fill out the form. In addition, the IRS lists two conditions to determine if you need to complete the form:

1. You were liable for, or responsible for collecting any of the federal excise taxes listed on Parts I and II of Form 720 for a prior quarter and have not filed a final return.

2. You were liable for, or responsible for collecting any of the federal excise taxes listed on Parts I and II of Form 720 for the current quarter.

The IRS Form 720, or the Quarterly Federal Excise Tax Return, is a legal tax form businesses must complete to report and pay federal taxes. As its name suggests, it should be done on a quarterly basis to report and pay your federal excise tax liability, and you can file it electronically or by mail; however, payments for excise taxes are required on a semimonthly basis and should be done by electronic funds transfer. A semimonthly period is the first 15 days of a month, the first semimonthly period, or the 16th through the last day of the month, the second semimonthly period.

You should file Form 720 for each quarter of the calendar year on the following dates:

To remember the due dates easily, take note that Form 720 needs to be completed by the last day of the first month that follows the end of the prior quarter. If the due date for filing the form falls on a Saturday, Sunday, or legal holiday, you should submit it on the next business day.

For any of the quarters when you are not reporting for excise tax, you should still send a Form 720 on the due date, with “0” on the appropriate space of the form. Furthermore, if you are closing your business permanently, you should put a checkmark on the “Final Return” option located on the upper left side of the first page, above Part I of Form 720 to notify the IRS. No matter your legal intent in using the document, you may get the Form 720 on the IRS website.

You can send Form 720 to:

Department of the Treasury
Internal Revenue Services
Ogden, UT 84201-0009

Form 720 is one of the longer U.S. tax forms; it has seven main sections. Make sure that all the details you will provide are accurate to avoid any legal issues.

Step 1 — General Information Section (Section 1)
Provide the following basic information about your business:

1. Name. Provide the name of your business.

2. Address. Provide the mailing address of your business.

3. Employer identification number. Provide your nine-digit federal employer identification number.

4. Quarter ending date. Provide the last day of the quarter you are filing your report for.

Step 2 — Part I (Section 2)
In this section, you should calculate taxes applicable to your business.

1. Environmental Taxes. Use this section if you are a dealer or seller of petroleum products, crude oil, and ozone-depleting chemicals. You are also required to complete Form 6627 and attach it to Form 720.

2. Communications and Air Transportation Taxes. Use this section if you provide phone-related and air transportation-related services.

3. Fuel Taxes. Use this section if your business engages in the use and sales of fuel, including diesel, kerosene, gasoline, and natural gas.

4. Retail Tax. Use this section if your business is involved in the use and sales of truck, trailers, and tractors.

5. Foreign Insurance Taxes. Use this section if you are an issuer of foreign insurance policies.

6. Manufacturers Taxes. Use this section if you are a manufacturer or seller of coal. If you import a gas-guzzling automobile, you may be eligible to make a one-time tax.

After calculating your taxes for Part I, add them and write the total amount on Line 1.

Step 3 — Part II (Section 3)
Just like Part I, Part II asks you to calculate any excise taxes applicable to your business. If none of the excise taxes in the first part apply to your business, you can proceed directly to Part II. Furthermore, the taxes in this section are only relevant if your business:

1. issues health insurance policies;

2. sells fishing equipment;

3. sells hunting gears like bows and arrows;

4. provides indoor tanning services; or

5. uses inland waterway or section 40 fuels.

After calculating your taxes for Part II, add them and write the total amount on Line 2

Step 4 — Part III (Section 4)
Part III of Form 720 is where you estimate your total tax liability if there are any. In here you can report any claims that you calculated in the Schedule C section of the form. In addition, if you overpaid your excise taxes, you can use this section to have the excess amount applied to your next return or refunded to you.

Step 5 — Schedule A (Section 5)
This section is not applicable for you if your business does not have liability for any tax in Part I. Moreover, you still do not need to fill out Schedule A if you do not have liability in Part I but do have liability in Part II. This part is used to report your business’ net tax liability; you will need to add the net tax liability for each tax, for each semimonthly period, and write the total in the applicable box.

Step 6 — Schedule T (Section 6)
If your business does not sell any fuels listed on this section, you can leave the page blank. Otherwise, if your business does, Schedule T asks you to report gallons of fuel received or delivered in a two-party exchange within a terminal or in a two-party exchange with a removal across the rack.

Based on IRS’s Instructions for Form 720 document, “in a two-party exchange, the receiving person, not the delivering person, is liable for the tax imposed on the removal of taxable fuel from the terminal at the terminal rack. A two-party exchange means a transaction (other than a sale) where the delivering person and receiving person are both taxable fuel registrants.” You may refer to the instructions for detailed terms and conditions.

Step 7 — Schedule C (Section 7)
Schedule C is only applicable to businesses that sell, manufacture, or produce fuel, just like Schedule T. Using this section, you can file claims to help lower your tax liability by attaching a separate sheet to explain your claim. You will find a table in the Instructions for Form 720 document that lists all the non-taxable uses of fuel; each use has an assigned number that you can enter in the appropriate box in Schedule C.

Step 8 — File and Pay
Once you are done filling out and reviewing your Form 720, you will need to report it to the IRS before the set due date. You can mail your form directly to the IRS or electronically if you are completing the form through the IRS e-file program. If you have a balance due, you must also pay it with a direct debit, check, or money order. Do not forget to create copies of your accomplished Form 720 for your business’ records.

What is the purpose of Form 720?
Form 720, or the Quarterly Federal Excise Tax Return, is an IRS tax form businesses need to file on a quarterly basis to report and pay federal excise taxes.

Who needs to use Form 720?
Businesses that deal with goods and services that are subject to excise taxes need to use Form 720 to report and pay federal excise taxes to the IRS.

What goods are subject to excise taxes?
The primary product that is subject to excise tax is fuel, including diesel, kerosene, and aviation. However, the following products and services are also subject to excise taxes:

1. Telephone communications

2. Air transportation

3. Passenger ship transportation

4. Gasoline

5. Coals

6. Vaccines

7. Fishing equipment

8. Indoor tanning services

9. Tires

10. Foreign insurance policies

You can review all of the products and services that qualify a business to pay excise taxes using Form 720.

How do I report sales for alcohol, tobacco, and firearms?
The Tobacco Tax and Trade Bureau (TTB) regulates alcohol, tobacco, and firearms. To file and pay the excise taxes for the mentioned goods, you must complete Form 5000.24, which can be completed online at the TTB’s official website.

Where can I get Form 720?
You can find the IRS Form 720 along with its official Instructions for Form 720 document on the Internal Revenue Service’s website. Also, you can file the form electronically through any service provider participating in the IRS e-file program for excise taxes. You can search on IRS’s official website the list of authorized providers to find a provider in your area.

What details does the Internal Revenue Service need to identify my business?
The IRS uses your federal employee identification number, which is also you tax identification, to identify your business.

Can I file Form 720 semi-annually?
No. Form 720 needs to be filed quarterly and payments for excise taxes must be made semimonthly. The IRS requires you to pay your excise taxes more frequently than it requires you to file your Form 720.

What report methods should I use to accurately compute for excise taxes?
The excise tax for items on Form 720 is calculated using the Sales Report by Product and Service, and Units Sold Report by Product methods. Using the Sales Report by Product and Service approach, you need to keep track of your total sales amount for each product and service that you sell. On the other hand, the Units Sold Report by Product approach requires you to calculate items based on the number of products you sold.

How to make deposits?
The IRS requires to receive payments using electronic funds transfer. It is recommended to initiate the transaction at least one day before the date the deposit is due. If a deposit is due on a Saturday, Sunday, or legal holiday, you should make a payment on the next business day.

Is electronic filing of Form 720 required?
Innovation has resulted in the IRS creating an e-file program for excise taxes, despite that, the agency still accepts paper Form 720. In short, how to file your form is entirely up to your decision.

Will it cost anything to electronically file Form 720 returns?
Yes. The cost to e-file a form depends on the provider’s required service fee for online submission.

When can I electronically file Form 720?
Form 720 can be submitted online 24/7.

How do I choose a transmitter to electronically file Form 720 returns?
The IRS has posted the contact information of all its approved e-file transmitter on its website. You may select one to your liking.