IRS Tax Form 720: Quarterly Federal Excise Tax Return (Rev. Sept 2024)

Introduction to IRS Form 720

Welcome to our comprehensive guide on IRS Form 720, the Quarterly Federal Excise Tax Return. This form is essential for businesses that are required to report and pay federal excise taxes on specific goods and services. Whether you’re new to excise taxes or looking to ensure compliance, this guide will provide you with the necessary information to navigate Form 720 effectively. In this guide, we will cover:

What is IRS Form 720? An overview of the form and its purpose.
Who needs to file Form 720? Identifying businesses and individuals required to submit Form 720.
Types of excise taxes reported : A breakdown of the various excise taxes covered by the form.
Filing requirements and deadlines: Key dates and submission guidelines to keep you on track.
Step-by-step instructions: Detailed guidance on how to complete each section of the form.
Common mistakes to avoid: Tips to help you avoid common pitfalls and ensure accurate reporting.

By the end of this guide, you will have a clear understanding of IRS Form 720 and the confidence to file it correctly. Let’s get started!

What is IRS Form 720?

IRS Form 720, the Quarterly Federal Excise Tax Return, is used by businesses to report and pay federal excise taxes on specific goods and services. These taxes are imposed on a variety of products and activities, including fuel, air transportation, and certain types of insurance policies. The form is divided into three parts (Parts I, II, III) and three schedules, Schedule A for Excise Tax Liability, Schedule C for Claims, and Schedule T for Two-Party Fuel Exchange. By filing Form 720, businesses ensure compliance with federal tax regulations and contribute to the funding of various government programs.

Who Needs to File Form 720?

Any business entity, whether a sole proprietorship, partnership, corporation, or limited liability company, that deals in goods or services subject to federal excise taxes must file IRS Form 720. This includes businesses involved in the sale of luxury goods, certain types of equipment, or specific services. Additionally, manufacturers, retailers, airlines, and other businesses that owe excise taxes on their products or services are required to file this form.

Excise Taxes Reporting with Form 720

IRS Form 720 is used to report a variety of federal excise taxes imposed on specific goods and services. These taxes include:

Part I

Communications Taxes: Taxes on local and long-distance telephone services.
Air Transportation Taxes: Taxes on the transportation of persons and property by air.
Fuel Taxes: Taxes on gasoline, diesel fuel, kerosene, and other motor fuels.
Retail Taxes: Taxes on the sale of certain luxury goods, such as heavy trucks and trailers.
Ship Passenger Taxes: Taxes on the transportation of passengers by water.
Manufacturers Taxes: Taxes on the sale of specific goods, including certain vaccines and medical devices.
Foreign Insurance Taxes: Taxes on policies issued by foreign insurers.

Part II

Patient-Centered Outcomes Research Institute Fee (PCORI): Health insurance policies
Indoor tanning tax
Lust Tax on inland waterways fuel use
Section 40 Fuels
Biodiesel Sold as but not used as fuel
Sales of Designated Drugs during Statutory Periods

Subforms reported on Form 720

Sub-Form 6627 – Environmental Taxes: Taxes on ozone-depleting chemicals and imported products containing these chemicals.
Sub-Form 6197 – Gas Guzzler Tax: Tax on the sale, use, or lease of an automobile of a model type that does not meet certain standards for fuel economy
Sub-Form 7208 – Excise Tax on Repurchase of Corporate Stock: Excise tax on repurchases of corporate stock.

Form 720 Filing Requirements and Deadlines

Businesses that are liable for federal excise taxes must file IRS Form 720 for each quarter in which the tax liability is incurred. The form must be submitted by the last day of the month following the end of the quarter. The quarterly deadlines are as follows:

First Quarter: January 1 – March 31, due by April 30
Second Quarter: April 1 – June 30, due by July 31
Third Quarter: July 1 – September 30, due by October 31
Fourth Quarter: October 1 – December 31, due by January 31

It is important to ensure timely filing to avoid penalties and interest charges. Payments for the excise taxes reported on Form 720 should be made when the form is filed. No deposits are required for these taxes.