For the kind attention of Federal Excise Taxpayers! If your business deals in goods and services subject to federal excise taxes — like air transportation, fishing equipment or gasoline — then you may have to complete IRS Form 720 on a quarterly basis to report and pay your federal excise tax. It is now due and today November 1, 2021 is the due date for the third quarter federal excise taxes. Here’s what you need to know about Form 720 in this comprehensive, step-by-step guide.
You are liable to file Form 720, the federal excise taxes every quarter when you offer a service, sell a product or goods that has an excise tax component. The Excise taxes are due for every quarter in a year and the below table clearly indicates the actual due date. If the due date falls on weekend or on a federal holiday, you should file on the next business day.
Part-I in Excise Tax Form 720
IRS excise tax form comprises of several sections and understanding them makes your tax filing process smooth. Here’s a brief overview of the various sections involved in Part I in IRS Form 720.
- Environmental Tax:
Dealers and sellers of; crude oil, imported petroleum products, and ODC’s are subjected to file this excise tax return.
- Communication Tax:
If you’re using local telephone services and teletypewriter exchange service, you’re liable to file this Quarterly Federal Communication Tax.
- Air Transportation Tax:
Air transportation Tax needs to be filed by the Airline Company, providing a consolidated report about the passengers and the property handled through flights. Also, the usage of transportation facilities should be reported in this excise tax form.
- Fuel Tax:
This involves the use and sell of diesel, kerosene, gasoline and LNG.
- Retail Tax:
All manufacturers and sellers of highway vehicles such as bus, heavy trucks and truck tractors should file under this category.
- Ship Passenger Tax:
The IRS imposes tax on certain ship voyages. This tax is applied annually on the person organizing the voyage.
- Foreign Insurance Tax:
Foreign issuers issuing policies such as indemnity bonds and casualty insurance are implied.
- Manufacturer Tax:
This IRS excise tax applies to the seller and manufacturers of coal. This tax also involves one-time gas guzzler tax imposed on imported vehicles and vehicles driven by gasoline or diesel fuel with a minimum gross weight of 6,000 lbs.
Part-II in Excise Tax Form 720
Yes, there is a part-II in form 720, which includes sports fishing equipment, arrow shafts, fishing roles and poles, use of fuel on inland waterways, biodiesel sold but not used, and electric outboard motors. On Dec 6, 2012 there was a new addition in this section of the excise tax form, known as the ‘Patient-Centered Outcomes Research Fee’.
Patient-Centered Outcomes Research Fee – A Brief Overview
The newly introduced ‘Patient-Centered Outcomes Research Fee’, imposed by the ‘Affordable Care Act’ helps in funding the patient-centered outcomes research institute. It is to be paid annually using Form 720 during the second quarter.
The Part II in IRS excise tax form 720 also comprises of the Leaking Underground Storage Tank Tax, mostly referred as the LUST tax. This excise tax is one percent per gallon of the excise tax levied on the taxable fuels sold in the U.S. Moreover, the tax amount received helps fund the LUST trust fund responsible for handling any clean-ups and repair.
Indoor Tanning Tax:
In 2010, the Federal government imposed a new kind of tax return applicable to establishments providing indoor tanning services. This excise tax took effect from July 1, 2010 this tax is not imposed on fitness offering tanning, as an additional amenity but do not charge any additional fees. If you own saloon offering tanning facilities, you should file this excise tax return every quarter on part II. However, this tax is not applicable to licensed medical professionals such as dermatologists and psychologists offering tanning services.
Schedule A, T and C in Form 720
Schedule A in IRS form 720 helps you list the deductions, which includes various categories of expenses such as medical and dental, charity gifts, theft losses, and taxes. For easy and hassle-free, filing of Schedule A you should file it through taxexcise.com and preserve the documents of the expenses made during the year in your registered account.
Also known as the two-party exchange information reporting is imposed on diesel fuel used in terminal, or delivered within a terminal. The same rule applies for the usage of Kerosene, Gasoline, and Aviation Gasoline too.
To report loss or profit of the business you own or the profession you handle, you need to file form 1040 in Schedule C. Here, you can explain your wages, expenses along with income and deductions too.
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Reporting quarterly federal excise taxes electronically would get your return processed instantly and you’ll receive an acknowledgment immediately. If you have missed out something and the return data does not matched with the IRS record then your return would get rejected. You can rework on the data and resubmit it for processing on the same day. TaxExcise takes extra care to make sure that you do not leave mandatory fields empty, you have to be watchful while keying in your data.
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