Form 720 is a quarterly federal excise tax return used by businesses dealing in goods and services subject to excise tax. It is used to report the tax to the IRS. In this article, we will provide information on the exact steps for filling out Form 720 and other important information.

Some of the information included in Form 720:

• Various types of excise taxes, such as environmental taxes, fuel taxes, and air transportation taxes
• Number of units sold or weight of the product, multiplied by the applicable tax rate
• Excise tax liability, credits, and refunds
• Information related to two-party exchanges of taxable fuel

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Who needs to file the Form 720?

Form 720 is primarily required to be filed by businesses that manufacture, sell, or use goods and services subject to federal excise taxes. This includes manufacturers of certain products, such as tires and gasoline, as well as providers of specific services, like indoor tanning and air transportation. However, there are some exceptions to this rule, which are listed below:

• Small businesses with less than $1,000 in excise tax liability per quarter are not required to file Form 720
• Nonprofit organizations and government entities are generally exempt from excise taxes, and thus do not need to file Form 720
• Businesses that only deal in goods and services exempt from excise taxes, such as certain types of alternative fuels, are not required to file Form 720
• Some excise taxes, like those on alcohol and tobacco, are reported on separate forms and not included in Form 720

Essential updates to the Form 720

For the most recent updates to Form 720, businesses should be aware of the following changes:

• The IRS has introduced a new tax on the sale of electronic nicotine delivery systems (ENDS), effective from October 1, 2021. This tax is reported on Form 720, Schedule A, and includes products such as e-cigarettes, e-hookahs, and vape pens.
• As of July 1, 2020, the tax rate for the Patient-Centered Outcomes Research Institute (PCORI) fee has increased. This fee is reported on Form 720, Part II, and is applicable to issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans.
• Form 720 has been updated to include the tax on indoor tanning services, which was previously reported on Form 720, Part II, but is now reported on Form 720, Schedule A. This change is effective from the first quarter of 2020.

It is essential for businesses to stay informed about the latest updates to Form 720 and other tax forms to ensure accurate reporting and compliance with federal tax regulations.

2024 Form 720 filing deadlines

Employers must file Form 720 every quarter, even if they have no taxes to report. The due dates typically fall on the last day of the month following the end of the quarter, giving employers one month to prepare the form. If any due date for filing falls on a Saturday, Sunday, or legal holiday, returns may be filed on the next business day.

Exact deadline dates for 2024

• First quarter (January, February, March) - due by April 30
• Second quarter (April, May, June) - due by July 31
• Third quarter (July, August, September) - due by October 31
• Fourth quarter (October, November, December) - due by January 31

Form 720 late payment penalty

Failure to file Form 720 on time or underreporting your tax liability can result in IRS penalties. It is important to ensure you give yourself enough time to complete and file your Form 720 by the last day of every April, July, October, and January.

Step-by-Step Instructions for IRS Form 720

Part I: Environmental Taxes

• Line 53: Report taxes on ozone-depleting chemicals (ODCs).
• Lines 18-21: Include taxes related to petroleum products.
• Lines 17, 54, 19: Report taxes on imported chemical substances and ODC tax on imported products.

Part II: Transportation Taxes

• Lines 22, 26, 27, 28: Taxes related to the transportation sector including air transportation and transportation of property by air.

Part III: Fuel Taxes

• Lines 60-62: Diesel and gasoline taxes, reported by the number of gallons and tax rate.
• Lines 104-124: Various fuel taxes including dyed diesel, kerosene, and other specific fuel types.

Additional Details

• Name and Address: Provide the name and address at the top of the form.
• Employer Identification Number (EIN): Enter the EIN for the entity reporting the taxes.
• Quarter Ending: Indicate the quarter for which the return is being filed.

Filing the Form

• Check Applicable Boxes: Depending on the circumstances (e.g., final return, address change).
• Complete Relevant Sections: Only fill out the sections that apply to your tax liabilities.
• Sign and Date: Ensure the form is signed by an authorized individual.

General Tips

• Accurate Measurement: Ensure accurate measurement and reporting of gallons and applicable rates.
• Timely Filing: Submit the form by the deadline for each quarter to avoid penalties.

How to file Form 720

Filing Form 720 can be done either online or by mail. To file online, taxpayers can use any electronic return originator (ERO), transmitter, or intermediate service provider (ISP) participating in the IRS e-file program for excise taxes. More information on e-file can be found in the Excise Tax e-File & Compliance (ETEC) Programs - Forms 720, 2290, and 8849. For those who prefer to file by mail, Form 720 should be sent to the Department of the Treasury, Internal Revenue Service, Ogden, UT 84201-0009, using the U.S. Postal Service or a designated private delivery service. The main differences between online and mail filing include the convenience and potentially quicker processing times offered by electronic filing, while mail filing requires adherence to specific mailing addresses and timely mailing rules.

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