Form 720 Instructions

Form 720, also known as the "Quarterly Federal Excise Tax Return," is used by businesses to report and pay various federal excise taxes. These taxes are imposed on specific goods, services, and activities. In this document, we will provide an overview of the instructions for completing Form 720.

Any business dealing with services and products that are subject to excise tax must file IRS Form 720 every quarter so that they can report and pay their federal excise tax. This form, also known as the Quarterly Federal Excise Tax Return form, lets businesses report and pay their taxes.

How to Fill Out Form 720?

Before you start filling out IRS Form 720, it’s a good idea to have your accounting and business information ready. The first part of the form will request the basic information about your business, such as EIN, address, name, etc.

In Part I and Part II, you will provide information to calculate your appropriate excise taxes. Depending on your business operation area and additional liabilities, you may have to complete other forms, such as IRS Form 6627, or fill out the first or second part only. In this part, you will have to fill in the rate and tax columns according to the nature of your business.

Later, on Schedule A, you will have to calculate your net tax liabilities. However, if you don’t have any liabilities to provide in Part I, you can skip this section.

If your business is dealing with fuel, you must fill out Schedule C or Schedule T. For example, if your business is producing or selling fuel, like aviation gasoline, gasoline, kerosene, or diesel fuel, you will have to fill out Schedule T. On the other hand, you must fill out Schedule C only if your business uses certain types of fuel, which you can check and confirm in the relevant section.

In Part III, you will calculate your total taxes with the data you have provided in Part I or Part II. Once you are done, you can sign and file your Form 720 to the IRS.

Line-by-Line Form 720 Instructions 2024

Part I: Excise Taxes on Sales of Certain Fuel

This section is used to report and pay taxes on the sale of specific types of fuel, including gasoline and diesel. The tax rates vary depending on the type of fuel.

Part II: Excise Taxes on Indoor Tanning Services

Businesses providing indoor tanning services are required to report and pay taxes on these services. The tax rate is a percentage of the amount paid for such services.

Part III: Environmental Taxes

This part covers taxes related to the production and importation of certain environmentally harmful products. Tax rates are based on the type of product and its environmental impact.

Part IV: Communications and Air Transportation Taxes

Here, businesses in the communication and air transportation industries report and pay excise taxes on their services.

Part V: Manufacturer’s Taxes on Sport Fishing and Archery

Manufacturers and importers of sport fishing and archery equipment are required to report and pay taxes based on the sales of these products.

Part VI: Other Excise Taxes

This section includes various other excise taxes that don’t fall into the previous categories. It’s important to carefully review the instructions for each tax type.

Payment Information

Payments for excise taxes reported on Form 720 can be made electronically or by check or money order. EFTPS is recommended for its convenience and efficiency.

Recordkeeping

Maintaining thorough and accurate records of all transactions subject to excise taxes is crucial. These records should be kept for a minimum of three years from the due date of the return.

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