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.