What is Form 720? Understanding the Ins and Outs of Quarterly Federal Excise Tax Returns

Do you own a business that deals with goods and services subject to excise tax? If so, you’re likely no stranger to the world of federal excise taxes and the quarterly return that comes with it – Form 720. But even if you’re not a seasoned pro, navigating the ins and outs of Form 720 doesn’t have to be a daunting task. From determining who needs to file to understanding what to include on the return, there are countless ways to set yourself up for success when completing a quarterly federal excise tax return. 

Key Takeaways

1. Businesses that deal in goods and services subject to excise tax must file a Form 720 on a quarterly basis to report the tax to the IRS.
2. The IRS provides two tests to determine whether you need to file a Form 720 at the conclusion of each calendar quarter.
3. You must file a Form 720 if you collect any excise tax during the current quarter or if you were responsible for collecting excise taxes during any quarter during the year and you have not filed a final excise tax return.
4. Form 720 is due on the last day of the month following the end of the quarter.

Understanding Form 720: What is it and Who Needs to File?

The federal government charges an excise tax on specific types of products and services, and, in some ways, it resembles a state sales tax. However, you may not be aware you’re paying this tax since it’s usually included in the price of goods, such as the gas you purchase for your vehicle. Businesses that deal in goods and services that are subject to excise tax need to prepare a Form 720 on a quarterly basis to report the tax to the IRS.

What to Include on Form 720

There is an extensive list of goods and services that the federal government collects excise taxes on. Some of the more common products and services subject to the excise tax include:

• A surcharge on indoor tanning
• Gasoline
• Airline tickets
• Coal products

Who Files Form 720?

Whether you are a manufacturer, retailer, airline, or any other business that deals in goods for which excise taxes are due, you have a responsibility to file a Quarterly Federal excise Tax Return on Form 720 up to four times a year, depending on the circumstances.

When do You File Form 720? 

Each quarter, you are required to report excise taxes to the IRS on a Form 720, which shows the amount of excise taxes you must pay for that quarter. At the end of each quarter, you have until the end of the next month to file and pay your excise taxes. 

Quarter	Months	Due Date
1st	January – March	April 30
2nd	April – June	July 31
3rd	July – September	October 31
4th	October – December	January 31

Filling Out Form 720

Form 720 includes a line for each type of excise tax that you may be responsible for paying. A majority of the excise taxes are charged based on unit sales or weight. For example, if you sell diesel fuel, you’ll need to input the number of gallons sold and multiply it by the rate per gallon.

Paying Your Excise Taxes

If you owe excise tax when you file your Form 720, the IRS requires you to make payment using electronic funds transfer. To avoid penalties, you should ensure that your payment reaches the IRS by the deadline. This requires you to initiate the transfer by 8 p.m. (EST) one day before the due date.

Ease the Burden of Form 720: Expert Assistance with TurboTax Live Business

Don’t let Form 720 leave you stressed. With TurboTax Live Business, you can get expert help with your quarterly federal excise tax return and file with confidence. Our small business tax experts are always up-to-date with the latest tax laws and will ensure you get every credit and deduction possible, so you can put more money back into your business.

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