What is Form 720?
Tax form 720, Quarterly Federal Excise Tax Return, is used to calculate and make excise tax payments on certain categories of income/assets.
Excise taxes are taxes paid when purchases are made on a specific good. Most excise tax in some ways resembles a state sales tax. They are paid on purchases of specific goods. As a consumer, you might not even realize you’re paying excise tax since it’s usually included in the price of goods.
How Frequently Should You Prepare Form 720 for Excise Tax?
If you are a business who sells products or services subject to excise tax, you should complete a specific IRS form on a quarterly basis. Businesses, whose activities involve the following categories, typically owe excise tax:
- Automobile fuel
- Airline tickets
- Highway usage
- Indoor tanning
- Tobacco products
- Health-related goods and services
Form 720 for excise tax should be prepared and submitted to the IRS quarterly. The form is also known as the quarterly federal excise tax return.
Who Files Form 720?
If you are a business that deals in goods for which excise taxes are due, you must file a Form 720.
In addition, some expat taxpayers would fill out form 720. For example, an expat taxpayer who has an interest in a specific type of foreign life insurance plan would have to use IRS form 720 to report the excise taxes on that interest.
How Do You Fill Out IRS Form 720
On IRS Form 720, you’ll see a line for each type of excise tax that you may owe, usually based on unit sales or weight.
Paying Your Quarterly Federal Excise Return
You or your tax pro can make a payment on excise taxes using electronic funds transfer by the quarterly deadlines.
Each quarter is three months long and begins on Jan. 1 of each year. The Form 720 is due on the last day of the month following the end of the quarter. For example, you must file a Form 720 by April 30 for the quarter ending on March 31.
Many excise taxes should be paid on a semi-monthly basis, not quarterly. But, if the amount is under certain thresholds, the IRS allows you to delay payment until you accumulate a sufficient tax liability.
More Help With IRS Form 720
If you are a business who needs to file IRS Form 720, get the help of H&R Block! With specialized small business services, we can help support you with not only your individual taxes, but also your business tax needs.
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