Form 720: Understanding Your Excise Tax Duties

Navigating the maze of federal tax requirements can be difficult for business owners, especially when it comes to indirect taxes like excise taxes. One important form that many companies need to understand is IRS Form 720, the Quarterly Federal Excise Tax Return.

In this article, we're going to explore who needs to file Form 720, what it is used for, and when it's due. Continue reading for guidance on how to keep your business compliant and in good standing with the IRS.

What is Form 720 Used For?

The IRS Form 720 (Quarterly Federal Excise Tax Return) is used to report and pay your federal excise taxes as a business owner.

Excise taxes are taxes paid on certain types of goods, services, or activities and they're often included in the price of the product.

Common Products and Services Subject to Excise Tax

Businesses that sell the following products and services are typically subject to an excise tax in the US.

1. Tobacco: Businesses that manufacture or import tobacco products like cigarettes, cigars, and smokeless tobacco are subject to federal excise taxes.
2. Alcoholic Beverages: Breweries, wineries, and distilleries pay excise taxes on the beverages they produce. The tax rates vary depending on the type and quantity of the beverage.
3. Fuel: Gasoline, diesel, and other types of fuel are typically subject to an excise tax.
4. Air Travel: Commercial airlines pay excise taxes on the tickets they sell and on the use of international air travel facilities.
5. Communication services: Businesses providing local telephone services are subject to federal excise taxes.
6. Firearms and Ammunition: Businesses involved in the manufacturing or importation of firearms and ammunition are required to pay an excise tax.
7. Heavy Trucks, Trailers, and Tractors: An excise tax is applied to these types of vehicles if they exceed a certain weight limit. Form 2290 is what will need to be filed.
8. Health Insurance Providers: The entity providing the coverage, the coverage provider, is responsible for paying its share of the excise tax
9. Medical Devices: Manufacturers and importers of certain medical devices can be subject to federal excise tax.

Reporting and Paying for Excise Taxes

On a quarterly basis, you are required to report and pay excise taxes to the IRS via Form 720. Schedule A of Form 720 is used to show the total amount of excise taxes you must pay for the quarter.

At the end of each quarter, you have one month to file and pay your excise taxes:

You can send your completed Form 720 by mail or online through an IRS-approved software provider. To keep track of your excise taxes, the best and easiest way is to utilize an easy-to-use innovative bookkeeping service.

Work with the Experts

The intricacies of handling excise taxes and reporting through Form 720 are an important part of doing business in the United States. This can seem overwhelming, but partnering with 1-800Accountant can help to lessen the pressure linked with your business tax responsibilities.

We provide a user-friendly and advanced bookkeeping service, streamlining the reporting and payment of excise taxes. Our services ensure on-time filings and decrease your worry as a business owner. The ability to outsource these demanding tasks greatly reduces the administrative load and enables entrepreneurs to concentrate more on growing their businesses.