This being said, if your business deals in goods and services that are subject to excise tax—like air transportation, fishing equipment, or gasoline—then you’ll have to complete IRS Form 720. Form 720 must be filed with the IRS on a quarterly basis in order for your business to report and pay your federal excise tax liability.
Consumers also contribute indirectly to the payment of the tax, as the business selling the product typically increases the purchase price in order to cover what they are paying in excise taxes. This increase in price can affect a business’s volume of sales. Form 720 is a tax form required of businesses that deal with the sale of certain goods and services . These businesses are required to pay extra taxes, known as “Excise Taxes”, and they are accounted for through this form. You must report excise tax on fuels in Part I, even if the fuel is used for an exempt purpose. The other method used to calculate excise tax is the total units sold.
The Top 25 Tax Deductions Your Business Can Take
Here’s where you figure out your business’s current excise tax liability. The special rule for September is just one of those tax rules that makes you want to shake your fist in the air in frustration.
The tax identity theft risk assessment is based on various data sources and actual risk may vary beyond factors included in analysis. For tax years beginning after 2017, applicants claimed as dependents must also prove U.S. residency unless the applicant is a dependent of U.S. military personnel stationed overseas. A passport that doesn’t have a date of entry won’t be accepted as a stand-alone identification document for dependents. One state program can be downloaded at no additional cost from within the program.
- Timing is based on an e-filed return with direct deposit to your Card Account.
- Allocate the total excise tax liability reported in part one over each half-month in the quarter.
- No filings are needed for the other quarters for such employers.
- All the sellers and manufacturers of highway vehicles file Retail Tax.
- Must provide a copy of a current police, firefighter, EMT, or healthcare worker ID to qualify.
IRS Forms 940 and 941 must be filled out to ensure you’re paying employment taxes. We discuss the difference in each form and how to fill them out accurately. Businesses that don’t need to file Form 720 otherwise can claim fuel tax credits on Form 4136. Manufacturing, construction, and farming businesses should take advantage of this little-known small business tax tip. We’ve finally made it to the end of Form 720.
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The Excise taxes are due for every quarter in a year and the below table clearly indicates the actual due date. If the due date falls on weekend or on a federal holiday, you should file on the next business day.
The U.S. Surgeon General suggests the tobacco excise tax has effectively curbed cigarette smoking in the U.S. Leaking Underground Storage Tank Tax, commonly referred as LUST Tax, comes under Part II of the IRS Form 720. This LUST excise tax is 1% per gallon of the excise tax levied on all the taxable fuels that are sold in the United States. The LUST trust fund, which is responsible for handling any clean-ups and repair, is benefited by the tax amount received.
If you are continuing to pay life insurance premiums on a foreign life insurance policy, you may be subject to a form 720 requirement. This IRS excise tax applies to the seller and manufacturers of coal. This tax also involves one-time gas guzzler tax imposed on imported vehicles and vehicles driven by gasoline or diesel fuel with a minimum gross weight of 6,000 lbs. You will complete number 1 of Schedule A, unless you are liable for any of the alternative methods taxes, as indicated by the appropriate IRS numbers (22, 26, 28, or 27—which correspond to Part I). If your business is responsible for any of those taxes, on the other hand, you will complete number 2 of Schedule A. Based on the calculation of your total sales/units sold and the respective rate, you will fill in your business’s tax responsibility in the “Tax” column. At the bottom of Part I, you will add up all of the taxes and fill in your total amount.
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Step 1: Gather Accounting Documents And Fill Out Your Business Information
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About Form 720, Quarterly Federal Excise Tax Return
The advantage here is that you could zero down all possible human errors while preparing a tax return and avoid paying additional taxes with accurate math. The Part II in IRS excise tax form 720 also comprises of the Leaking Underground Storage Tank Tax, mostly referred as the LUST tax. This excise tax is one percent per gallon of the excise tax levied on the taxable fuels sold in the U.S. Moreover, the tax amount received helps fund the LUST trust fund responsible for handling any clean-ups and repair. On Dec 6, 2012 there was a new addition in this section of the excise tax form, known as the ‘Patient-Centered Outcomes Research Fee’.
All the sellers and manufacturers of highway vehicles file Retail Tax. Highway vehicles include heavy trucks, buses and truck tractors.
For example, your first-quarter Form 720 return is due on April 30. You remit excise taxes 15 days after they’re incurred. For example, say you own a tanning salon, where most tanning bed services are subject to a 10% federal excise tax. All excise taxes collected for tanning sessions between January 1 and January 15 are due on January 29. All levels of government levy excise taxes to influence behavior and raise revenue.
Valid for 2017 personal income tax return only. Return must be filed January 5 – February 28, 2018 at participating offices to qualify. Type of federal return filed is based on your personal tax situation and IRS rules. Additional fees apply for Earned Income Credit and certain other additional forms, for state and local returns, and if you select other products and services. Visit hrblock.com/ez to find the nearest participating office or to make an appointment. In 2010, the Federal government imposed a new kind of tax return applicable to establishments providing indoor tanning services.