Form 720

Form 720: Quarterly federal excise tax return guide

What is Form 720?

Form 720 is the Quarterly Federal Excise Tax Return. Businesses use it to report and pay federal excise taxes owed on specific goods, services and activities. Excise tax is charged on what you sell or use rather than on your profit, and the cost is often built into the price the customer pays.

The taxes reported fall into several categories set by the IRS. Common ones you might report on Form 720 include:

• Fuel taxes on gasoline, diesel and alternative fuels.
• Air transportation taxes on passenger and cargo services.
• The 10% excise tax on indoor tanning services.
• Environmental taxes, including those on ozone-depleting chemicals.
• Communications taxes on certain telephone services.
• The PCORI fee paid by health plan sponsors and insurers.

Who needs to file Form 720?

Your filing obligation depends on what your business does, not on its size or legal structure. A fuel retailer, an airline, a tanning salon owner, an importer of certain chemicals or an employer sponsoring a self-insured health plan can all owe excise tax. Sole proprietors, LLCs and corporations are treated the same way.

An LLC does not need to file Form 720 simply because it is an LLC. You file only for a quarter in which you are liable for one of the excise taxes listed on the form. If your business never deals in taxable goods, services or activities, this form likely does not apply to you.

When is Form 720 due?

Form 720 is filed for each calendar quarter, and it is due on the last day of the month after the quarter ends. When a due date lands on a weekend or legal holiday, you can file on the next business day. The quarterly deadlines are:

• April 30 for the first quarter, covering January through March.
• July 31 for the second quarter, covering April through June.
• October 31 for the third quarter, covering July through September.
• January 31 for the fourth quarter, covering October through December.

If you file only to report the PCORI fee, Form 720 works more like an annual return. You report and pay that fee once a year, on the second-quarter return due July 31.

How and where to file Form 720

You can file Form 720 electronically or by mail. The IRS strongly encourages electronic filing through an IRS-authorized e-file provider, since it processes faster, reduces errors and gives you quick confirmation that your return was received. The form cannot be filed directly on the IRS website.

If you send a paper return, mail it to the address the IRS lists in the current Form 720 instructions:

• Department of the Treasury, Internal Revenue Service, Ogden, UT 84201-0009

Mailing addresses can change, so confirm this one against the latest instructions before sending. You need an Employer Identification Number to file, and you generally pay any balance due through the Electronic Federal Tax Payment System (EFTPS).

What happens if you don't file Form 720?

Missing a Form 720 deadline can get expensive. The IRS charges a failure-to-file penalty of 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25%. A separate failure-to-pay penalty of 0.5% per month applies to tax you owe but do not pay on time.

Interest also accrues on unpaid amounts from the due date until you pay in full. Filing on time, even when your liability is small, is the simplest way to avoid these charges. If you are unsure whether you owe excise tax for a quarter, checking early leaves room to correct course before penalties build up.

Need to file Form 720?

Lumin offers a fillable Form 720 template that makes it easy to complete your Quarterly Federal Excise Tax Return. Enter your business information, calculate the required fields and review your details in one place before saving or printing your form. Fill, sign and download your Form 720 in minutes. Try it today for free.