What you need to know
IRS Form 720, used to report and pay Quarterly Federal Excise Tax, is primarily used to account for excise tax on various products or services. Individuals or businesses engaged in raw materials for tobacco products, domestic air transportation, fuels, and other specified environmental commodities need to pay this tax. It is critical to understand Form 720 in order to avoid penalties from the IRS.
1.If operators of highway trucks qualify for environmental or fuel-related excise taxes, they may need to file returns.
2. Air Transport Suppliers Airlines and other services within the private aviation business file excise taxes on airline tickets and transportation services.
3. Tobacco, Alcohol, and Vaping Industries Manufacturers, retailers, and importers of tobacco, cigarettes, and alcohol must file Form 720. Excise tax regulations must also be adhered to by e-cigarette and vaping industries.
4. Medical Equipment Producers Businesses that sell and manufacture taxable medical equipment need to file Form 720.
5. Indoor Tanning Providers Salons and service providers who offer tanning are subjected to an excise tax and must submit Form 720 quarterly.
When is Form 720 Due?
IRS form 720 is submitted quarterly and they are
April 30 for Q: January- March ,
July 31 for Q2: April – June ,
October 31 for Q3: July – September
January 31 for Q4: October – December.
The IRS may impose fines and interest due to the failure to file tax returns in time.
How to File IRS Form 720
1. Online Filing (E-filing Form 720) Form 720 can be filed online and is fast tracked using an IRS online account. It is also important to use an IRS approved e-file provider for safe and accurate submission.
2. Filing on Paper
A business can also complete a paper Form 720 and send it via post to the appropriate IRS office.This method takes more time, and the chances of making errors in the process increase.
Common Mistakes to Avoid When Filing Form 720
Incorrect calculations of tax liabilities – Be meticulous when reviewing tax rates and amounts.
Letting timelines pass without action – Late submissions often incur extra payments and charges.
Failure to make give payment to an IRS contracted e-file provider – Faster and safer receipt handling is ensured with e-filing.
Not remitting excise taxes payments – Taxes that remain unpaid will lead to penalties from the IRS, even after filing Form 720.
Having knowledge of IRS Form 720 and who will be filing it is important when doing business with goods and services exposed to excise taxes. Regardless if you are in the trucking, fuel, air transportation, medical or tanning industry, timely submission is of utmost importance to avoid compliance fines. E-filing Form 720 is less complicated and quicker, which is why it is recommended.
Using this reference, businesses can make certain that they adhere to the requirements of Form 720 to eliminate penalties and make filing their taxes simpler.
