IRS Tax Form 720: Quarterly Federal Excise Tax Return

Businesses involved in specific goods or services like gasoline, airline tickets, or even indoor tanning must navigate a lesser-known IRS requirement: Form 720. Unlike income tax forms, this quarterly excise tax return deals with taxes applied to certain products, services, or activities. Filing it correctly isn't optional, it's the law. And missing a deadline or misreporting could cost you more than you think. In this blog, we'll break down what Form 720 is, who needs to file it, how to do it right, and why getting it wrong isn't worth the risk.

What is Form 720?

IRS Form 720, officially titled the Quarterly Federal Excise Tax Return, is used to report and pay excise taxes in the U.S. These taxes aren't based on income or profits but are applied to specific items and services. Common examples include fuel, airline tickets, medical devices, and environmental taxes.

Excise taxes are often embedded in the price of a product or service, but businesses must report and remit them separately. Form 720 provides the structure for doing that. It helps the IRS track who owes what and when. It's not just for major corporations either. Even small businesses may need to file if they fall into the excise tax category.

Who Needs to File Form 720?

The IRS lays out clear criteria for filing Form 720. You must file if:

• You're liable for or collect any excise taxes during the quarter.
• You filed in a previous quarter and haven't marked your return as "final."

Industries and businesses that commonly file include:

• Gas stations and fuel distributors
• Airline operators
• Indoor tanning salons
• Manufacturers or importers of tires and heavy trucks
• Health insurance providers (for PCORI fees)

If your business is involved in any of the above, it's time to look closely at your tax responsibilities.

When is Form 720 Due?

Form 720 follows a quarterly schedule. Here are the due dates:

Quarter	Period Covered	Filing Deadline
Q1	Jan 1 – Mar 31	April 30
Q2	Apr 1 – Jun 30	July 31
Q3	Jul 1 – Sep 30	October 31
Q4	Oct 1 – Dec 31	January 31

If the due date falls on a weekend or holiday, the deadline moves to the next business day. Keep in mind that while Form 720 is quarterly, some businesses might also have to make semi-monthly excise tax deposits.

How to File Form 720

There are two main ways to file:

1. Paper Filing: Mail the completed form to: Department of the Treasury Internal Revenue Service Ogden, UT 84201-0009

Include Form 720-V if you’re sending a payment by check or money order.

2. Electronic Filing: The IRS allows e-filing through approved software providers. This method is faster, reduces errors, and provides confirmation when your return is received.

Payment Methods:

• EFTPS (Electronic Federal Tax Payment System)
• IRS Direct Pay (for eligible businesses)
• Check or money order (if mailing your return)

Inside IRS Form 720: What You’ll Need

Form 720 is broken into multiple parts and schedules:

• Part I & II: List the types of excise taxes and IRS numbers for what you're reporting.
• Part III: Total your liability and report prior deposits.
• Schedule A: Required if you report taxes in Part I. Breaks down your liability by semi-monthly periods.
• Schedule C: Used for claiming credits and adjustments.
• Schedule T (optional): Applies to terminal fuel reporting.

Each section must be filled out accurately to avoid penalties or missed refund opportunities.

Instructions for IRS Form 720: Step-by-Step

1. Enter business info: Name, address, and EIN.
2. Choose applicable excise tax types: Check boxes in Part I or II.
3. Calculate taxes owed: Multiply applicable rates by units sold or service volume.
4. Complete Schedule A: If you owe in Part I.
5. Add any credits in Schedule C: For overpayments or specific exemptions.
6. Review and sign Part III: Total liability, subtract deposits, determine payment or refund.
7. File and pay: Send it off or e-file, and pay any balance due.

Additional Considerations When Filing

Understanding Collection Points and IRS Numbers

Form 720 might seem straightforward on the surface, but depending on your business operations, the details can get complicated. Some excise taxes are collected at the point of sale, others at the point of manufacture. Some require allocation across different activities. Knowing which IRS numbers to reference for each tax category is critical.

Conditional Applicability of Certain Excise Taxes

Certain types of excise taxes apply only under specific conditions. For example, the environmental tax on petroleum products is only applicable to imported or refined oil. Health insurance providers are subject to PCORI fees only if they operate certain self-insured health plans. These nuances make it necessary to regularly review IRS updates, especially in industries affected by regulatory change.

Documentation Requirements

Any taxpayer liable for excise taxes under Part I must maintain proper documentation to support their calculations. This includes invoices, shipping records, sales receipts, and any other backup to demonstrate how you determined liability. This isn’t just helpful—it’s expected in the event of an audit.

Additional Forms and Schedules

If you need to file excise taxes on fuels, the IRS may require you to complete Schedule T. This schedule asks for detailed information about fuel movements, types, gallons transferred, and tax responsibility. You may also need to file additional forms depending on your operations—such as Form 2290 for heavy vehicle use tax. While Form 720 covers many excise taxes, it’s not a one-size-fits-all solution.

Amending Past Returns: Form 720-X

Mistakes happen. If you realize you under- or over-reported on a previous Form 720, don’t file a new form. Use Form 720-X instead. This is the IRS-approved method to amend your quarterly excise tax filings. It allows for corrections and adjustments while maintaining a clear audit trail.

You’ll need to explain the reason for the adjustment clearly. The IRS expects full transparency in this process. Supporting documentation is key. Keep detailed records of your corrections, including what prompted the adjustment and how you recalculated your tax liability.

Penalties for Non-Compliance

Filing Form 720 late or not at all can trigger hefty penalties:

• Late filing penalty: 5% of the unpaid tax per month, up to 25%
• Late payment penalty: 0.5% of the unpaid tax per month
• Interest: Accrues daily on unpaid amounts

In some cases, business owners may even be held personally responsible under the Trust Fund Recovery Penalty if they collect excise taxes and fail to pay them.

Timely and accurate filing helps your business avoid costly surprises. It also builds credibility if your company is ever subject to an IRS review.

How Global FPO Can Help

Excise taxes can get complicated fast. At Global FPO, we work with businesses across industries to help them:

• Identify if they're liable for excise taxes
• Calculate and file Form 720 accurately
• Claim refunds and credits where applicable
• Set up systems for deposits and reporting

Whether you're filing for the first time or cleaning up a backlog, our tax professionals are here to guide you.

We help clients stay up to date with IRS changes, understand which sections apply to their operations, and avoid common filing mistakes. If your business handles goods or services subject to excise tax, even irregularly, it’s worth having experts review your obligations.

Don’t Overlook Form 720

Form 720 isn’t as well-known as income tax returns, but it carries just as much weight. If your business falls under any category that collects or owes excise taxes, staying compliant isn't just smart, it’s legally required. Filing accurately and on time avoids penalties and protects your reputation.

Need help navigating the filing process or figuring out if this applies to your business? Contact Global FPO today and we’ll make sure your Form 720 is filed right—every single quarter. We’ll keep you compliant, efficient, and prepared for whatever tax season throws your way.

FAQs

1. What is IRS Form 720 used for?

It’s used to report and pay federal excise taxes on specific goods and services, such as fuel, air transportation, and indoor tanning.

2. How often do I need to file Form 720?
You must file it quarterly—by the end of the month following each quarter (e.g., April 30 for Q1).

3. Can Form 720 be filed online?
Yes, the IRS allows e-filing through approved software providers. It’s faster and helps reduce errors.

4. What happens if I don’t file Form 720?
Failure to file or pay excise taxes on time can lead to penalties, interest, and potential legal consequences.

5. What is Form 720-X?
Form 720-X is used to correct mistakes or adjust amounts reported on a previously filed Form 720.