IRS Form 720 – Quarterly Federal Excise Tax Return

IRS Form 720 – Quarterly Federal Excise Tax Return – In the complex world of federal taxes, understanding specialized forms like IRS Form 720 is essential for businesses and individuals dealing with excise taxes. Whether you’re involved in fuel sales, air transportation, or manufacturing certain goods, this form ensures compliance with federal excise tax requirements. This comprehensive guide covers everything you need to know about IRS Form 720, including its purpose, filing requirements, and recent updates for 2026. We’ll help you navigate the process to avoid penalties and ensure accurate reporting.

What Is IRS Form 720?

IRS Form 720, known as the Quarterly Federal Excise Tax Return, is used to report and pay various federal excise taxes imposed under Subtitle D of the Internal Revenue Code. These taxes apply to specific goods and services, such as fuels, environmental products, communications services, and more. The form allows taxpayers to calculate their tax liability by IRS number and make payments accordingly. If you have no tax liability, you still file the form by entering “None” on Part III, line 3, and signing it.

Form 720 consists of several parts:

  • Part I: Covers environmental taxes, communications services, air transportation taxes, fuel taxes, and manufacturers’ taxes like those on coal, tires, and vaccines.
  • Part II: Includes taxes such as the Patient-Centered Outcomes Research (PCOR) fee, indoor tanning services, and stock repurchases.
  • Part III: Summarizes total tax, credits, and balance due.
  • Schedules: Schedule A for excise tax liability records, Schedule T for two-party fuel exchanges, and Schedule C for claiming credits or refunds.

This structure helps organize diverse excise taxes into a single quarterly return, streamlining reporting for liable entities.

Who Needs to File IRS Form 720?

Not everyone has to file Form 720—it’s required only if you’re liable for or responsible for collecting specific federal excise taxes listed in Parts I and II. Common filers include:

  • Manufacturers of goods like coal, tires, vaccines, sport fishing equipment, bows, and arrow shafts.
  • Providers of services such as communications (e.g., local telephone), air transportation, indoor tanning, and ship passenger transportation.
  • Entities involved in fuels, including diesel, kerosene, gasoline, and alternative fuels.
  • Collectors of taxes on foreign insurance premiums, obligations not in registered form, and environmental taxes (e.g., Superfund chemicals, ozone-depleting chemicals).
  • Issuers and plan sponsors for the PCOR fee (filed annually on the second-quarter return).
  • Businesses handling stock repurchases or sales of designated drugs.

If you’re going out of business or no longer liable for these taxes, file a final return by checking the “Final” box. Ultimate vendors, blenders, and registered credit card issuers may also file for credits on nontaxable uses.

Excise Taxes Covered by Form 720

Form 720 reports a wide range of excise taxes, each identified by an IRS number. Here’s a breakdown of key categories:

  • Environmental Taxes: Superfund chemicals (IRS Nos. 53, 54, 16-18, 21), ozone-depleting chemicals (ODCs, IRS Nos. 98, 19, 20)—reported via attached Form 6627.
  • Communications and Air Transportation: 3% on local services (IRS No. 22); 7.5% plus $5.20 per domestic segment for persons by air (IRS No. 26); 6.25% for property by air (IRS No. 28); $22.90/$11.40 for international facilities (IRS No. 27).
  • Fuel Taxes: Diesel ($0.244/gallon, IRS No. 60); kerosene ($0.244, IRS No. 35); gasoline ($0.184, IRS No. 62); alternative fuels by type (e.g., IRS Nos. 112, 118-124).
  • Manufacturers Taxes: Coal ($1.10/$0.55 per ton or 4.4%, IRS Nos. 36-39); tires ($0.0945 per 10 lbs., IRS Nos. 108-109, 113); gas guzzlers (via Form 6197, IRS No. 40); vaccines ($0.75/dose, IRS No. 97).
  • Other Taxes: PCOR fee ($3.47/$3.22 per life, IRS No. 133); indoor tanning (10%, IRS No. 140); sport fishing equipment (10%, IRS No. 41); foreign insurance premiums (various rates, IRS No. 30); stock repurchases (via Form 7208, IRS No. 150); designated drugs (IRS No. 142).

Floor stocks taxes on ODCs (IRS No. 20) are reported on the July 31 return but paid by June 30.

How to File IRS Form 720: Step-by-Step Guide?

Filing Form 720 involves careful completion to ensure accuracy. Follow these steps:

  1. Gather Information: Obtain an Employer Identification Number (EIN) if needed. Collect records of taxable transactions, including gallons for fuels or premiums for insurance.
  2. Complete Name and Address: Enter your details and the quarter ending date. Check boxes for address changes or final returns.
  3. Fill Out Parts I and II: Report liabilities by IRS number, attaching forms like 6627 or 6197 as required.
  4. Use Schedules: Record semimonthly liabilities on Schedule A; report exchanges on Schedule T; claim credits (e.g., for nontaxable fuel uses) on Schedule C, meeting minimum amounts like $750 for certain claims.
  5. Calculate Total in Part III: Subtract credits (line 4 from Schedule C) and overpayments (line 6) from total tax (line 3) to find balance due (line 10).
  6. Sign and Authorize: Sign the return; designate a third party if desired; include paid preparer info if applicable.
  7. File Electronically or by Mail: Use EFTPS for deposits; pay balance via IRS Direct Pay, electronic withdrawal, check, or wire.

For claims, attach supporting statements, certificates, and proofs (e.g., for exports).

Due Dates and Filing Schedule for IRS Form 720

Form 720 is filed quarterly:

  • January–March: Due April 30
  • April–June: Due July 31
  • July–September: Due October 31
  • October–December: Due January 31

If a due date falls on a weekend or holiday, file the next business day. The PCOR fee is filed annually on the July 31 return. Special deposit rules apply in September, with additional deposits due September 29 for certain periods.

Payments, Deposits, and Credits

Semimonthly deposits are required via EFTPS if your liability exceeds $2,500 per quarter (exceptions for one-time filers like gas guzzlers). Pay any remaining balance with the return. Use Schedule C for credits, such as for exported fuels or nontaxable uses, with rates like $0.244 for diesel (CRN 310). Minimum claim amounts apply, and annual claims can be made on Form 4136.

Penalties for Late Filing or Non-Compliance

Failing to file on time, deposit taxes, or provide accurate information can result in penalties and interest. The trust fund recovery penalty equals the full unpaid amount for willful non-remittance of collected taxes (e.g., air transportation, communications). Penalties for dyed fuel misuse are abatable via Form 843. Explain reasonable cause if notified of penalties to potentially avoid them.

Recent Changes and Updates for 2026

As of December 2025, key updates include:

  • Termination of the Sustainable Aviation Fuel (SAF) credit after September 30, 2025.
  • Expiration of biodiesel, renewable, and alternative fuel credits after 2024.
  • Inflation adjustments for 2025: Arrow shafts at $0.63/shaft; air transportation segment at $5.20; international facilities at $22.90/$11.40.
  • PCOR fee increased to $3.47/$3.22 per life for applicable years.
  • Stock repurchase tax (IRS No. 150) first due October 31, 2024.
  • Designated drugs tax effective October 1, 2023.

Stay updated by checking IRS.gov for 2026 revisions.

Where to Download IRS Form 720 PDF??

You can download the latest IRS Form 720 PDF directly from the official IRS website: https://www.irs.gov/pub/irs-pdf/f720.pdf. Always use the most current version to ensure compliance.

Conclusion

Mastering IRS Form 720 is crucial for anyone handling federal excise taxes. By understanding its requirements and staying current with updates, you can file accurately and avoid costly penalties. If you’re unsure about your liability, consult a tax professional or visit IRS.gov for more resources. Proper compliance not only meets legal obligations but also supports efficient business operations.