IRS Instruction 720 – If you’re dealing with federal excise taxes, understanding IRS Form 720 is essential. This quarterly federal excise tax return helps businesses report and pay various excise taxes imposed by the IRS. Whether you’re new to filing Form 720 or need a refresher on the latest updates, this guide covers everything from who must file to step-by-step instructions. We’ll draw from official IRS sources to ensure accuracy and compliance for 2026.
What Is IRS Form 720?
Form 720, officially known as the Quarterly Federal Excise Tax Return, is used to report and pay a wide range of federal excise taxes. These taxes apply to specific goods, services, and activities, such as fuels, environmental products, air transportation, and more. The form allows taxpayers to calculate their tax liability by IRS number and claim applicable credits. It’s not an income tax form but focuses on excise taxes under Subtitle D of the Internal Revenue Code.
Businesses use Form 720 to ensure they’re compliant with federal regulations. If you have no tax liability for a quarter, you can still file to report zero tax, and if it’s your final return (e.g., going out of business), check the “Final” box.
What’s New for Form 720 in 2026?
The IRS regularly updates Form 720 instructions to reflect legislative changes and inflation adjustments. For 2026, key updates stem from the One Big Beautiful Bill Act of 2025 and other developments:
- Termination of Certain Credits: The Section 6426(k) credit for sustainable aviation fuel (SAF) mixtures ends after September 30, 2025, with Schedule C, line 12d reserved for future use. Credits for biodiesel, renewable diesel, agri-biodiesel, alternative fuel, and alternative fuel mixtures expire for sales or uses after 2024.
- Patient-Centered Outcomes Research (PCOR) Fee Increase: For policy years ending between October 1, 2024, and October 1, 2025, the fee rises to $3.47 per covered life (up from $3.22).
- Inflation Adjustments: The tax on arrow shafts increases to $0.63 per shaft, domestic air transportation segments to $5.20, and international flights to $22.90 per person ($11.40 for Alaska/Hawaii segments on departures).
- Oil Spill Liability Trust Fund Tax Expiration: This tax expires in 2026, impacting fuel-related filers.
- Other Changes: Updates to Superfund excise taxes, dyed fuel refund claims, and the new excise remittance tax begin in 2026. USPS postmarking changes may affect timely filing proofs.
The instructions were revised in December 2025, with the page last reviewed on December 19, 2025. Always check for the latest revisions on the IRS website, as schemas and business rules for electronic filing (MeF) are updated for tax year 2026.
Who Must File IRS Form 720?
You must file Form 720 if your business is liable for or collects any federal excise taxes listed in Parts I and II of the form. This includes:
- Manufacturers or importers of certain goods (e.g., tires, vaccines, sport fishing equipment).
- Providers of services like air transportation, communications, or indoor tanning.
- Fuel producers, distributors, or users (e.g., gasoline, diesel, alternative fuels).
- Entities responsible for environmental taxes, such as ozone-depleting chemicals (ODCs) or Superfund taxes.
- Issuers of health insurance policies or self-insured plans for the PCOR fee (filed annually on the second-quarter return).
If you owe excise taxes from prior quarters without a final return, or if you’re reporting floor stocks taxes (e.g., ODCs due by July 31), filing is required. No filing is needed if you have zero liability and no future obligations—simply file a final return.
IRS Form 720 Filing Deadlines for 2026
Form 720 is due quarterly, with deadlines falling on the last day of the month following the quarter’s end. For 2026:
- Q1 (January–March): April 30, 2026
- Q2 (April–June): July 31, 2026
- Q3 (July–September): October 31, 2026
- Q4 (October–December): January 31, 2027
If a deadline falls on a weekend or holiday, file by the next business day. Special rules apply: PCOR fees are due annually on July 31, and floor stocks taxes on ODCs are due June 30 but reported on the July 31 return. Claims for credits must generally be filed within 3 years of the return or 2 years of payment.
How to File Form 720: Electronic vs. Paper?
The IRS encourages electronic filing for efficiency and accuracy. Use the IRS e-file program through approved providers for Modernized e-File (MeF) submissions. For paper filing, mail to: Department of the Treasury, Internal Revenue Service, Ogden, UT 84201-0009.
- Electronic Filing: Faster processing; required for certain large filers. Use EFTPS for deposits if your liability exceeds thresholds.
- Paper Filing: Include your EIN, quarter ending date, and attachments like Form 6627 (environmental taxes) or Form 6197 (gas guzzler tax).
- Payments: Use EFT via EFTPS or IRS Direct Pay. Exceptions exist for low liabilities or specific taxes like PCOR. New business payment options were introduced in March 2025.
- Amendments: Use Form 720-X for corrections.
If reporting zero tax, enter “None” on Part III, line 3, and sign the form.
Taxes Reported on Form 720
Form 720 covers numerous excise taxes, categorized in Parts I and II:
Part I Taxes
- Environmental Taxes: Petroleum Superfund (IRS No. 53), chemicals (54), oil spill (18, 21—expiring in 2026), ODCs (98, 19, 20).
- Communications and Air Transportation: Local services (22), persons/property in air (26, 28), international facilities (27).
- Fuel Taxes: Diesel (60), gasoline (62), kerosene (35, 69), alternative fuels (112, 118, 120–124).
- Other: Coal (36–39), tires (108–113), gas guzzler (40), vaccines (97), truck/trailer (33), ship passengers (29), foreign insurance (30).
Part II Taxes
- PCOR fee (133), sport fishing equipment (41, 110, 114, 44, 106), indoor tanning (140), inland waterways fuel (64), LUST tax (125), biodiesel recapture (117), stock repurchase (150), designated drugs (142).
Use Schedule A for semimonthly liabilities, Schedule T for fuel exchanges, and Schedule C for credits (e.g., nontaxable uses, exports).
Step-by-Step Instructions for Filling Out Form 720
- Header Information: Enter your name, address, EIN, and quarter ending date. Check boxes for address changes or final return.
- Parts I and II: Report liabilities by IRS number, using attachments for calculations (e.g., gallons x rate for fuels).
- Schedules: Complete Schedule A for deposit breakdowns, Schedule C for credits (e.g., line 1 for nontaxable fuel uses; minimum $100–$200 claims).
- Part III: Total liability (line 3), subtract credits/overpayments, calculate balance due (line 10).
- Sign and Date: Include third-party designee if applicable. Attach supporting forms.
- Claims: For refunds, use Form 8849 or annual Form 4136 if quarterly minimums aren’t met.
For detailed rates and CRNs (Credit Reference Numbers), refer to Pub. 510.
Penalties, Recordkeeping, and Common Mistakes
- Penalties: Late filing or deposits can incur fees. Trust fund recovery penalties apply to unpaid collected taxes (e.g., air transportation). Provide reasonable cause explanations to avoid them.
- Recordkeeping: Retain records for at least 4 years, including proofs of exemptions, certificates, and export documentation.
- Common Mistakes: Forgetting attachments, miscalculating semimonthly liabilities, or missing credit claims. Double-check for inflation-adjusted rates in 2026.
Additional Resources for IRS Form 720
- Official IRS Instructions: Download the latest PDF at irs.gov/pub/irs-pdf/i720.pdf.
- Publications: Pub. 510 (Excise Taxes), Pub. 509 (Tax Calendars).
- Help: Contact the Taxpayer Advocate Service (TAS) for issues, or visit IRS.gov for forms and e-file providers.
Staying compliant with Form 720 avoids penalties and ensures smooth operations. Consult a tax professional for complex situations, and file on time for 2026 quarters. For more tax guides, explore our site or visit IRS.gov.