A Complete Procedure for Carrying Out Excise Tax Returns Forms
An excise tax refers to the tax or duties charged on specific products and services like fuel, tobacco, alcohol, and even airline tickets. This leg of the tax process though tedious for business owners and persons who deal with excise taxable goods can be made relatively simple with the correct knowledge and tools. Filing business taxes is one thing, but filing excise business taxes requires special focus and order. We will explain who is obliged to file excise tax returns, what form should be used and what one can do to make the whole process less tedious.
What Is Excise Tax?
Excise tax is a tax on the sale or license to sell some goods, activities and services, or their use by the public. Generally, sales tax is a tax added to the invoice for every sale, while only a few tedious taxes of this nature are included within the cost of the commodity like covert sale taxes.
The most notable instances would be the following:
Fuel Taxes: These taxes are imposed on the sale of gasoline, diesel and some others.
Tobacco and Alcohol Refund Taxes: These taxes are placed on the sales of cigarette, cigar, beer, wine and whisky and other spirituous beverages.
Air Transport Taxes: These taxes are incorporated in the prices of air tickets.
Gun and Ammunition Excise Duties: These are paid on certain categories of goods to their manufacturers and on their further sales to the consumers.
Excise taxes are made at different levels namely federal and state making those who handle such products abide by the tax laws.
Who Needs to File Excise Taxes?
Excise tax is mostly filed by manufacturers or producers and sometimes even distributors of excisable goods. For instance, the following industries often need to file excise with the tax authorities:
Fuel and energy producers: Refineries and companies marketing and distributing gasoline, diesel and other fuels.
Tobacco and alcohol manufacturers: Individuals and businesses involved in the sales and distribution of tobacco cigarettes, beer, wine or spirits.
Transportation companies: Airlines or other businesses dealing with the provision of airline transportation.
Firearm Dealers and manufacturers: Dealerships that involve sale or making of guns, gun powder and other accessories of guns mainly targeting the military or the civilians.
If you are in the business of selling, manufacturing, or distributing products that are subject to excise tax, it is essential to maintain the required federal and state filing.
What Forms Are Used for Filing Excise Taxes?
As part of the procedural requirements imposed by the IRS, proper tax paying entities are required to remit an excise tax by completing and returning Form 720 which is the Quarterly Federal Excise Tax Return. Form 720 encompasses the filing of other forms of excise taxes including those imposed on fuel, air transport, tobacco, alcohol and many more. It is quite crucial to timely report this annual return form since failure to do so may lead to administrative sanctions on the company.
Key deadlines for Form 720:
First Quarter: 30th April of every calendar year
Second Quarter: 31st July of every calendar year
Third Quarter: 31st October of every calendar year
Fourth Quarter: 31st January of the year succeeding the end year of the Form 720.
Apart from Form 720 other excise tax related forms or excise tax reports might be filed as a requirement dependent on the particular category of an excise tax imposed on an entity. For instance, businesses that are under environmental taxes like ozone-depleting substances might be required to file Form 6627 (Environmental Taxes).
How to File Excise Tax Returns
Returns on excise taxes may also be filed the traditional manner by hard copy filing method as well as by electronic filing systems. However, the IRS preferred method is that of filing returns over the internet. E-filing is also comparatively fast, more accurate and hassle free. They can also be completed on various tax preparation software or utilizing IRS authorized e-file service providers.
Steps to file excise taxes electronically:
Gather necessary information: Ensure that you have all the supporting documents that contain information on the excise products, number of sales, where the products were made and sales receipts.
Complete Form 720: Declaration of all the taxes charged on all excise products should be completed in the correct sections of Form 720.
Submit electronically: You are required to e-file your excise tax return utilizing IRS e file systems or third party providers.
Pay taxes owed: Tax payments can be done electronically via the IRS system through the Electronic Federal Tax Payment System (EFTPS).
E-filing Form 720 will make the IRS process your tax return faster as any mistakes that could n be made by the taxpayer and correction is done before submission.
Common Mistakes to Avoid When Filing Excise Tax
Considering how complicated the excise tax procedures can be, it is helpful to know that even slight mistakes can incur some penalties. Here are some of the major problems to be dealt with;
Incorrect tax calculations: Every product has an excise tax rate affixed to it which may not be the same for the different products. One must ensure that for every category of a product the correct rate has been used in order to avoid an excess being paid or shortage of tax being paid.
Missing deadlines: Not filing documents when they are supposed to be filed may attract penalties. There are quarterly filing deadlines, mark them on your calendar to avoid unnecessary penalties.
Information that does not comply with the requirements or is late with the terms: Prepare product amounts, tax percentages, and taxpayer identification numbers in detail and double-check the information before your filing when reporting.
Benefits of E-Filing Excise Taxes
Apart from the full submitted paper filing, one cannot overestimate the benefits of e-filing:
Quick turnaround of processing: E-filing returns will be received and processed at a certain time compared to any paper fliers received.
Reduced mistakes: E-filing reduce errors actively since e-filing systems are built in a way where simple aids discourage avoidance making most returns done accurately.
Tax payments made quickly: When taxes owed are done electronically, there is no longer any need for checks and waiting for the post.
Storage of papers: When documents are supposed to be submitted electronically, filling forms and loss of such files is a past.
Stay Compliant and Simplify Your Filing
Filing return related taxes in respect of excise is a primary duty of companies that are engaged in specific business sectors. Comprehension of your responsibilities regarding filing, use of appropriate filing documents, adoption of electronic filing reduces the hassle of filing and ensures that one complies with laws of the land. Get ahead of the deadlines and think about obtaining assistance or software in order to make your process of filing reconex excise tax more efficient.