Excise taxes on fuel are important since it is one of the U.S. tax values since funds are used by the federal and state government in paying for infrastructure, transport developments and other services provided to the citizens. Even for these taxes and filing comes to the concern and needs attention for the business as well as the individual citizens. In this case, the author hopes to educate the reader on excise taxes on fuel as well as how and what is used to file them using Form 720.
What Are Excise Taxes on Fuel?
Excise taxes are the taxes which are levied on specific commodities or their likings. Here, the goods selected will be taxes relating to fuel for gasoline or diesel, kerosene and so on. The fuel excise tax is intended mostly to assist in the construction and betterment, for example, the funding ought to other transportation facilities like highways and for roads and bridges. These taxes are usually absorbed in the amount of money we pay at the cash register say for fuel and in most cases may not appreciate it.
Fuel excise taxes are categorized broadly under either: Federal excise taxes or State excise taxes. There are certain predetermined taxes that the Federal government levies across a number of Fuels which may differiciate from those that states have. This makes it necessary for companies that sell fuel, distribute fuel, or consume fuel to have an understanding of the tax obligations that apply at these two levels.
Who Should Fill Form 720?
Form 720 – Quarterly Federal Excise Tax Return, is the form for submitting all types of federal excise taxes, including those which are levied on fuel. It is a requirement to file this form saw the bare a large number of entities, including:
FUEL PRODUCERS AND DISTRIBUTORS: every company engaged in manufacturing or distribution of taxable fuels has to fill Form 720 to show how much in excise taxes is due for the taxable fuels that they sell or distribute.
Importers: Such companies involved in fuel eye brussiam importation in USA, these customs also need to declare and pay out tax expenses by use of Form 720.
Retailers: there’s always a retail who sells such Fuels to the drivers, some of the retail selling such Fuels may also be required to fill Form 720 since they are those who Opt to Excel if any tax authority requires them to remit levies.
Other Taxable Nonprofit Organizations: Organizations that are not subject to certain federal taxes may be liable to pay fuel excise tax if engaged in other forms of business.
Fuel forms an important part of any business that is subject to tax. Thus a tax risk assessment should be able to advise on filing requirements given the types of business activities and the types of fuel involved.
Insights on Form 720
Form 720 is an umbrella term used for tax returns that encompass many varied permits declared taxes in one single perpetual return, including fuel, air transport and environmental taxes. This allows taxpayers to fill in the tax due liability correctly.
Important Sections That Constitute Form 720
Part I: This segment is where taxpayers indicate the total number of gallons of a particular type of taxable fuel produced or imported or even sold in a particular quarter under review. It looks at fuel types, sales in gallons, applicable excise tax rates, and several others.
Part II: In this part, you will calculate the total excise tax based on either Part I or circulation tax. This is a key part of the calculation of total revenue tax liability.
Part III: In this section, the credits or refunds and other overpayment adjustments are dealt with.
Part IV: This part contains any other information that may be asked by the IRS including the kind of businesses and relevant taxpayer identification numbers.
Filing Deadlines
Form 720 is filed every quarter and therefore if in any case it is not a final quarter there are due dates at the end of each quarter. The filing dates are as follows ~ due dates:
1st Quarter (January – March): Due by April 30
2nd Quarter (April – June): Due by July 31
3rd Quarter (July – September): Due by October 31
4th Quarter (October – December): Due by January 31 of the following year
These deadlines are very important because failing to meet them will attract default fees or penalties.
How to File Form 720
Form 720 is a tax form which has to be submitted in one of the means paperful, or electronically on the net. Here’s a step by step outline on how to fill sweet Form 720 to avoid pitfalls that may arise in the filling:
Step 1: Gather Necessary Information
Before the preparation goes into filling of the form, proper validation and submission of the necessary documentation and analysis has to be performed. This will include records of fuel purchases, sales, imports and taxes paid during the quarter. It is best to ensure such information is sorted in advance.
Step 2: Complete Form 720
Complete the Form 720 completely in all its aspects. Remember to concentrate on the gallons of fuel and the respective tax imposed, which is often reported. Any irregularity may cause examinations or fines therefore verify your answers carefully.
Step 3: Review the Form and Sign It
Upon filling the form, look for mistakes and omissions of information. Always remember to place your signature and the date in the appropriate spaces on the form before submitting it. Failure to do so may lead to issues since a form with no signature is regarded as incomplete, hence delays in the submission process.
Step 4: Submit the Form
Form 720 can be submitted in paper form or electronically. If submitting paper form, it should be sent to the address as per the instructions given on the form. For electronic submission, you can either use the IRS e-filing or an authorized e-filing service. Usually, electronic filing is less time-consuming and you get to know that your document was received right away.
Step 5: Make Payment
In the event that you owe excise taxes, make sure that you include the payment for the form when sending it. Payments may be made online on the IRS website or with the completed form by tax return through the mail. It will be nice to state your tax Id on the payment for the purposes of proper identification.
Common Mistakes to Avoid
Even though in many people filing Form 720 would not appear complex, there are common mistakes that should be avoided:
Inaccurate calculations: Go through the figures and the computations a second time so as not to give less money than is owing or more than is actually owed.
Failure to file on time: Submitting documents beyond the time requested may have hasty consequences. Use deadline reminders to avoid this.
Not Providing Additional Information: Verify that you have filled out all the sections that need to be filled and that you have attached any documents that you were requested by the IRS.
Not Filing State Taxes: Do not forget that in addition to federal excise taxes, a firm needs to look into its state excise tax establishment as such may have requirements for filing for excise tax.
Fuel excise tax is an important means of supporting the transport development activities in most states in America. It is something that no business afraid of litigation and penalties should take lightly. All it takes for one to be able to get round the challenges which come along with excise duty on fuels is by gathering information in the right manner, filling up the form as required and meeting the deadlines one by one. Monitoring and abiding by changes in excise tax laws especially towards sustaining fuels market in future would entail retrieving and sorting through various variable legal documents that govern it.