US businesses generally file Form 720, better known as the “Quarterly Federal Excise Tax Return.” As the name suggests, the purpose of Form 720 is to report and pay any federal excise tax thereon. Some of the more common goods and services subject to excise taxes include: fuel; transportation by air; indoor tanning and so on. So, below are the things you need to understand about Form 720.
- Who are the potential filers of Form 720?
Companies that manufacture goods or provide services that has excise taxes must therefore submit the form 720. This applies to manufacturers, service providers and importers in areas like fuel, transportation and environment taxes.
- Types of Excise Taxes
Most of Directorate of Internal Revenue’s Form720 are not limited in terms of the range of excise tax most section of the Form720 are quite clear. Here are the most common categories:
Environmental Taxes: These are levied on measures aimed at reducing the use of ozone-depleting substances, or on gasoline or gasoil with specific additives.
Communication and Air Transportation Taxes: Relates to transportation by air and also to telephone.
Fuel Taxes: Impose levies and excise taxes on gas suppliers and diesel fuel importer’s.
Luxury Taxes: Including, but not limited to, the usage of tanning beds and other types of sales of luxury goods and services.
- Domicilio Time
Even though the form is only required to be filed quarterly, there are deadlines on the last eve of the following month to each of the quarters:
1st Quarter: End of Month (April)
2nd Quarter: End Month of (July)
3rd Quarter: End Month (October)
4th Quarter: Due as at end of January of the succeeding year
- E-Filing Form 720
They can opt to deliver it electronically through any of the IRS authorized Mas 720 providers.
E-filing affords several advantages such as quicker processing, less paper work, and immediate submission confirmation.
- Penalty for Non-Compliance
When late in filing Form 720 both, risk and penalties are levied which includes interests. Businesses must file even where they do not have cash to settle the entire tax because the fine for non-filing is very high compared to one for late payment.
- Form 720 Additional Forms
Some of them may be required to file additional forms such as:
Form 6197: Used for gas guzzler tax.
Form 6627: Imposed on ozone-depleting substances-related environmental taxes.
- Form 720 How to Prepare For Filing
For Form 720 to be correctly lodged, all of the businesses in question will have to:
Know which excise tax or taxes cultural is going to be needed.
Compile all of the documents supporting the taxable products/services.
Assign the IRS published rates into the tax base and taxable amount.
Seek assistance from a taxation professional for preparing tax returns accurately.
Tax returns and revenue declarations associated with Form 720 are important for those businesses that are subjected to the excise tax. Properly executed return submissions accompanied by timely reporting can help businesses within the jurisdiction avoid unnecessary costs associated with penalties.