E-filing Form 720 is a core responsibility for several companies that are required to file and pay their excise taxes. If your business participates in air transportation, manufacture of soft drinks, selling of indoor tanning services, or in any other activity which requires making payments of excises, learning how to walk through the e-filing process will save your hours, minimize mistakes, and keep your company compliant. This is the step-by-step comprehensive guide on how to file Form 720 via e-filing, which also simplifies the follow-up of your tax requirements.
What Is Form 720?
Form 720, known popularly as the “Quarterly Federal Excise Tax Return,” is a report and payment of federal excise taxes made by businesses. Excise taxes are indirect taxes imposed on the sale of particular goods and services such as gasoline, cigarette, air travel, and heavy trucks. Excise taxes differ from income tax, which is imposed uniformly on all earnings because they impose the tax on specific industries or products. Businesses that manufacture, sell, or consume the particular goods and services impose excise taxes chargeable to the IRS.
Sometimes, excise taxes are reported on Form 720.
- Environmental taxes (e.g., on ozone-depleting chemicals)
- Communications taxes (on services like telephone communications)
- Air transportation taxes
- Fuel taxes (for diesel, gasoline, and other fuels)
- Retail taxes (e.g., on indoor tanning services)
- Manufacturing taxes (e.g., on vaccines, tires, firearms)
Benefits of E-Filing Form 720
Traditionally, most companies would mail the paper forms to the IRS. In recent times, because e-filing is now readily available, this process has been streamlined significantly. E-filing is indeed much quicker and more convenient than manual filing, and it benefits in several ways like the one below.
Confirmation that the IRS has accepted your Form 720.
There are several benefits from e-filing using the software.
Less error: In most cases, fewer errors will be made due to the in-built check option commonly availed in the developed software. By this means, it is certain that your return will not be rejected because of error.
Faster processing: An e-filed return gets faster processing compared to paper filers from the IRS. This means your taxes will clear at the right time.
Easier record-keeping: The e-filing way will help in producing digital copies of your submissions. This will ease keeping them and retrieving them.
Who Must File Form 720?
Not all businesses are required to pay excise taxes. So, determine whether your business falls under the taxed. You should file Form 720 if your business deals in products or services subject to federal excise taxes. This may include;
Manufacturers and producers who produce goods such as tobacco, alcohol, or gasoline.
Transportation companies dealing with airlines or trucking companies.
- Service providers like tanning parlors and telecommunication firms.
If you still do not know if your business is liable for excise tax, it’s best to call a tax professional or to refer to the official guidelines by the Internal Revenue Service.
How to E-File Form 720
Now that we know how important Form 720 is, it’s now time to learn how to e-file. Follow the steps below to ensure that the process will go very smoothly:
Choose an IRS Certified E-File Service Provider
Your first task is to select an e-file service provider which is IRS approved. There are many services available, ranging from paid-for services to free ones. Ensure that the provider is also reliable and offers any features your company might require, like automated form completion, error checking, and filing multiple returns.
Before filing e-filed, ensure you have the following data readily available. You will need to obtain:
- TIN or EIN number for your business.
The other information relating to your business, such as your name, address, and what type of excise tax involved
Tax period you wish to file for it is quarterly normally
The amount collected or paid in excise taxes End
Now that you have chosen your e-file service provider, go to open or sign into that account. According to the instructions provided by that service provider, you will establish your business profile when signed in. From there, you can select what type of excise tax form you’re preparing using Form 720. The system will provide you with step-by-step processes for adding each type and amount of tax you’re required to pay.
Preparation and Review Form 720
Once the registered user accesses the e-file system, they then continue by filling Form 720 with the information in question. These details include:
Part I
Environmental taxes
Communications and air transportation taxes
Fuel taxes
Retail taxes and so on
Part II
Taxes such as that on vaccine and foreign insurance
Schedule C: Refunds and credits for excise taxes paid.
Do not rush through filling your forms. Ensure that you put all information correctly, and then go through your entire form to ensure there are no errors. Many e-filing systems will automatically check for errors, but this is also a very good idea to double-check everything by hand.
Step 5: Submit the Form
Once you have reviewed the form and ensured that all information is correct, submit your Form 720 electronically. You will automatically receive an immediate confirmation from the IRS stating that they have received your return successfully.
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Pay (if applicable)
If your return has a balance owing of excise taxes, you will need to pay. Most e-filing service providers have a convenient alternative: you can process a direct EFT from the portal. This way you can ensure timely payment of the charges and avoid late payment penalties.
Retention Copy for You
Just be sure to preserve the digital copy of Form 720 and any payment confirmations. Of course, this will be much easier to refer back to later as you go through an audit or when you try to file multiple for a given quarter.
Form 720 Filing Dates
To submit form 720, you must file quarterly, four times per year. All of the above dates are the following:
- First quarter: April 30
- Second quarter: July 31
- Third quarter: October 31
- Fourth quarter: January 31 of the next year
Late filing penalties apply if these deadlines are missed, so don’t forget to put a reminder on your calendar and e-file in time.
E-filing form 720 has eased the process of filing excise tax. It thus makes it easier for companies to administer their tax obligations. By following the above procedures-choosing the correct e-file service provider, collecting the required information, and filing on time-you will never incur expensive errors and levies; meanwhile, your company will stay compliant. As more sectors of the economy are touched by the collection of excise taxes, knowing how to file electronically would be usefully added to any manager’s or owner’s practice.