This tobacco excise tax has been the government’s essential source of revenues, imposition on which is against tobacco products to discourage consumption and promote public health. Form 720 is the official form used for reporting and payment of this excise tax. Here we provide you with the basics of filing Form 720 online and why the tobacco excise tax is important, along with a few tips that make your filling much easier.
Tobacco excise tax is a duty imposed in the manufacture, sale, and importation of tobacco products such as cigarettes, cigars, smokeless tobacco, and roll-your-own tobacco. Excise tax on tobacco plays an important role in helping governments to reduce this vice and its related health threats. Normally, the revenues accruing from this tax are channeled into providing health education, educational courses, and public services that help curb the levels of smoking.
The levels of the tobacco excise tax vary based on the type of product. For instance, the level of cigarette tax is significantly much higher than that charged on cigars or pipe tobacco. With changes in laws, a tobacco manufacturing or retailing company must know the current levels and how to legally comply.
What is Form 720?
Officially called the “Quarterly Federal Excise Tax Return, ” Form 720 is a form by the IRS that must be used in reporting and paying federal excise taxes. This form contains several kinds of excise taxes, one of which deals with tobacco products. Any business filing Form 720 should file it quarterly showing details related to sales, production, and applicable excise taxes for tobacco products.
The structure of the form divides it into different sections, which enables the filers to report their various excise taxes. There are specific lines on the form for various tobacco products, thus ensuring that the correct reporting of tax obligation is reflected. Carefully filing the form helps one avoid attracting any penalties or discrepancies from the IRS.
How to File Form 720 Online: Step-by-Step Process
Filling out Form 720 can be directly accomplished online and saves precious time while also improving accuracy of information. Here is the step-by-step procedure for you to navigate the online filing system:
1. Gather Required Information
Before you begin the online filing process, obtain all necessary information that includes:
Business details: business name, address, and EIN
Type of tobacco product sold or manufactured
Total sales and production quantities for each product
Prepaid taxes and other credits applied in advance
2. Access the IRS e-File System
Visit the IRS website, navigate to the e-File page, possibly opening or logging into an account you had previously opened. The IRS has streamlined the process of filing online from your business directly for tax compliance purposes.
3. Complete the Form
Complete the Form 720 accordingly, answering all the questions provided. Fill the fields according to all the requirements. Be sure to validate the tax rates and computation of each of the tobacco products. Avail yourself from commiting errors that may lead to fines or audits.
4. Check and Finalize
After you fill up the form, take some time to cross all your entries. Make sure that everything is correct and you have all the documents required. Then, submit the accomplished form online. You will receive a confirmation number for your submission of the form. Make sure that you retain this number.
5. Pay
You can pay your taxes online using the IRS payment options. You may also pay before the due date to avoid any interest and penalty associated with the delayed payments. Many options exist to make the payment – either through direct debit, credit card, or electronic funds transfer.
Benefits of E-File
There are several benefits of Form 720 e-file
Even the actual preparation of a return is faster in many ways: online filing is usually significantly quicker than paper filing and supports simultaneous submission and verification of your return. Inbuilt calculations and often checking for errors prevent mistakes that would have been possible on paper. Of course, you can access the IRS system from any location with a net connection, so it is even easier to submit from your office or home.
The intricacies of the Tobacco Excise Tax and Form 720 can be very complicated unless one has the proper knowledge and resources. One can make filing a breeze by filing online while fulfilling federal regulations. Everyone should stay informed on the tax rates that prevail and what deadlines are in place for businesses regarding tobacco products. Adherence to these needs will keep you up-to-date on your tax obligations and, in turn, support public health undertakings.