Excise Tax Form 720-CS In Relation To The Fuel Industry Reporting Systems.
Every business operating in the sectors that levy such duties as extra excise taxes must understand the fact that there is internal revenue, there are forms for each and every one of them. One of such IRS forms is the Excise Tax Form 720-CS document which is primarily concerned with fuel reporting. This form is also meant for companies which are into transportation or importing of fuel products and it is used to control the fuel movement out or within the U.S. borders or between the states. In this guide, we will understand What is Form 720-CS, who should file form 720-CS, to fill in this form what are common requirements and lastly what mistakes there are important points which one should take up to avoid making these common mistakes.
What is Excise Tax Form 720-CS?
The Excise Tax Form 720-CS is also referred to as the Carrier Summary Report whose use is the reporting of the transportation of certain liquids which are taxable which include gasoline and diesel fuel as well as cleans up fuel and so on. This additional recording is used for understanding the trend of the movements of oil products inland for Internal Revenue Services. By controlling the movement of fuel, the IRS helps to adhere to the requirements in regards to the excise tax and curb abuse of the system.
More specifically, Form 720-CS is created for companies who transport fuel by means of pipelines, by vessels or otherwise. Fuel transport companies summarise the relation between the amount of fuel moved, type of fuel, point of origin, and point of destination. For federal compliance, carriers have to file this form on a monthly basis.
Who Needs to File Form 720-CS?
Whether a business is entitled to submit a form depends greatly on the degree to which their company is engaged in this exempt activity – fueling and transporting liquid fuels subject to excise tax on particular businesses, such as: . This should generally include;
- Pipeline Operators: Engaged in the activity of transporting fuel through the use of pipelines to or from different states or countries.
- Vessel Operators: Engaged in the business of transporting fuel using water craft such as ships alongside barges and tankers.
- Truck Operators: Carrying out the transportation of fuel beyond state borders by road using trucks or any other vehicles.
- Importers and Exporters: Engaged in the importation or exportation of taxable fuels to or out of the U.S.
As insensitive as it seems, even for businesses that do use forms like 720-CS on an infrequent basis by transporting taxable fuels, the submission of this form is still required. The purpose of the IRS form 720 is for the IRS to gather unnecessary information that will rather help the agency to prevent the revenue tax laws from being violated.
The Filing Procedure for Form 720 CS
The procedure of filing Form 720 CS is similar to erecting a structure and putting together information in the most appropriate manner possible. Since the form is to be filed on a monthly basis, it means that the companies will have to, according to the reporting periods, make accurate and reliable records of all the movements of the fuels aforementioned. Below is a step-by-step guide to completing the form correctly.
1. Prepare all Possible Data
Collect or ascertain all the information on the transportation of fuels before beginning the filing process. This includes:
- Carrier Information: The name of your company, Employer Identification Number (EIN), phone/contact address.
- Details of the Fuel Moved: Such as types of fuel, their amounts and the dates of shipment.
- Origin and Destination Information: Such as pick up and delivery points where appropriate.
- Mode of Transport: Events such as the movement of the fuel through a pipeline, water via vessel or land through a truck.
2. Fill in the Form
Having collected the necessary elements, proceed to fill in the Form 720 CS. The form contains several bodily areas upon completion of each:
- Part I: Carrier Information: Such identifies the business by requesting for its items and access number consisting of the Employer Identification Number or EIN plus the name of the company and address location of the business. The section also captures the month and year of the fuel used for reporting.
- Part II: Product Information: This is where you will describe the quantity and types of the fuel carried and from which area or country to which area or country these fuels were evacuated. It is necessary to describe and use the appropriate fuel codes and include the type of fuel such as gasoline, kerosene, diesel or some other excise liquid.
- Part III: Summary of Shipments: Aside from this document, he will also include a summary of each movement of fuel into and out of the Fuels’ Ministry in the reporting period including the capital fuel movement.
- Schedule Data: This part makes it necessary to provide information with respect to every shipment including figures on the company to which the fuel is delivered, the date, and the site about where the fuel is delivered.
3. Submit the Form
Form 720-CS must be submitted on or before the last business day of the month that follows the month where the fuel was moved. If for example a business moved fuels in the month of September, the deadline wears twenty third October. The form can be filed electronically via the IRS ExSTARS system or by post to the Internal Revenue Service.
It is highly advisable to use the electronic means of filing as the forms will be processed quickly, possibilities of being wrong are limited while also receiving back evidence that the IRS got the forms.
4. Diligently Keep All Documents
As for the US-based businesses filing a Form 720-CS, the record keeping is also important. Back up for the expenses incurred by the parent company such as the fuel spent. Spending money on the preparation, Audit backup documentation may be required during an audit by the IRS so it is necessary to have backups to the movements of gasoline, invoices, shipping documents, etc. Preferably keep these records for three years from the time the tax was filed.
Common Mistakes to Avoid
The process of completing and filing Form 720-CS for the first time should not intimidate any taxpayer since it is a simple process. However, there are key mistakes firms make. It can save time and avoid probable penalties:
- Wrong Fuel Codes: There is a fuel type code that is specific to the IRS and any wrong codes can cause inconsistencies in the filed returns due. It is advisable to verify fuel codes before filing the form.
- Incorrect Shipment Information: Make sure you verify all the information provided regarding the shipping dated, amount and potential addresses. Inconsistencies may raise flags of suspicion and alert the IRS to scrutinise your form further than what is usually the case.
- Filing Late: Form 720-CS is a monthly return and any filing date that is ignored risks the penalty. Try and schedule the deadlines from your computer or some other device and file in due course.
- Neglecting to File for Partial Shipments: Though your business was engaged in the transportation of fuel for only part of the month, in such cases also you are required to file the reports. The inevitable question arises – what will happen if a filing period is missed and for what duration.
Why Compliance with Form 720-CS Matters
Completing and submitting Form 720-CS is a requirement of law for every business involved in the transportation of fuel, but also it is an integral part of work. The business-initiated correct submission of the Form 720 CS relieves the taxpayer’s burden of compliance risk with respect to IRS rules. In fuel transportation, which is one of the highly regulated industries, tax payments should be very high on one’s priority list to effectively manage the IRS and not incur beneficial losses.
Compliance issues also result in new costs, tax obligations including penalties, and income taxes on paid taxes that have not been settled, and risks associated with lawsuits. In addition, it is necessary because if taxpayers do not pay valid taxes, the IRS would be able to monitor and enforce compliance across the industry fairly.
Excise Tax Form 720-CS is a significant tax filing for companies dealing integrally with fuel transportation. Fulfilling this obligation helps the companies report their fuel movements in a timely manner compliant with the month’s requirements, therefore avoiding penalties and showcasing their willingness to comply with the federal tax requirements. There is also a need to understand who must file a form and learn how to fill and send it, which is crucial because all people engaged in the fuel industry must comply with the IRS regulations concerning business activities..
File your taxes and include proper documentation, keeping track of all submissions and the accuracy of the reported figures. If there is something you do not comprehend how to do, go ahead and hire an excise tax specialist rather than guess things. This will also calm your nerves knowing well that your business is not being run in a norm or way that will contradict legal operational processes.