This is a guide on quarterly excise tax returns for businesses.
For businesses under federal excise taxes, one of the most important things that a business can do is its quarterly returns in order to ensure that it complies with the demands of the IRS. These taxes fall on quite a number of products and services, such as fuel, heavy highway vehicles, air transportation, and tobacco products. Learning how to file these returns, what they are all about, and when they fall due can prevent businesses from potential penalties in addition to saving them some hassle in the reporting process.
What Are Quarterly Excise Tax Returns?
Quarterly excise tax returns have emerged as a way of paying and reporting taxes on products or services liable to excise tax. Such items include such things as gasoline, diesel fuel, alcohol, tobacco, among other luxury goods. The tax, in most instances, is passed on to the consumer. However, the business or entity that manufactures, sells, or imports said goods files an excise tax return and remitting tax to the government. The most frequently used form for reporting quarterly excise taxes is Form 720.
Who Has To File?
Not all businesses are required to file quarterly excise tax returns. In case your company is able to sell or provide taxable goods or services, such as selling fuel or possibly offering domestic air travels, then you are covered by this obligation. Areas that are frequently affected include transportation, energy, communications, and manufacturing, among others. Businesses which also sell or import certain environmental or luxury goods may be required to make quarterly filing for excise taxes.
Filing Deadlines and Schedules Excise taxes must be reported quarterly. So, this implies that Form 720 is filed annually four times. Quarterly excise tax returns are due on the following dates:
- First Quarter (January-March): April 30
- Second Quarter (April-June): July 31
- Third Quarter (July-September): October 31
- It should arrive at the receiver's end by January 31 of the following year
There will be a penalty for non-filing or late payment of tax and interest will be charged. Better be prepared so there is no stress or mistakes at the last minute.
Filing Quarterly Excise Tax Return
Filing excise tax returns is not so cumbersome as filing **Form 720** has been allowed to be filed electronically. E-filing does not only save time but also reduces error, and hence your return is both error-free and timely. You can use IRS-approved software providers to e-file or if you like doing it the old-fashioned way, you may just print and fill out manually **Form 720** and mail it to the IRS.
You will prepare your return with comprehensive records of the taxable goods or services that you sold as well as their appropriate tax rates. You'll also file those deductions and credits/refund your business qualifies for and report them accurately.
How to Avoid Mistakes
This usually makes the preparation of a return messy, particularly with quarterly excise taxes, especially those businesses dealing with more than one taxable good or service. One common mistake here is the unchecked taxable transactions. All qualified sales a business has must be accounted for, even if some of them were not recognized during the quarter. Misapplying tax rates or mistakenly understanding how to apply them through different products is also a mistake. Very important while keeping the tax filed accurately is to keep updated with the guidelines of the IRS and excise tax regulations.
Why It Matters
Not only is it a legal requirement, but also an important business activity for keeping your business in good financial standing. Failure to do it may result in staggering penalties, audits, or even legal suits. Beyond that, staying on top of these excise tax filings gives you some great insight into how much taxable sales are happening in your business, and the insight can help you plan for future tax liabilities.
Quarterly excise tax returns are one of the primary responsibilities of businesses operated by excise-taxed industries. How best to file requirements, organisation, and utilisation of e-filing can make the filing task easier for your business and ensure that the business is always kept in compliance. Careful preparation and attention to detail can help a business manage their obligations in excise taxes so that they will not be burdened with costly penalties due to their ignorance of such things.