Retail Tax

Retail Excise Tax: Explanation Explained

A retail excise tax is applied on the sale of selected products and services that are taxable following the federal excise tax. Many extortionists, for example a merchant does not allow withhold taxes from employees when sales have been made. If your business handles products or services that are taxed with retail excise taxes, you must file and remit those taxes periodically.

In this document, we will explain the special requirements of retail excise taxes, who qualifies to submit such a document, the various types of business activity within the class and submission of Form 720 for the proper counsels of the IRS.

What Is Retail Excise Tax?

A Retail Excise Tax is a type of tax which is applicable on sales of particular types of goods or services usually at the last consumer. These levies intend to provide income for the federal government and promote control over use of particular products. Any taxes imposed on the retail sale of a particular product usually depend on the type of product although it normally comprises tax for fuel, liquor, cigarette, guns, and some luxury goods.

Prohibited Items Under this category include Alcohol trap selling and storage of controllers:

Fuel: Gasoline, diesel and aviation fuel are being taxed at the federal excise tax.
Tobacco Products: The use of cigarettes, thus taxes are levied on all forms of tobacco.
Alcohol: All kinds of liquors, including spirits, wine and beer, are taxable under excise taxes.
Firearms and Ammunition: Guns and related equipment are taxed in the United States of America.
Luxury Goods: Other products that may be taxed include those luxurious ones like the high-priced cars or exotic boats.

Who Needs to File Retail Excise Tax?

Every retail business that conducts selling of products or rendering of services that are within the right retail excise tax jurisdiction is mandated to render returns of such taxes to the Internal Revenue service. This means that these businesses will charge their customers excise taxes on the sales of goods at retail and will remit the required amounts to the federal revenue. Failure to do so can result in penalties and fines.

Businesses That Must File Retail Excise Taxes:

Gasoline stations and fuel vendors
Vendors dealing in alcohol or tobacco retail
Vendors of firearms and ammunition
Retailers of luxury goods and high-end goods (if any)

There are instances where non-taxable manufacturers and importers may also collect and remit some excise taxes, for example, firearm and fuel excise tax. It is highly alkaline to know if your kind of business falls in the area of undue noncompliance of the retail excise tax obligations.

Filing Categories Under Retail Excise Tax

The businesses that are liable for excise tax purposes are placed into different classifications based on the product or service offered. It is vital to determine your business category in order to ensure that you submit the necessary forms and remit the right tax.

1. Fuel Wholesalers and Retail Outlets – Gas Stations Fuel wholesalers and gas stations have to add federal excise taxes on gasoline, diesel, and fuel counted under the normal fuel excise taxation category, to their sales. These taxes are reflected in price per gallon and will be reported to the IRS.
2. Retailers of Alcoholic Drinks and Tobacco Products Businesses that engage in the sale of alcoholic drinks such as wine, beer, and spirits, and tobacco products such as cigarettes and cigars have an obligation to administer excise taxes on such products at the point of sales. Excise taxes will depend on the type and quantity of the product.
3. Businesses Dealing in Guns and Amphibians and Accessories to them Enterprises that buy and sell guns and gunpowder-based commodities incur excise unlike other businesses engaged in activities other than such selling. The sale of arms and ammunition is subject to excise duty, and such receipts are also reported to the IRS and applicable comeback forms filed for taxable expenses.
4. Sellers of Luxury Goods As far as the high-value goods are concerned, such as luxury cars, yachts or any other luxury items, the business is likely to be involved in retail excise taxes. The type of these taxes is going to be determined by how much the item is outside their original price when they were sold.

Filing Retail Excise Taxes with Form 720

Entities earning or engaged in retail excise taxes have an obligation to file such taxes with IRS forms and specifically Form 720 (Quarterly Federal Excise Tax Return). All forms of excise tax filing, including retail excise tax filing, will be reported in Form 720.

Key Sections of Form 720:

Part I: This section covers the retail excise taxes on anabolic steroids, telephone services, air transportation service, theatre tickets, including fuels, alcohol, tobacco, firearms and other taxable goods.
Schedule A: All changes made to the excise tax return will be taken into account in any modification claim.

The due dates of filing Form 720 are as provided; all form 720 are filed quarterly:

First quarter: 30th April,
Second quarter: 31st July,
Third quarter: 31st October,
Fourth quarter: End of January 31st of the next year.

Steps for Filing Form 720:

Collect Sales Information: Provide a breakdown of all output tax on taxable sales including, but not limited to, fuel, high value goods like alcohol, tobacco, firearms and a variety of other goods that are subject to excise tax.
Fill Out Form 720: Report index the excise taxes you’ve collected in the course of the quarter in the first part of this form.
Submit Your Form and Payment: Once you have completed Optimal Form 720, this should be sent to the IRS along with payment for the excise tax that is pending.

Preparer Filing and Payment of Retail Excise Taxes

As much as professionally written and filed the excise tax returns are, filing those published in the bulletin is the tedious part, but all is simplified with the introduction of the e-filing platform. Filling 720 in any of the electronic formats guarantees that your taxes are timely filed with the relevant authorities as well as within the IRS requirements.

Benefits of E-Filing:

Faster Processing: E-filing eliminates get submission of returns via the regular mail)/ through which the IRS would take time in the processing and instead process only the e-filed forms through their systems.
Reduced Errors: We provide the chance of going through your return to remove any basic errors thus speeding up the process since no mistakes that may cause hindrances will be left unattended.
Convenience: Form 720 can be e-filed from any place at any time regardless of past endeavours where one had to wait to submit papers.
Secure: All the sensitive data of your business are safe from e-filing threats due to the presence of secured technology in the e-filing site.

How to E-File with Us:

Register: In order for one to e-file retail excise taxes, he or she has to register with the online system first.
Complete Your Form: In this section follow the guidelines to fill in the form 720 one step at a time.
Submit and Confirm: After completion of the form, a user can submit the forms electronically, which prompts instant feedback from the IRS.

Maintain Legal Status and Prevent Introduced Sanctions

Timely submission of your retail excise taxes to the inflexible IRS is extremely important to the exposure of surcharges and interest. Incomplete or overdue tax accounts will expose you to several fines so be quite specific in filing quarterly accounts as well as remitting all sales and taxes due.

Relevant Fines:

Late Filing Penalty: A penalty ranging between 0% and 25% of the tax amount due is incurred if the return is not filed by the due date.
Late Payment Penalty: A monthly surcharge of 0.5% will apply on a tax liability delayed by payment.
Interest: A penalty imposed on all outstanding balances of a tax until the account is cleared in full.

Retail excise tax is one tax that companies selling fuel, alcoholic beverages, tobacco, firearms, and luxury items have to deal with while conducting business. Being on time in fulfilling IRS filing requirements for instance by filing Form 720 quarterly courtesies a penalty-free status for your business and welfare good standing. Try e-Filing with us to simplify things, avoid mistakes, and file your returns competently and timely.