Anyone involved with goods and services subject to excise tax needs to provide IRS Form 720 – Quarterly Federal Excise Tax Return. Excise taxes are further divided into Part I (Environmental, Communications, and Air Transportation Taxes) and Part II (Excise Taxes of Manufacturers, Retailers, and Others). We shall explain each category to assist taxpayers fulfill their tax obligations.
Part I: Environmental Taxes
To enable the implementation of programs set to improve the environment and to encourage for the decreased application of certain chemicals and fuels, the IRS seeks to implement, monitors, and enforces excise taxes of an environmental nature. These include:
The Petroleum Oil Spill Tax (IRS No. 18 & 21): Applies to crude oil and petroleum products produced or received in the US. This fee pays into the Oil Spill Liability Trust Fund, better known as OSLTF
The Ozone-Depleting Chemicals (ODCs): Tax (IRS No. 98 & 19): On producers or exporters of chlorofluorocarbon (CFC) and other ODCs, Odcs Tax is imposed to encourage lack of use.
Chemicals and Hazardous Substances Tax (IRS No. 54 & 17): Targeted towards manufacturers and importers of certain chemicals and hazardous substances.
Superfund Tax (IRS No. 16 & 53): Imposed on offshore petroleum and other perilous chemicals to charge for money spent in cleaning up the environment.
Revision Part I: Communication and Air Transport Service Tax
These taxes apply to telecommunications and air passenger transportation services.
Local Telephone and Teletypewriter Services (IRS No. 22): Used to cover a range of services but has been significantly repealed apart from a few cases.
Air Passenger Transportation Tax (IRS No. 26 & 27): Paid on domestic airliner tickets and international tickets including extra fees on flights into or out of U.S. territories.
Air Cargo Transportation IRS (Number 28): Costs incurred on transportation of goods by air.
Part I: Taxes on Fuel
Some of these taxes on fuel are listed in part I. These are:
Aviation Fuel Tax (IRS No. 77 & 79): Applied on aviation gasoline and jet fuel.
Diesel and Gasoline Excise Tax (IRS No. 60 & 62): Charged on fuel used in motor traffic, railroads, and marine service.
Alternative Fuel Excise Tax (IRS No. 69 & 105): Includes liquefied petroleum gas (LPG), natural gas (CNG), and liquefied hydrogen.
Part II: Taxes on Manufacture, Sale, and Other Charges of Excise
This category refers to the particular excise branding a specific good, or services offered in a dedicated region.
Manufacturers Taxes
Tires and Truck Tires (IRS No. 108 & 110): An excise tax on heavy trucks tires by weight.
Coal Exit Tax (IRS N° 36 & 37): This tax is applicable for coal mined within the United States to support the Black Lung Disability Trust Fund.
Retailers Excise Taxes
Heavy Vehicles Tax (IRS N° 33): This tax is paid by businesses operating heavy highway vehicles over the weight of 55000 pounds.
Sport Fishing and Archery Equipment (IRS N° 41 & 106): Tax is imposed on fishing and archery equipment such as bows, reels, and rods over 30 pounds of draw weight.
Health and Insurance Related Excise Taxes
Foreign Insurance Tax (IRS N° 30 & 31): This tax is applicable for premiums of a policy underwritten by a foreign insurer.
Patient-Centered Outcomes Research Institute (PCORI) Fee (IRS N° 133): This fee is charged for self insured healthcare plans and is meant to fund purposeful medical research.
How To File and Pay Form 720
Form 720 needs to be submitted quarterly on 30th April, 31st July, 31st October and 31st January. The IRS accepts payments through the Electronic Federal Tax Payment System (EFTPS), check, or via credit and debit cards.
To comply with tax law regulations, taxpayers must understand the specific classifications of the Form 720 excise tax. Businesses should maintain proper documentation while working with a tax professional to avoid errors. This will help with quicker and easier filing. An IRS approved e-file provider can ease the burden of filing.
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