Federal Form 720 is the official quarterly return for businesses to report and pay federal excise taxes. These excise taxes apply to specific goods and services such as fuel, air transportation, and environmental materials. The form ensures that businesses subject to these obligations meet their reporting and payment responsibilities under federal law.

During the 2015 tax year, several adjustments affected how companies calculated and submitted their federal excise tax. Updated tax rates for air transportation taxes and inland waterway fuel use changed how businesses determined their tax liability. Because these changes directly impact quarterly filings, accurate reporting and awareness of the latest Internal Revenue Service guidelines are essential.

This guide explains filing your federal excise tax return using Form 720 for 2015. It outlines key sections, form instructions, due dates, and best practices for compliance. Whether filing on paper or electronically, understanding how the form serves your business helps ensure timely submission and avoid penalties.

Understanding Form 720 and Federal Excise Taxes

Form 720 is part of a broader system designed to help the IRS collect specialized taxes imposed on specific industries and products. Businesses required to report excise taxes must understand how these obligations differ from income or sales taxes.

What Is the Form 720 Quarterly Federal Excise Tax Return

• Purpose of Form 720: The form serves as a centralized document for reporting various excise taxes related to business activities and taxable goods under federal law.
  
  
• Businesses required to file: Companies must file if they collect or pay excise taxes on items such as gasoline, diesel fuel, air travel, or ozone-depleting substances.
  
  
• Filing frequency: Form 720 is typically filed quarterly to help the IRS track payments throughout the year for consistent compliance monitoring.
  
  
• Excise taxes versus sales taxes: Excise taxes focus on certain types of goods or services, not total earnings or general retail transactions.

Key Sections of Form 720 2015 Instructions

• Part I: This section covers environmental taxes, communications taxes, fuel taxes, and other specialized taxes that apply to specific industries.
  
  
• Part II: This section contains other excise taxes for indoor tanning, sport fishing equipment, and patient-centered outcomes research fees.
  
  
• Part III: The final part summarizes total tax liability, claims, and payments, ensuring businesses calculate and report their overall tax position accurately.
  
  
• Schedules and attachments: Some taxes require additional schedules or IRS forms, such as Form 6627 for environmental taxes or Schedule C for credits and refunds.

Who Must File and When

• Businesses subject to excise tax: Any company engaged in activities that trigger excise obligations must report and pay quarterly, even if the activity is seasonal.
  
  
• Due date for filing: The due date for each quarter is the last day of the month following that quarter. For example, the first quarter is due April 30.
  
  
• First quarter and following year filings: Businesses must continue filing each quarter until they submit a completed form marked “final return” when operations end.
  
  
• Ensure timely submission: Filing promptly ensures faster processing, helps maintain compliance, and reduces the risk of interest or penalties for late submission.

What’s New for Form 720 in 2015

The IRS updates tax rates, introduces new categories, or adjusts reporting requirements yearly to reflect legislative changes. For the 2015 tax year, several important updates affected the calculation of excise taxes and related payments.

Patient-Centered Outcomes Research Fee Increase

• Updated rate: The rate for applicable health insurance policies and self-insured plans increased to $2.08 per covered life, up from $2.00 in the previous year.
  
  
• IRS number reference: This fee is identified as IRS No. 133 and must be included in Part II of the form for accurate reporting and compliance.

Inland Waterways Fuel Use Tax Adjustment

• Updated rate: The new rate became $0.29 per gallon, replacing the lower rate. This change applies to diesel fuel used in inland waterway operations.
  
  
• Affected taxpayers: Businesses operating marine or transport activities using inland waterways must calculate using the new tax rate and report accordingly.

Air Transportation Tax Rate Updates

• Domestic air transportation: The domestic segment tax was $4.00 per segment plus a 7.5% rate on amounts paid for passenger travel under IRS No. 26.
  
  
• International facilities tax: For international air transportation, the tax was $17.70 per person per flight, with Alaska or Hawaii segments taxed at $8.90 each.

Other Adjustments to Specialized Taxes

• Arrow shaft tax: The tax increased to $0.49 per shaft, adjusted for inflation, for manufacturers and importers of these taxable goods under IRS No. 106.
  
  
• Gasoline blendstock claims: For 2015 filings, claims for exported gasoline blendstocks taxed at $0.001 per gallon were shifted to Schedule C, line 15b.
  
  
• Ongoing updates: Businesses should review the IRS website regularly to ensure compliance with new rates and reporting procedures introduced after 2015.

Step-by-Step Instructions for Completing Form 720

Understanding the process of completing Form 720 helps businesses ensure accurate reporting and compliance with federal excise tax rules. The steps below summarize each section of the form in order.

Step 1: Prepare Records and Verify Tax Information

Gather all records related to taxable goods, payments, and prior filings. Confirm that your Employer Identification Number (EIN) and registration details are current. Verify the tax rates for all applicable excise categories, such as fuel taxes, environmental taxes, and communications taxes, before starting your calculation to ensure accurate reporting and compliance.

Step 2: Complete the Header Section

The top of the form requires basic business identification details. Enter the correct name, address, EIN, and quarter ending date. Indicate whether it is your final return if your business no longer has excise tax liability. This section ensures the IRS associates the completed form with the right business entity and reporting period.

Step 3: Fill Out Part I – Environmental, Fuel, and Air Transportation Taxes

Part I of Form 720 covers fuel, environmental, and communications taxes that apply to certain business activities and specific goods or services. Each tax type must be reported under the correct IRS number with accurate calculations and supporting schedules when required.

Step 4: Complete Part II – Other Excise Taxes and Fees

Part II includes other business taxes, such as the Patient-Centered Outcomes Research fee and specialized excise taxes on certain goods or services. Businesses must calculate total liability by multiplying applicable units or coverage counts by the listed tax rates and reporting totals precisely to maintain compliance and avoid penalties.

Step 5: Summarize in Part III – Totals, Payments, and Claims

Part III consolidates all information from Parts I and II. Businesses must add total taxes due, report credits or claims, and enter deposits made during the quarter. The result determines any remaining balance or overpayment. This section verifies that all figures are accurate before submission to the IRS.

Step 6: Sign and Authorize the Form

The final step requires an authorized company representative to sign and date the return. Paid preparers must also sign and include their preparer tax identification number. Authorization for a third-party designee can be added to allow the IRS to discuss the return with the chosen representative, expediting any post-filing questions.

Electronic Filing and Paper Filing Options for Form 720

The IRS allows electronic filing and traditional paper forms for businesses reporting excise taxes. Electronic filing ensures faster processing, accurate reporting, and secure data transfer. Paper forms remain acceptable for those without e-file access. Both methods require current IRS forms, correct schedules, and timely submission to avoid penalties for late or incomplete filings.

Electronic Filing (E-File) Process and Benefits

Electronic filing provides faster processing and built-in accuracy checks. Businesses use an IRS-approved provider to transmit Form 720 and receive immediate acknowledgment of receipt. E-file systems minimize calculation errors, ensure timely submission, and offer secure encryption. A valid Employer Identification Number is required, and authorized transmitters or Electronic Return Originators manage all data transfer securely.

Paper Forms and Mailing Instructions

Paper filing remains an option for businesses unable to e-file. Filers must complete the latest version of Form 720 in black or blue ink and include all schedules. The completed form should be mailed to the IRS address in Cincinnati, Ohio. To ensure accuracy, businesses using paper filing must verify instructions on the IRS website before submission.

Payment Instructions for Federal Excise Tax

Businesses subject to excise taxes must understand how and when to make deposits or payments to stay compliant. Most excise deposits are made electronically using the Electronic Federal Tax Payment System (EFTPS), which ensures secure and traceable transfers.

Electronic Federal Tax Payment System (EFTPS)

• System overview: EFTPS is a Treasury-managed system allowing businesses to pay federal excise taxes securely, ensuring accurate records and faster transaction processing.
  
  
• Enrollment requirement: Businesses must register for EFTPS before depositing and receive credentials to secure payments online or by phone.
  
  
• Advantages for compliance: EFTPS provides instant confirmations, simplifies record keeping, and reduces the risk of missed payments or calculation discrepancies.
  
  
• Access flexibility: The platform is accessible 24/7, allowing businesses to schedule payments or view past deposits from any authorized account.
  
  
• Support contact: The EFTPS helpline at 1-800-555-4477 assists with technical issues, enrollment, or corrections to previously submitted payments.

Deposit Timing and Due Dates

• Quarterly filing cycle: Form 720 is typically filed quarterly, with deposits due for the first quarter by April 30 and the fourth quarter by January 31.
  
  
• Threshold rule: Deposits are required if quarterly tax liability exceeds $2,500. Smaller balances may be paid directly with the tax return.
  
  
• Semimonthly deposits: Certain communications and air transportation taxes require bimonthly deposits reflecting ongoing tax collections.
  
  
• Safe harbor option: Businesses unsure about timing can follow the semimonthly rule for all deposits to maintain compliance and consistency.
  
  
• Low liability payment: Businesses owing $2,500 or less per quarter may pay with Form 720 at filing, avoiding separate EFTPS deposits.

Making Payments by Check or Voucher

• Voucher requirement: Businesses paying by check must use Form 720-V to ensure a proper payment application to the correct quarter and taxpayer account.
  
  
• Check instructions: Payments should be made to “United States Treasury,” with the EIN, tax period, and “Form 720” noted clearly on the check.
  
  
• Mailing verification: Send checks and vouchers to the IRS address at Department of the Treasury, Internal Revenue Service, Cincinnati, OH 45999-0009.
  
  
• Retention rule: Keep payment records and electronic receipts, and examine copies for at least four years to prove compliance and accurate tax payment.

Required Schedules and Attachments for Form 720

Some businesses must attach additional schedules or IRS forms to report detailed liability, claims, or specialized transactions. These attachments ensure accurate reporting of federal excise taxes across industries.

Schedules and Supporting Forms

• Schedule A: Used to report semimonthly excise tax liabilities under Part I, ensuring each period’s taxable activity is fully documented and consistent with EFTPS deposits.
  
  
• Schedule C: Filed to claim credits or refunds for overpaid or exempt excise taxes, including fuel used for export or nontaxable business purposes.
  
  
• Schedule T: Reports taxable fuel exchanges between registered entities within terminals, detailing gallons transferred, registration status, and terminal identification.
  
  
• Form 6627: Required for environmental taxes imposed on ozone-depleting substances, imported chemicals, and floor stocks under Part I of Form 720.
  
  
• Form 6197: Used by manufacturers or importers of motor vehicles to report gas guzzler tax liabilities on models not meeting federal fuel economy standards.
  
  
• Form 720-V: Payment voucher attached when paying by check, ensuring accurate matching of payments with quarterly tax returns and business identification.
  
  
• Additional pages: Businesses may attach supplemental sheets for complex filings, labeled with the EIN and supported by relevant transaction documentation.

Common Mistakes When Filing Form 720

Accurate reporting prevents penalties and ensures compliance with federal excise tax laws. Many common mistakes arise from incorrect calculations, missing schedules, or submission delays.

Calculation and Math Errors

• Incorrect rates: Businesses sometimes apply outdated or incorrect tax rates for fuel, communications, or environmental taxes, resulting in understated or overstated liabilities.
  
  
• Decimal placement: When multiplying gallons or units by tax rates, errors can distort totals, requiring manual correction or IRS clarification.
  
  
• Rounding mistakes: Round all amounts to the nearest dollar, rounding below 50 cents and up to 50 or more.
  
  
• Mismatch between parts: Before finalizing the return, verify that the Part I and II totals equal the figures entered in Part III.
  
  
• Review procedure: Cross-check every section or use accounting software to ensure each tax calculation aligns with IRS rates and published form instructions.

Registration and Compliance Mistakes

• Missing registration: Some businesses fail to file Form 637 before beginning taxable activities, risking penalties and processing delays.
  
  
• Expired authorization: Lapsed registrations invalidate future filings and may lead to rejections or penalty assessments by the IRS.
  
  
• Incorrect registration type: Registering under the wrong activity code causes administrative issues and potential misreporting of business taxes.
  
  
• Multiple EIN issues: Companies operating under multiple entities must ensure each EIN corresponds correctly with its excise tax account.
  
  
• Incomplete record updates: Businesses must update contact details and retain all IRS correspondence to avoid missed notices or filing complications.

Filing and Submission Errors

• Incorrect EIN entries: Entering an incomplete or inaccurate Employer Identification Number leads to rejections or delays in electronic filing confirmation.
  
  
• Unsigned Returns: The Internal Revenue Service considers unsigned or undated forms invalid and unfiled.
  
  
• Late filing penalties: Missing the due date results in additional interest charges based on the total tax liability owed.
  
  
• Missing attachments: Returns lacking required schedules or supporting documents are considered incomplete, delaying acceptance or refund processing.
  
  
• Incorrect quarter: Selecting the wrong quarter, such as submitting third-quarter data under the second quarter, can cause posting and compliance errors.

Zero Activity and Final Return Guidance

Even if a business has no excise tax activity in a given quarter, Form 720 may still be required. Properly filing a zero return ensures continued compliance and prevents unnecessary penalties or inquiries from the IRS.

Filing a Zero Activity Return

• When required: Businesses that previously reported excise tax but had no taxable activity during the current quarter must still submit a zero return to maintain compliance.
  
  
• How to file: Enter zeros on all applicable tax lines, complete the header information, and sign the form to confirm no excise liability for that quarter.
  
  
• Avoid penalties: Filing a zero return by the due date ensures timely submission and prevents late-filing penalties or compliance notices from the IRS.
  
  
• Record retention: Keep confirmation or mailing proof for at least four years, showing that the return was properly submitted, even without activity.

Filing a Final Return

• When applicable: File a final return if your business closes or will no longer be liable for excise taxes in future quarters.
  
  
• Final steps: Select the “final return” box, include all remaining liabilities, attach required schedules, and submit the final payment with the form.
  
  
• Business closure reporting: Include all taxable activities until the closure date to ensure accurate reporting for the final period.
  
  
• IRS confirmation: Keep documentation showing that your final return was accepted, confirming the closure of your excise tax account, and preventing future notices.

Special Cases and Exceptions

• PCOR-only filers: Businesses filing only the Patient-Centered Outcomes Research fee must file during the second quarter, not every quarter of the tax year.
  
  
• Seasonal activity: Companies with irregular operations must file zero returns for inactive quarters rather than filing final returns prematurely.
  
  
• Registration maintenance: Seasonal filers should keep their excise tax registration active to resume operations smoothly during future quarters.
  
  
• IRS support: Contact the Business and Specialty Tax Line at 1-800-829-4933 for guidance on whether to file a zero or final return.

First-Time Filer Tips

Filing Form 720 for the first time can seem complex, but understanding its structure and requirements helps ensure accuracy. Following proper registration, recordkeeping, and payment procedures leads to smoother compliance.

Key Preparations for New Filers

• Obtain EIN: Businesses must have an Employer Identification Number before filing any IRS forms or making electronic tax payments.
  
  
• Identify activities: Determine which business activities, including air transportation, fuel sales, or communications services, are subject to federal excise tax.
  
  
• Register if needed: Some companies must register under Form 637 before engaging in taxable activities related to excise taxes.
  
  
• Set up EFTPS: Register for the Electronic Federal Tax Payment System to ensure secure, timely deposits for excise liabilities.
  
  
• Download resources: To ensure proper completion, access official form instructions, Publication 510, and current IRS forms through the IRS website.

Filing Checklist Before Submission

• Verify information: Review all entries for accuracy, including EIN, quarter, business name, and total tax calculations before filing.
  
  
• Attach schedules: Include all required schedules or attachments, such as Schedule A, Schedule C, or environmental tax forms.
  
  
• Sign the form: Ensure the return is signed and dated by an authorized person or preparer before submission.
  
  
• Maintain records: For audit purposes, keep all filed copies, payment confirmations, and supporting schedules for at least four years.
  
  
• Monitor responses: Watch for IRS confirmation or acknowledgment notices, especially when using electronic filing for faster processing.

Frequently Asked Questions

What is the purpose of Form 720?

Form 720 is used by businesses to report and pay federal excise taxes on specific goods and services. It applies to fuel, air transportation, environmental materials, and communications industries. Filing this federal excise tax return ensures accurate reporting and compliance with IRS requirements for businesses responsible for these specialized federal excise tax obligations.

When is Form 720 due each quarter?

Form 720 must be filed quarterly. Deadlines are April 30 for the first quarter, July 31 for the second, October 31 for the third, and January 31 for the fourth. Submitting by the due date helps businesses stay compliant, avoid penalties, and ensure the timely processing of their federal excise tax return with accurate payment reporting to the IRS.

Can Form 720 be filed electronically?

The IRS allows businesses to submit Form 720 electronically using approved software or transmitters. Electronic filing offers faster processing, fewer calculation errors, and instant confirmation of receipt. Filing this federal excise tax return electronically provides a secure, reliable, and efficient way to meet IRS requirements and maintain compliance with federal excise tax regulations.

What happens if I file late or miss a payment?

Filing after the due date or missing a required payment can lead to penalties, interest, and enforcement actions based on unpaid tax liability. Businesses must calculate their excise taxes accurately, make payments through EFTPS, and meet all IRS deadlines. Prompt, accurate reporting of excise taxes helps maintain compliance and avoid unnecessary financial penalties or interest charges.

Do I need to file if I had no taxable activity?

Businesses that previously reported excise taxes but had no taxable activity this quarter must still file a zero return. Submitting a zero return confirms compliance and prevents penalty notices. If a business has officially stopped taxable operations, it should formally file a final return to close its excise tax account with the IRS.

What schedules are most commonly required?

Most filers attach Schedule A for liability reporting, Schedule C for claiming credits, and Schedule T for fuel transactions. Additional forms, such as Form 6627 for environmental taxes and Form 6197 for vehicle reporting, may also apply. Including every required schedule ensures accurate calculations, compliance with IRS requirements, and faster processing of your excise tax return.

How can I correct errors after filing?

If you discover an error, you can amend your return using the same Form 720 for that quarter. Include corrected figures, updated schedules, and an explanation. Electronic filing simplifies this process and provides quicker confirmation. Correcting mistakes promptly helps maintain compliance, prevents future IRS inquiries, and minimizes potential interest or penalty charges for reporting discrepancies.