Do I Need to File Form 720 For My LLC?

IRS Form 720, also known as the Quarterly Federal Excise Tax Return, is one of the most important tax forms for businesses. It’s used to report and pay excise taxes on goods and services that are manufactured in or imported into the United States. However, selected companies can only use this form.

If you want to know whether your LLC needs to file Form 720, you’ve come to the right place. Read on for the answer (and to learn when and how to file this form).

Does My LLC Need to File IRS Form 720?

If your LLC offers any goods or services that are subject to excise taxes, it must file IRS Form 720 quarterly. Examples of these products or services include:

• Gasoline
• Coal
• Fishing equipment
• Tires
• Vaccines
• Bows and arrows
• Telephone communications
• Air transportation
• Passenger ship transportation
• Indoor tanning services

While items like alcohol, tobacco, and firearms have excise taxes, they’re not regulated by the IRS. You won’t find them in the Form 720 list. Instead, businesses that sell them must pay their taxes to the Alcohol and Tobacco Tax and Trade Bureau.

Additionally, the IRS considers the following factors when determining whether you need to complete the form.

• You were liable for, or responsible for, any of the federal excise taxes listed on Form 720, Parts I and II, for a prior quarter, and you have yet to file a final return.
• You were liable for, or responsible for, any of the federal excise taxes listed on Form 720, Parts I and II, for the current quarter.

When Are Excise Taxes Paid?

Excise taxes are paid within a semi-monthly period. The IRS considers the first 15 days of the month as the first semi-monthly period and the 16th through the last day of the month as the second period.

However, if you’re paying excise taxes for services like communications or air transportation, you can pay for them on a different date that’s specified in the instructions for completing IRS Form 720.

When Do I Submit My LLC’s IRS Form 720?

You submit your LLC’s IRS Form 720 quarterly. Here’s when you should file the form with the IRS.

If your due date for filing falls on a weekend or a legal holiday, you can file your form by the next business day.

How Do I File IRS Form 720?

You can file IRS Form 720 by mailing a printed copy to the IRS or filing it electronically with the help of an authorized tax professional. The IRS has released a list of accredited e-file providers who can help you submit your tax forms.

How Do I Fill Out the IRS Form 720?

With so many parts to remember, filling out the IRS Form 720 can be overwhelming. So, to help you out, here’s a step-by-step guide on completing the document:

Gather Your Documents

The first thing you need to do when filing your Form 720 is gather all your documents. There is accounting software that can help you create reports and calculate your owed excise tax.

The amount of excise tax you’ll pay will depend on the nature of your business. It will be a percentage of your total sales or your sold units.

Write Your Business Information

The upper portion of the Form 720 is for your basic business information. It includes your name, address, quarter-end date, and Employer Identification Number (EIN).

Complete Part I

Part I of the Form 720 is for paying the following taxes:

• Environmental taxes
• Communication and air transportation taxes
• Fuel taxes
• Retail taxes
• Ship passenger tax
• Foreign insurance tax
• Manufacturer’s tax

If your business sells any of the mentioned products above, you will use the respective rate indicated in the “Rate” column to calculate your owed taxes.

Once you fill out the sections that apply to your business, you must add all your taxes and fill in the total. 

Fill Out Your Schedule A 

IRS Form 720 is divided into four parts: Schedule A, T, C, and Form 720-V (a payment voucher business owners can use for their excise taxes). If one or two of the taxes listed in Part I of the form apply to your business, you must complete Schedule A.

This portion of Form 720 reports your business’s net tax liability. You will add the net tax liability for each item in Part 1. This should apply for each semi-monthly period.

Complete Part II

The second part of Form 720 is for the following goods or services:

• Specific health insurance policies
• Fishing equipment
• Electric outboard motors
• Bows and arrow
• Indoor tanning services
• Waterways fuel
• Biodiesel sold as fuel but not used as fuel

You can complete Part II of the form using the same process as Part I.

Determine Whether You Need A Schedule T or C Form

Once you complete the second part of your Form 720, you must identify which schedule form applies to your business. 

Schedule T forms are for businesses selling diesel fuel, kerosene, and aviation gasoline. It calculates the total taxable gallons of fuel received or delivered during an exchange within a terminal. 

Meanwhile, Schedule C forms are for businesses that deal with one of the fuel types listed in Parts I and II of Form 720.

Complete Part III

Now that you’re done with the first two parts of Form 720, you must calculate your total taxes on Part III. 

After this, you can sign and submit the form to the IRS. You must pay your total taxes after filing your Form 720.

Get Help From an Experienced Tax Preparer

If you’re required to file IRS Form 720, NCH is here to help you complete it (and any other tax forms applicable to your business). Our experienced tax preparers will ensure that your Form 720 contains accurate information and is filed correctly to keep your business compliant with current IRS regulations.

Work With Our Tax Preparers Today

Disclaimer: The above material has been prepared for informational purposes only, containing opinions of the provider, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.