Do I Need to File Form 720 For My LLC?

One of the most important tax forms businesses must complete is IRS Form 720, which is used for reporting and paying excise taxes. However, this form only applies to specific companies. 

If you want to know if you’re one of them, you’ve come to the right place. 

In this blog, we’ll discuss what Form 720 is and which businesses need to submit them. We’ll also explore when and how to file them properly.

Join us as we uncover the secret to having a stress-free tax season. 

What is The IRS Form 720?

The IRS Form 720, or the Quarterly Federal Excise Tax Return, is a tax form used by businesses that sell goods or services subject to excise taxes. 

The form is divided into four parts: Schedule A, T, C, and Form 720-V. Form 720-V is a payment voucher business owners can use for their excise taxes. 

Understanding Excise Taxes

The federal government imposes excise taxes on products and services manufactured in and imported into the United States. Examples of these 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 wouldn’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. 

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 as set by Form 720’s instructions. 

Who Needs to File Form 720?

Any business that deals with the goods and services mentioned above must file their IRS Form 720 quarterly, regardless of their entity.

But aside from this, there are two other conditions that the IRS considers when determining who needs 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 to Submit Form 720

The IRS Form 720 must be filed quarterly. Here are this year’s deadline for submissions:

• First Quarter (January, February, March): April 30, 2024
• Second Quarter (April, May, June): July 31, 2024
• Third Quarter (July, August, September): October 31, 2024
• Fourth Quarter (October, November, December): January 31, 2025

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 to File Your Form 720

There are two ways you can file your IRS Form 720. You can print the form and mail it to the IRS, or you can file 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. 

A Step-by-Step Guide to Filling Out Your 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 

If one or two of the taxes listed in Part I of the form apply to your business, you must complete the Schedule A section. 

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 A Tax Professional

If you need help filing your IRS Form 720, look no further than NCH. 

NCH is one of Nevada’s leading business formation specialists. We have a team of experienced tax professionals ready to assist you in keeping your business tax-compliant. 

NCH will help you complete your Form 720 and any other tax forms you must submit. We’ll ensure that your reports are accurate and error-free so that you can maintain a good standing with the IRS.

To learn more about our tax preparation services, visit our website here or call us at 1-800-508-1729.

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.