What Is IRS Form 720? Quarterly Federal Excise Tax Return

IRS Form 720 is the quarterly tax return used to report and pay certain federal excise taxes on specific products and services (like fuel, air transportation, and indoor tanning). If your business collects or owes federal excise tax, Form 720 is how you report it to the IRS each quarter.

In this guide we’ll explain who must file, what’s inside the form, due dates, and how to avoid common filing mistakes.

What Is Form 720?

Form 720 is not an income tax return. It’s a return for excise taxes, which are taxes tied to certain goods or services. Income tax is based on what you earn. Excise tax is based on what you sell, manufacture, import, or provide (if it’s in an excise-tax category).

Why Does the IRS Charge Excise Taxes?

Excise taxes exist for a few common reasons:

• To fund specific programs (for example, highway-related fuel taxes)

• To offset environmental or public health costs (often tied to regulated products)

• To apply extra tax to certain industries/services

So Form 720 is basically the IRS’s system for tracking and collecting these targeted taxes each quarter.

Who Needs to File Form 720?

You only file Form 720 if your business is responsible for federal excise taxes. Common examples include businesses that deal with:

• Fuel (gasoline, diesel, aviation fuel)

• Air transportation (passenger tickets or cargo)

• Indoor tanning services (10% federal excise tax)

• Certain environmental taxes

• Retail taxes tied to certain heavy vehicles and related items

If you’re unsure, the fastest way to confirm is to check the Form 720 instructions and see whether any line items match your business activities.

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What’s Inside Form 720?

Form 720 looks long, but you don’t complete all of it. You fill in only the lines and schedules that apply to your excise tax situation.

Form 720 generally includes:

• Part I (certain excise taxes such as environmental-related categories)

• Part II (communications and air transportation, and other categories)

• Part III (summary and totals)

• Schedules that support calculations and credits (varies by tax type)

The instructions also reference add-ons like:

• Schedule A (used for certain liability calculations)

• Schedule C (claims/credits that reduce what you owe)

• Other schedules used in specific cases

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Common Excise Taxes Reported on Form 720

Here’s a quick view of common categories and real-life examples.

When Is Form 720 Due?

Form 720 is filed quarterly, with the following due dates:

• Q1 (Jan–Mar): due April 30

• Q2 (Apr–Jun): due July 31

• Q3 (Jul–Sep): due October 31

• Q4 (Oct–Dec): due January 31 (next year)

If a due date falls on a weekend or holiday, it shifts to the next business day.

How Do You File Form 720?

You can file by paper or electronically, depending on your setup and provider options.

Filing options

• E-file through an approved provider (faster, fewer errors)

• Mail the paper return (still allowed, but slower)

The IRS provides current “where to file” details in the official instructions.

Paying the tax

Payment options typically include:

• EFTPS (Electronic Federal Tax Payment System)

• Other electronic payment methods through approved channels (Some excise taxes, like indoor tanning, are commonly paid quarterly along with Form 720.)

Step-by-Step How to Complete Form 720

Step 1: Confirm which excise tax applies to you

Start with what you sell or provide. If it matches an excise category, you likely need Form 720.

Step 2: Identify the correct line(s)

Use the Form 720 instructions to locate the exact line for your excise tax type.

Step 3: Gather your quarterly totals

Have totals ready for the quarter:

• taxable sales or transactions

• units (if applicable)

• any tax collected (if you charge customers)

Step 4: Calculate the tax

Enter the calculation only for the lines that apply. Don’t fill sections that don’t relate to your business.

Step 5: Apply credits (if allowed)

If you qualify for credits (for example, certain adjustments or claims), you may use Schedule C when applicable.

Step 6: File and pay by the due date

File on time even if you’re unsure about something. Late filing can trigger penalties.

Common Mistakes That Cause Problems

These are the issues that usually create penalties or IRS notices:

• Filling out the whole form instead of only the relevant sections

• Missing quarterly due dates

• Using the wrong line for your tax type

• Skipping credits you’re allowed to claim

• Poor recordkeeping (no proof of taxable sales, tax collected, or adjustments)

A clean quarterly process is what keeps Form 720 simple.

Examples

Example 1: Indoor tanning salon

A tanning salon charges customers and collects the federal tanning excise tax, then reports it quarterly on Form 720.

Example 2: Fuel-related business activity

A business dealing with taxable fuel activities may need to report fuel-related excise taxes quarterly through Form 720 based on the applicable lines and schedules.

Different industries, same reporting requirement: if you owe federal excise tax, Form 720 is the reporting tool.

What Happens If You Don’t File Form 720?

If you file late or pay late, the IRS may charge penalties and interest.

Common IRS penalties include:

• Failure-to-file penalty: typically 5% per month, up to 25%

• Failure-to-pay penalty: typically 0.5% per month, up to 25%

That’s why it’s better to file on time and correct issues early rather than delaying.

Do You Need a Tax Pro for Form 720?

Not always.

You might handle it yourself if:

• You only have one excise tax line to report

• Your quarterly totals are clean and consistent

• You understand which sections apply

Professional support becomes valuable when:

• Multiple excise categories apply

• You’re unsure about credits or schedules

• You want to reduce risk of errors and penalties

How SK Financial CPA Can Help

Form 720 becomes stressful when businesses aren’t sure what applies or they miss deadlines. We helps businesses:

• Confirm whether Form 720 is required

• Select the correct excise lines and schedules

• Apply eligible credits correctly

• File quarterly on time and keep clean documentation

If you want Form 720 handled accurately and consistently, our team can take it off your plate.

Conclusion

Form 720 is the IRS’s quarterly return for federal excise taxes. It doesn’t apply to every business, but if it applies to yours, filing it correctly and on time matters. Once you know which excise tax line applies and you set a quarterly routine, Form 720 becomes manageable.

FAQs

Is Form 720 required for all businesses?

No. Only businesses responsible for federal excise taxes file Form 720.

Can I file Form 720 electronically?

Yes. The IRS supports e-filing through approved providers, and it’s often faster and less error-prone.

Do I need to fill every part of Form 720?

No. You complete only the sections and lines that apply to your excise tax situation.

How often do I file Form 720?

Quarterly: April 30, July 31, October 31, and January 31.

What if I file late?

Late filing and late payment can trigger penalties. The IRS commonly applies 5% per month for late filing (up to 25%) and 0.5% per month for late payment (up to 25%).

Is excise tax separate from sales tax?

Yes. Excise taxes are federal taxes on specific goods/services and are separate from state and local sales taxes.

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