What Is IRS Form 720? Quarterly Federal Excise Tax Return

For many businesses in the U.S., tax obligations go beyond just income or employment taxes. If your company deals with goods like fuel, air transportation, indoor tanning services, or certain heavy vehicles, you may be required to file IRS Form 720 — the Quarterly Federal Excise Tax Return.

This article breaks down what IRS Form 720 is, why it exists, who must file it, and how to file correctly. If you’re running a business that might fall under excise tax requirements, understanding this form is essential to stay compliant and avoid penalties.

Table of Contents

What Is Form 720?

IRS Form 720 is used to report and pay federal excise taxes on specific goods, services, and activities. Unlike general income tax, excise taxes apply only to certain products or services — think fuel, airline tickets, indoor tanning, and manufacturing of specific equipment.

Businesses required to pay these taxes must file Form 720 quarterly (every three months). This form is submitted to the IRS along with payment for any excise taxes due during the quarter.

Why Does the IRS Have Excise Taxes?

Excise taxes serve two primary purposes:

Revenue Generation: They fund federal programs such as highway maintenance, airport construction, environmental cleanup, and public health initiatives.
Regulation: Excise taxes can discourage consumption or encourage compliance. For example, taxes on tobacco and tanning services help limit public health risks, while fuel taxes help fund transportation infrastructure.

These taxes are typically passed on to consumers, but it’s the business that must report and remit the tax to the IRS.

Who Needs to File Form 720?

You need to file IRS Form 720 if your business is involved in:

Selling or using taxable fuels
Providing air transportation services
Offering indoor tanning services
Selling certain manufactured goods (like trucks and trailers)
Handling environmental taxes
Operating facilities that produce ozone-depleting chemicals
Manufacturing vaccines and paying the applicable excise tax

Form 720 isn’t limited to large corporations. Even small businesses may have to file if their products or services fall under excise tax rules. Always check IRS guidance or consult a tax advisor if you’re unsure.

Structure of Form 720

IRS Form 720 is divided into multiple parts:

Part I: Covers most excise taxes (fuel, air transportation, indoor tanning, etc.)
Part II: Covers other specific taxes (communications, coal, tires, etc.)
Schedule A: For reporting tax liability by date
Schedule T: Used if you’re reporting two-party exchanges of gasoline
Schedule C: Used to claim adjustments, credits, and refunds

It’s crucial to fill out only the sections that apply to your business, as not every filer needs to complete the entire form.

Common Excise Tax Categories (Reported on Form 720)

Here are several of the most common excise tax categories that require Form 720 reporting:

Fuel Taxes: Gasoline, diesel, aviation fuel, and alternative fuels
Airline and Travel Services: Taxes on air passenger and cargo transport
Indoor Tanning Services: 10% excise tax on tanning service sales
Environmental Taxes: Including taxes on ozone-depleting chemicals and imported taxable products
Manufacturing Taxes: On certain heavy trucks, trailers, and tires
Communications and Transportation: Long-distance telephone services, teletypewriter exchange services, etc.
Vaccine Tax: Certain vaccines sold in the U.S. are subject to excise tax

Refer to the IRS Instructions for Form 720 for a full list of applicable items and rates.

When and How to File Form 720

Filing Deadlines

Form 720 must be filed quarterly:

Quarter	Due Date
Jan – Mar	April 30
Apr – Jun	July 31
Jul – Sep	October 31
Oct – Dec	January 31 (following year)

Late filings or payments can result in penalties and interest.

Filing Methods

You can file Form 720 by:

Mail: Send to the appropriate IRS address based on your location (check IRS Form 720 instructions).
Electronically: Use an IRS-authorized e-file provider, especially if you’re working with a tax professional or using tax software.

Always retain a copy for your records.

Common Mistakes to Avoid

When filing Form 720, avoid these frequent errors:

Filing the wrong quarter: Double-check the dates before submitting.
Incorrect tax calculations: Use IRS instructions or trusted software to verify calculations.
Missing schedules: If you’re eligible for credits or refunds, don’t forget to include Schedule C.
Late filing or payment: These trigger IRS penalties.
Reporting in the wrong sections: Ensure you’re using the right line items for your excise category.

Even small mistakes can lead to delays or audits. Consider having your form reviewed before submission.

Real-Life Examples to Bring It Home

Example 1: Fuel Distributor

A fuel wholesaler sells diesel and biodiesel. They must calculate the applicable federal excise taxes and file Form 720 each quarter, reporting under Part I, IRS No. 60 and 79.

Example 2: Tanning Salon Owner

A tanning salon that earns $50,000 a quarter from services must pay a 10% excise tax. That’s $5,000 per quarter, filed under Part I, IRS No. 140.

Example 3: Truck Manufacturer

A company manufacturing heavy-duty trucks must report a 12% excise tax on the sale price of those vehicles. They file this under Part II, IRS No. 33.

What Happens If You Don’t File Form 720?

Failing to file or pay taxes reported on Form 720 can result in:

Late filing penalties: Generally 5% of the tax due for each month late (up to 25%)
Late payment penalties: 0.5% per month of unpaid tax
Interest: Accrues on unpaid balances
IRS scrutiny or audit: Non-compliance raises red flags

Avoid these risks by filing on time and ensuring all taxes are properly paid.

Do You Need a Tax Pro to File Form 720?

While the IRS provides detailed instructions, Form 720 is complex, especially when multiple excise categories or refunds are involved.

You may benefit from a tax professional if:

You’re unsure if you need to file
You operate in multiple industries (e.g., manufacturing + services)
You need to file adjustments or claim credits
You’ve received IRS notices in the past

A tax pro can help you minimize liabilities, file accurately, and avoid penalties.

My Count Solutions Can Help

At My Count Solutions, we understand the complexities of excise taxes and the importance of timely and accurate Form 720 filing. Our team of experienced CPAs and tax preparers can help your business:

Determine whether you’re subject to excise taxes
Calculate the correct tax amounts
Complete and file the Form accurately
Track filing deadlines and avoid penalties
Claim any applicable credits or adjustments

Let us take the burden off your plate, so you can focus on running your business.

Final Thoughts

This isn’t a form most businesses are familiar with — until they need to file it. Whether you’re running a fuel distribution company, an air transport service, or even a local tanning salon, excise taxes are part of your tax responsibilities. Understanding how the form works, who must file, and how to avoid mistakes can protect your business from costly penalties. If you’re unsure, don’t take chances — get help from a qualified tax professional or trusted partner like My Count Solutions.

Stay informed. Stay compliant. And don’t let Form 720 catch you off guard.