Instructions For Form 720 - Quarterly Federal Excise Tax Return

Inland waterways fuel use tax (IRS No. 64). If you are

Note. Include on line 6 of your next return the amount from

liable for the inland waterways fuel use tax, report the

line 11 you want to have applied to that return.

number of gallons subject to tax on the line for

If you owe other federal tax, interest, or penalty, the

IRS No. 64. Certain fuels must also be reported under IRS

overpayment on line 11 and line 7 will first be applied

No. 125 (see below).

to the unpaid amounts.

CAUTION

The inland waterways fuel use tax applies at the rate

Line 10. If line 3 is more than line 9, enter the difference in

listed on Form 720. This is in addition to all other

line 10. You do not have to pay if line 10 is under $1.00.

taxes imposed on the sale or use of the fuel.

CAUTION

You may pay the amount shown on line 10 by EFTPS,

LUST tax on inland waterways fuel use (IRS No. 125).

check or money order, or, if filing electronically, electronic

The leaking underground storage tank (LUST) tax must be

funds withdrawal (direct debit). If you pay by EFTPS or

paid on any liquid fuel used on inland waterways that is not

direct debit, do not file Form 720-V, Payment Voucher.

subject to LUST tax under section 4041(d) or 4081. For

example, gallons of Bunker C residual fuel oil must be

If you do not deposit as required and, instead, pay

the taxes with Form 720, you may be subject to a

reported under both IRS Nos. 64 and 125.

penalty.

CAUTION

Alcohol sold as but not used as fuel (IRS No. 51). An

excise tax is imposed if the alcohol fuel mixture credit or

Payment of Taxes

alcohol credit was claimed and any person later (a) uses a

mixture or straight alcohol for a purpose other than fuel, (b)

Generally, semimonthly deposits of excise taxes are

separates the alcohol from the mixture, or (c) mixes the

required. A semimonthly period is the first 15 days of a

straight alcohol.

month (the first semimonthly period) or the 16th through the

Use the following table to determine the tax for each

last day of a month (the second semimonthly period).

gallon of alcohol. Fill in the number of gallons and the

However, no deposit is required for the situations listed

appropriate rate in the Rate column on the line for IRS No.

below. The taxes are payable with the return.

•

51. If more than one rate applies, leave the Rate column

The net liability for taxes listed in Part I (Form 720) does

blank and attach a schedule showing the rates and number

not exceed $2,500 for the quarter.

•

of gallons taxed at each rate.

The gas guzzler tax is being paid on a one-time filing. See

Gas guzzler tax on page 6.

THEN the tax rate

•

The liability is for taxes listed in Part II (Form 720), except

IF the alcohol is...

AND...

per gallon is...

for the floor stocks tax that generally requires a single

•

at least 190 proof

is ethanol

$ .51

deposit. See Floor Stocks Tax above.

•

is methanol

.60

•

How To Make Deposits

benefited from the

.61

small ethanol

To avoid a penalty, make your deposits timely and do not

producer credit

mail your deposits directly to the IRS. Records of your

•

at least 150 proof but

is ethanol

$ .3778

deposits will be sent to the IRS for crediting to your

•

less than 190 proof

is methanol

.45

accounts.

•

benefited from the

.4778

Electronic deposit requirement. You must make

small ethanol

producer credit

electronic deposits of all depository taxes (such as deposits

for employment tax, excise tax, and corporate income tax)

using the Electronic Federal Tax Payment System (EFTPS)

Biodiesel sold as but not used as fuel (IRS No. 117). An

in 2008 if:

excise tax is imposed if the (a) biodiesel or renewable diesel

•

The total deposits of such taxes in 2006 exceeded

mixture credit or (b) biodiesel or renewable diesel credit was

$200,000 or

claimed and any person later (a) uses a mixture or straight

•

You were required to use EFTPS in 2007 or any prior

biodiesel or renewable diesel for a purpose other than as

year.

fuel, (b) separates the biodiesel or renewable diesel from

the mixture, or (c) mixes the straight biodiesel or renewable

If you are required to use EFTPS and use Form 8109,

diesel.

Federal Tax Deposit Coupon, instead, you may be subject

to a 10% penalty. If you are not required to use EFTPS, you

The tax is $.50 per gallon of biodiesel, $1.00 per gallon of

may participate voluntarily. To get more information or to

agri-biodiesel, and $1.00 per gallon of renewable diesel. An

enroll in EFTPS, visit the EFTPS website at

additional $.10 is added if the agri-biodiesel benefited from

or call 1-800-555-4477. Also see Publication 966, The

the small agri-biodiesel producer credit. Fill in the number of

Secure Way to Pay Your Federal Taxes.

gallons and the appropriate rate in the Rate column on the

line for IRS No. 117. If more than one rate applies, leave the

Depositing on time. For EFTPS deposits to be on time,

Rate column blank and attach a schedule showing the rates

you must initiate the transaction at least 1 day before the

and number of gallons taxed at each rate.

date the deposit is due (before 8:00 p.m. Eastern time).

Federal tax deposit coupons. If you are not making

Floor Stocks Tax

deposits by EFTPS, use Form 8109 to make the deposits at

Ozone-depleting chemicals floor stocks tax (IRS No. 20).

an authorized financial institution. See the instructions in the

Use Form 6627 to figure the liability for this tax. Enter the

coupon book for additional information. If you do not have a

amount from Form 6627, Part IV, line 4, column (d) on the

coupon book, call 1-800-829-4933.

line for IRS No. 20. Attach Form 6627 to Form 720 that is

You will automatically be enrolled in EFTPS when

due July 31 of each year. Deposit the payment by June 30

TIP

you apply for an EIN. You will receive a separate

at an authorized financial institution. See How To Make

mailing containing instructions for activating your

Deposits below.

EFTPS enrollment after you receive your EIN. You will still

have the option to use FTD coupons, but see Electronic

Part III

deposit requirement above.

Line 4. Report on Form 720, line 4, the total claims from

When To Make Deposits

Schedule C, line 16. See the instructions for Schedule

There are two methods for determining deposits: the regular

C – Claims on page 9.

method and the alternative method.

Line 6. Include on line 6 the amount from line 11 of your

previous return that you applied to this return and the

The regular method applies to all taxes in Part I of Form

amount from Form 720X, line 5b.

720 except for communications and air transportation taxes

-7-

Instructions For Form 720 - Quarterly Federal Excise Tax Return - 2008 Page 7

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