Instructions For Form 720 - Quarterly Federal Excise Tax Return

if deposits are based on amounts billed or tickets sold,

Additional deposit of taxes in September 2008

rather than on amounts actually collected. See Alternative

For the Period

method below.

Type of Tax

Beginning on

Ending on Due Date

Regular method taxes

If you are depositing more than one tax under a method,

EFTPS

Sept. 16

Sept. 26

Sept. 29

combine all the taxes under the method and make one

Non-EFTPS

Sept. 16

Sept. 25

Sept. 29

deposit for the semimonthly period.

Alternative method taxes (IRS

Nos. 22, 26, 27, and 28) (based

Regular method. The deposit of tax for a semimonthly

on amounts billed)

period is due by the 14th day following that period.

EFTPS

Sept. 1

Sept. 11

Sept. 29

Generally, this is the 29th day of a month for the first

Non-EFTPS

Sept. 1

Sept. 10

Sept. 29

semimonthly period and the 14th day of the following month

See Electronic deposit requirement above.

for the second semimonthly period. If the 14th or the 29th

day falls on a Saturday, Sunday, or legal holiday, you must

make the deposit by the immediately preceding day that is

For the remaining days in September, be sure to

not a Saturday, Sunday, or legal holiday.

make your deposits by the regular due date.

CAUTION

Alternative method (IRS Nos. 22, 26, 27, and 28).

Amount To Deposit

Deposits of communications and air transportation taxes

may be based on taxes included in amounts billed or tickets

Deposits of taxes for a semimonthly period must be at least

sold during a semimonthly period instead of on taxes

95% of the amount of net tax liability for that period, unless

actually collected during the period. Under the alternative

the safe harbor rule applies. See Safe Harbor Rule below.

method, the tax included in amounts billed or tickets sold

The net tax liability for a semimonthly period is the total

during a semimonthly period is considered collected during

liability for the period minus any claims allowed on Schedule

the first 7 days of the second following semimonthly period.

C for the period. Net tax liability for a semimonthly period

The deposit of tax is due by the 3rd banking day after the

may be figured by dividing the net tax liability for the month

7th day of that period.

by 2, provided this method of computation is used for all

semimonthly periods in the calendar quarter.

Example. The tax included in amounts billed or tickets

sold for the period June 16-30, 2008, is considered collected

The net tax liability for a semimonthly period is not

from July 16-22, 2008, and must be deposited by

reduced by any amounts from Form 720X.

July 25, 2008.

CAUTION

To use the alternative method, you must keep separate

Safe Harbor Rule

accounts of the tax included in amounts billed or tickets sold

The safe harbor rule applies separately to deposits under

during the month and report on Form 720 the tax included in

the regular method and the alternative method. Persons

amounts billed or tickets sold and not the amount of tax that

who filed Form 720 for the look-back quarter (the 2nd

is actually collected. For example, amounts billed in

calendar quarter preceding the current quarter) are

December, January, and February are considered collected

considered to meet the semimonthly deposit requirement if

during January, February, and March and are reported on

the deposit for each semimonthly period in the current

Form 720 as the tax for the 1st quarter of the calendar year.

quarter is at least

(16.67%) of the net tax liability reported

for the look-back quarter.

The separate account for each month must reflect:

For the semimonthly period for which the additional

1. All items of tax included in amounts billed or tickets

deposit is required (September 1-11 and 16-26 for EFTPS,

sold during the month, and

or September 1-10 and 16-25 for non-EFTPS), the

additional deposit must be at least

(12.23%),

2. Other items of adjustment relating to tax for prior

(11.12%) for non-EFTPS, of the net tax liability reported for

months (within the statute of limitations on credits or

the look-back quarter. Also, the total deposit for that

refunds).

semimonthly period must be at least

(16.67%) of the net

tax liability reported for the look-back quarter.

The separate account for any month cannot include an

Exceptions. The safe harbor rule does not apply to:

adjustment resulting from a refusal to pay or inability to

•

The 1st and 2nd quarters beginning on or after the

collect unless the refusal has been reported to the IRS. See

effective date of an increase in the rate of tax unless the

Communications and Air Transportation Taxes —

deposit of taxes for each semimonthly period in the calendar

Uncollected Tax Report on page 3.

quarter is at least

(16.67%) of the tax liability you would

have had for the look-back quarter if the increased rate of

The net tax liability that is considered collected during

tax had been in effect for that look-back quarter;

•

the semimonthly period must be either:

Any quarter if liability includes any tax not in effect

•

throughout the look-back quarter; or

The net amount of tax reflected in the separate account

•

For deposits under the alternative method, any quarter if

for the corresponding semimonthly period of the preceding

liability includes any tax not in effect throughout the

month, or

look-back quarter and the month preceding the look-back

•

One-half of the net amount of tax reflected in the separate

quarter.

account for the preceding month.

Requirements to be met. For the safe harbor rule to

apply, you must:

Special rule for deposits of taxes in September 2008. If

•

Make each deposit timely at an authorized financial

you are required to make deposits, see the chart below. The

institution, and

special rule does not apply to taxes not required to be

•

Pay any underpayment for the current quarter by the due

deposited (see Payment of Taxes on page 7). See

date of the return.

Regulations sections 40.6302(c)-2 and 40.6302(c)-3 for

rules to figure the net tax liability for the deposits due in

If you meet the requirements and use the safe harbor

September.

rule, check the box on line 5 of Form 720.

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Instructions For Form 720 - Quarterly Federal Excise Tax Return - 2008 Page 8

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