Instructions For Form 720 - Quarterly Federal Excise Tax Return

Department of the Treasury

Instructions for Form 720

Internal Revenue Service

(Rev. October 2005)

Quarterly Federal Excise Tax Return

Section references are to the Internal Revenue Code unless otherwise noted.

•

The tax on use of international air travel facilities (IRS

General Instructions

No. 27) increases for amounts paid during 2006. For

flights that begin or end in the United States, the rate will

What’s New

be $14.50 per person. For domestic segments that begin

or end in Alaska or Hawaii (applies only to departures),

Hurricane relief. Taxpayers affected by the recent

the rate will be $7.30 per person.

hurricanes are eligible for relief. See Help for Hurricane

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For amounts paid for each domestic segment of

Victims at or call 1-866-562-5227.

taxable transportation of persons by air (IRS No. 26), the

domestic segment tax increases to $3.30 per segment for

Changes Effective For The Fourth Calendar

transportation that begins in 2006.

Quarter of 2005

•

Effective January 1, 2006, the rate of tax for

The Energy Policy Act of 2005 contains the following

diesel-water emulsions will be $.198 per gallon if certain

provisions effective after September 30, 2005.

requirements are met. Energy Policy Act of 2005.

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The Leaking Underground Storage Tank (LUST) tax

•

Renewable diesel will generally be treated the same as

rate ($.001) generally applies to removals, entries, and

biodiesel for tax and credit purposes. Effective for fuel

sales of dyed diesel fuel, dyed kerosene, kerosene for

sold or used after December 31, 2005. SAFETEA.

use in aviation (nontaxable uses and foreign trade),

•

The rules regarding sales of certain taxable fuel to

gasoline blendstocks, kerosene used for a feedstock

states and nonprofit educational organizations will

purpose, and diesel fuel or kerosene used in Alaska. The

change. SAFETEA. See Notice 2005-80.

following abstracts have been added to Form 720.

•

Taxable tires (IRS No. 66) will be split into 3 separate

1. IRS No. 105, Dyed diesel fuel, LUST tax.

abstracts. SAFETEA.

2. IRS No. 107, Dyed kerosene, LUST tax.

3. IRS No. 111, Kerosene for use in aviation, LUST

1. IRS No. 108, Taxable tires other than biasply or

super single tires.

tax on nontaxable uses, including foreign trade.

4. IRS No. 119, LUST tax, other exempt removals.

2. IRS No. 109, Taxable biasply or super single tires

•

The LUST tax generally will not be credited or

(other than super single tires designed for steering).

refunded, except for exported fuel. The affected rates on

3. IRS No. 113, Taxable tires, super single tires

Schedule C (Form 720) have been reduced by $.001 to

designed for steering.

reflect this change. Line 15b has been added to

Schedule C to make claims for exported fuel. See Claims

Electronic Payment

for Exported Fuel on page 14.

Now, more than ever before, businesses can enjoy the

The Safe, Accountable, Flexible, and Efficient

benefits of paying their federal taxes electronically.

Transportation Equity Act of 2005 (SAFETEA) contains

Whether you rely on a tax professional or handle your

the following provisions effective after Sept. 30, 2005.

own taxes, the IRS offers you a convenient program to

•

Aviation-grade kerosene is eliminated as a type of fuel

make it easier. Spend less time on taxes and more time

and is now taxed as kerosene at $.244 per gallon unless

running your business. Use Electronic Federal Tax

a reduced rate applies. See Kerosene for use in aviation

Payment System (EFTPS) to your benefit. For

on page 4 and Schedule C – Claims on page 9.

information on EFTPS, visit or call EFTPS

•

Registered ultimate vendors cannot make claims for

Customer Service at 1-800-555-4477. Also see How To

undyed diesel fuel and undyed kerosene (other than

Make Deposits on page 7.

kerosene for use in aviation) sold for use on a farm for

farming purposes. Ultimate purchasers may use line 3d

Purpose of Form

or 4c of Schedule C to make these claims. See Schedule

C– Claims on page 9.

Use Form 720 and attachments to report liability by IRS

•

Certain tractors are not subject to the 12% retail tax.

No. and pay the excise taxes listed on the form.

See Truck, trailer, and semitrailer chassis and bodies,

and tractors on page 5.

•

When To File

Limousines over 6,000 pounds are not subject to the

gas guzzler tax. See Form 6197, Gas Guzzler Tax.

You must file a return for each quarter of the calendar

•

The tax on fishing rods and fishing poles (and

year as follows:

component parts) taxed at a rate of 10% will have a

maximum tax of $10. See Fishing rods and fishing poles

Quarter covered

Due by

on page 6.

Jan., Feb., Mar.

April 30

Changes Effective For The First Calendar

Apr., May, June

July 31

Quarter of 2006

July, Aug., Sept.

October 31

•

The tax on arrow shafts increases to $.40 per arrow

Oct., Nov., Dec.

January 31

shaft.

Cat. No. 64240C

Instructions For Form 720 - Quarterly Federal Excise Tax Return - 2005

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