Instructions For Form 720 - Quarterly Federal Excise Tax Return

Electric outboard motors (IRS No. 42). The tax on an

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

electric outboard motor is 3% (.03) of the sales price. The

gallon of agri-biodiesel. Fill in the number of gallons and

tax is paid by the manufacturer, producer, or importer.

the appropriate rate in the Rate column on the line for

Add the tax on each sale during the quarter and enter the

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

total on the line for IRS No. 42.

Rate column blank and attach a schedule showing the

rates and number of gallons taxed at each rate.

Fishing tackle boxes (IRS No. 114). The tax on fishing

tackle boxes is 3% (.03) of the sales price. The tax is

Floor Stocks Tax

paid by the manufacturer, producer, or importer. Add the

tax on each sale during the quarter and enter the total on

Ozone-depleting chemicals floor stocks tax (IRS No.

the line for IRS No. 114.

20). Use Form 6627 to figure the liability for this tax.

Enter the amount from Form 6627, Part III, line 4, column

Bows, quivers, broadheads, and points (IRS No. 44).

(d) on the line for IRS No. 20. Attach Form 6627 to Form

The tax on bows is 11% (.11) of the sales price. The tax

720 that is due July 31 of each year. Deposit the

is paid by the manufacturer, producer, or importer. It

payment by June 30 at an authorized financial institution.

applies to bows having a peak draw weight of 30 pounds

See How To Make Deposits below.

or more. The tax is also imposed on the sale of any part

or accessory suitable for inclusion in or attachment to a

Part III

taxable bow and any quiver, broadhead, or point suitable

for use with arrows described below. Add the tax on each

Line 4. Report on line 4 of Form 720 the total claims

sale during the quarter and enter the total on the line for

from line 16 of Schedule C. See the instructions for

IRS No. 44.

Schedule C –Claims on page 9.

Arrow shafts (IRS No. 106)

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

The tax on arrow shafts is subject to an annual

previous return that you applied to this return and the

inflation adjustment for any calendar year

amount from line 5b of Form 720X.

beginning after 2005. For 2006, the tax will be

CAUTION

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

$.40 per arrow shaft.

from line 11 you want to have applied to that return.

The tax on arrow shafts is $.39 per arrow shaft. The

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

tax is paid by the manufacturer, producer, or importer of

the overpayment on line 11 and line 7 will first be

any arrow shaft (whether sold separately or incorporated

applied to the unpaid amounts.

CAUTION

as part of a finished or unfinished product) of a type used

in the manufacture of any arrow which after its assembly

Line 10. Form 720-V, Payment Voucher, must be filed

meets either of the following conditions.

with Form 720 if you have a balance due on line 10.

•

It measures 18 inches or more in overall length.

•

It measures less than 18 inches in overall length but is

Payment of Taxes

suitable for use with a taxable bow, described earlier.

Generally, semimonthly deposits of excise taxes are

Add the tax on each sale during the quarter and enter

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

the total on the line for IRS No. 106.

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

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

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

excise tax is imposed if the alcohol fuel mixture credit or

However, no deposit is required for the situations

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

listed below; the taxes are payable with the return.

a mixture or straight alcohol for a purpose other than fuel,

•

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

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

does not exceed $2,500 for the quarter.

the straight alcohol.

•

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

Use the following table to determine the tax for each

See One-Time Filing on page 2.

•

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

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

appropriate rate in the Rate column on the line for IRS

except for the floor stocks tax, that generally requires a

No. 51. If more than one rate applies, leave the Rate

single deposit. See Floor Stocks Tax above.

column blank and attach a schedule showing the rates

How To Make Deposits

and number of gallons taxed at each rate.

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

THEN the tax rate

mail your deposits directly to the IRS. Records of your

IF the alcohol is...

AND...

per gallon is...

deposits will be sent to the IRS for crediting to your

•

at least 190 proof

is ethanol

$ .51

accounts.

•

is methanol

.60

•

benefited from the

.61

Electronic deposit requirement. You must make

small ethanol

electronic deposits of all depository taxes (such as

producer credit

deposits for employment tax, excise tax, and corporate

•

at least 150 proof but

is ethanol

$ .3778

income tax) using the Electronic Federal Tax Payment

•

less than 190 proof

is methanol

.45

System (EFTPS) in 2005 if:

•

benefited from the

.4778

The total deposits of such taxes in 2003 exceeded

small ethanol

$200,000 or

producer credit

•

You were required to use EFTPS in 2004.

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

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

An excise tax is imposed if the biodiesel mixture credit or

Federal Tax Deposit Coupon, instead, you may be

biodiesel credit was claimed and any person later: (a)

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

uses a mixture or straight biodiesel for a purpose other

EFTPS, you may participate voluntarily. To get more

than as fuel, (b) separates the biodiesel from the mixture,

information or to enroll in EFTPS, visit the EFTPS

or (c) mixes the straight biodiesel.

website at or call 1-800-555-4477. Also

-7-

Instructions For Form 720 - Quarterly Federal Excise Tax Return - 2005 Page 7

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