Can Form 720 be Filed Annually ?

• The IRS does not permit a 720 annual filing under any circumstances.

• IRS Form 720 must be filed quarterly throughout the year.
• Every taxpayer must file IRS Form 720 on a quarterly basis to maintain an annual filing frequency throughout the year.
• Small-volume taxpayers must also file every quarter.
• It is imperative to comply with the IRS Form 720 filing frequency.

Excise Tax and Form 720 – What Businesses Must Know

To comply with the Federal Excise Tax laws, every business must understand:

• The Purpose of Excise Tax

• Form 720 is the Official Reporting Mechanism for Reporting Excise Tax

• When the IRS requires Filing/Deposit Dates

This guide compiles all of the necessary information in one document to help businesses stay compliant year-round so they do not incur IRS penalties.

ALSO CHECK - Form 720 Due Date | eFile720

What is an Excise Tax? A Simple Business Breakdown

Federal Excise Taxes are only applicable to specific goods, services or activities. They are a specific tax on a product or transaction as opposed to a general sales tax.

Federal Excise Taxes can be assessed against:

• Fuel/Other Environmental Products

• Tobacco/Alcohol

• Communications and Air Transportation

• Some Medical Devices

• Indoor Tanning Services

• Wagering Activities

Characteristics of Excise Taxes:

• They are typically added to the price of the goods sold, so consumers do not generally realize they are paying them separately.

• They are assessed against the producer, seller or user of the goods rather than just against the retailer.

• Excise Taxes must be reported through Form 720 quarterly or annually by all businesses that manufacture, provide services to and/or receive excise-taxable goods.

Understanding Form 720 Filing: Why Quarterly Filing is Mandatory

One of the most common industry questions is whether a 720 annual filing is allowed.

The answer is clear:

• Form 720 cannot be filed annually.

• The IRS mandates it as a quarterly return, regardless of the amount or frequency of business activity.

• Whether a business has high liability or minimal transactions, the IRS Form 720 filing frequency must remain quarterly.

IRS Quarterly Filing Structure

These deadlines reinforce that Form 720 quarterly or annually is not a choice; quarterly is the standard requirement.

Why Can't the IRS Allow the Annual Submission of IRS Form 720?

Business owners often feel justified in filing their taxes only annually because of their small volume of transactions. But the IRS requires all companies to submit their filings at least once every quarter since:

Excise taxes support essential federal agencies' programs, including the Environmental Protection Agency (EPA), the U.S. Department of Transportation (DOT) and the U.S. Department of Defense (DOD).

These programs rely on receiving funds promptly quarterly. Quarterly submissions produce a reliable audit trail and aid in the elimination of compliance-related issues. By regularly submitting your taxes, you are able to quickly identify tax discrepancies.

Summary of Tax Filing Structure (Quick Reference)

• Tax Form IRS Form 720 must be filed quarterly.

• Tax Form IRS Form 720 must continue to be filed quarterly, even if a business does not have any activity during this period.

• There is no option to submit Form 720 annually or quarterly.

Payment Rules:

• If your tax liability is $2,500 or less, you will pay your taxes when you submit your quarterly return.

• If your tax liability is greater than $2,500, you will need to submit semi-monthly deposits.

Where to Report?

• Environmental Excise Tax

• Communications Excise Tax

• Gasoline Excise Tax

• Manufacturers' Excise Tax (MET)

• Foreign Insurance Taxes

• Retail (Indoor Tanning) Excise Tax

All registered businesses must comply with these requirements equally.

Advantages:

Online submissions of "720" forms will enable businesses and accountants to file efficiently and accurately. There are many advantages to e-filing, including:

• Less waiting for returns to be received

• Obtain confirmation immediately

• Reducing the number of manual calculations done by the business

• Maintain an accurate record of filed returns.

ALSO CHECK - Who Is Required to File IRS Form 720?

Conclusion

It is important for businesses to understand that the IRS prohibits businesses from filing Form 720 annually. In addition, a taxpayer must deposit the required excise tax every month through quarterly filing.

All businesses that use Form 720 must file quarterly; thus, the IRS requires a standard filing frequency/structure each month, maintained by a semi-monthly deposit requirement for the largest excise tax-release amount.

File your Form 720 electronically using eFile720, which will speed up your filing process, eliminate manual processing time and only charge for when you file your form

FAQs

1. Can Form 720 be submitted on an annual basis?

No. 720 annual filing is not allowed. The IRS requires all businesses to follow quarterly filing requirements.

2. What determines the IRS Form 720 filing frequency?

The IRS requires that all businesses that file a Form 720 file quarterly.

3. Is Form 720 quarterly or annually for businesses with low excise taxes?

Form 720 must be filed quarterly regardless of the amount due. Even if a business has a small excise tax, the frequency of filing is determined by the business's liability.

4. When must semi-monthly deposits be made?

If a business's liability under Part I of Form 720 is greater than $2,500 during the quarter, then the business must submit semi-monthly deposits.

5. What will happen if a business misses submitting its quarterly Form 720?

Businesses that fail to submit Form 720 on time or to pay their tax by the due date may incur penalties from the IRS for not submitting Form 720 on time.