Can Form 720 be Filed Annually

Form 720 is utilized by businesses to report and pay federal excise taxes on specific goods, services, or activities. It allows taxpayers to calculate their excise tax liability, which is categorized by IRS number, and ensure timely payment for the relevant categories of income, products, or transactions subject to excise taxes.

What is Excise Tax?

Federal Excise taxes are levied on the purchase of specific goods and are often included in the price, making them less noticeable to consumers. Similar to a state sales tax in some ways, excise taxes differ in that they specifically target certain products. 

These taxes are imposed on the production, sale, or use of goods within a country, and are commonly applied to items like fuel, tobacco, and alcohol

Can form 720 be filed annually?

No, Form 720 the Quarterly Federal Excise Tax Return, must be filed every quarter to report excise taxes. Each quarter spans three months, beginning on January 1, and the form is due by the last day of the month following the end of the quarter. 

For example, for the first quarter ending on March 31, Form 720 is due by April 30. Below is a breakdown of the quarters and their respective form 720 due dates:

Source: IRS

When is the Excise Tax paid Semi-monthly?

For businesses filing Form 720, if the net excise tax liability listed in Part I is $2,500 or less for the quarter, the tax is paid when filing the form. However, if the liability exceeds $2,500, semi-monthly deposits to the IRS are generally required. The IRS defines semi-monthly periods as follows:

• The first semi-monthly period covers the first 15 days of the month.

• The second semi-monthly period covers the 16th through the last day of the month.

Regardless of the tax liability, businesses must file Form 720 for each quarter of the calendar year.

WRAP:

After reading this blog, you should have a clear understanding that Form 720 must be filed quarterly, not annually.

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