How to File Form 6627[Federal Environmental Taxes]
Federal excise tax is imposed by governments on certain items, including goods/services, specific industries and activities. These taxes are paid either by the manufacturer, importer or service provider and will be included in the price the consumer pays for that good/service.
Each category of goods/services has its own Federal Excise Tax Rate (fuel, air travel, environmental, etc.), so that the government properly taxes each industry for its use of Federal resources (e.g., enabling air travel, emissions, etc.).
A Federal Excise Tax Return is filed quarterly using IRS Form 720, which includes all Federal Excise Tax categories minus the categories of Tobacco and Alcohol.
To accurately file it, you must understand what taxes apply to you, the current Federal Excise Tax Rates and the dates when you must file your return; penalties may apply.
The best way to manage your excise tax obligations is to file your Excise Tax Return online using an IRS-authorized software program to minimize mistakes and ensure timely filing upon your return date.
Overview
Excise tax is an important component of the U.S. tax system. It is imposed on certain commodities, services and businesses operating in the United States.
Consumers do not typically know when they are paying excise taxes; however, they do experience the added cost of these taxes through the price of the products they purchase.
For businesses, compliance with the excise tax system is crucial to maximizing efficiency; the process to file returns and the quarterly report requirement will all impact the business's operations.
This blog will provide a complete and comprehensive summary of excise taxes and the different types of excise taxes, as well as how to determine the rate of Excise Taxes and how to properly complete and file an accurate excise tax return.
What is Form 6627?
Form 6627 is used to report taxes imposed on specific chemicals and petroleum products that pose a threat to the environment. This form is primarily concerned with the Environmental Excise Tax and the Federal Oil Spill Tax, both of which aim to mitigate environmental damage caused by hazardous substances. These taxes apply to manufacturers, importers, and sellers of products that contribute to environmental harm.
Read our blog on Form 6627 Instructions Simplified for a better understanding.How to File Form 6627?
Form 6627 can be filed using two methods. Note that this form is always filed along with Form 720, which reports excise taxes. Here are the two options:
Manual Filing:
Download the latest version of Form 6627 from the official IRS website
Complete the form manually and send it to the IRS by mail. Since Form 6627 must be filed with Form 720, you will mail both forms to the appropriate Form 720 mailing address.
Online Filing:
Use any IRS-approved online platform to file Form 6627 electronically. The online method is highly recommended by the IRS, as it is faster, more cost-effective, and helps minimize errors. Filing online saves time and offers more convenience compared to the manual process.
For a hassle-free experience, online filing is the preferred method.
Manual Form 6627 Filings:
When filing Form 6627 manually, you will need to complete both Form 6627 and Form 720. Here's how to properly fill them out:
Form 6627:
Enter your name: Ensure that the name matches exactly as it appears on Form 720.
Enter the quarter and EIN: Indicate the filing quarter and provide your Employer Identification Number (EIN).
Form 6627 consists of six parts: Refer to the correct IRS number from Form 720 and enter the quantity of taxable chemicals or products in Column A.
Calculate the tax: Multiply the values in Column A and Column B, and enter the result in Column C.
Part 5 may require the weight of the ODC (Ozone-Depleting Chemical) product: Fill this out if applicable.
Form 720:
Business details: Provide your business name, quarter-ending date, EIN, and contact information.
Part 1: This section covers most tax categories from Form 6627.
Part 2: Includes one additional tax category.
Transfer values: Take the Column C values from Form 6627 and enter them into the corresponding tax columns on Form 720.
Complete other applicable sections: Fill out any additional sections of Form 720 relevant to your business.
Form 720-V (Payment Voucher): Complete this voucher as an acknowledgment of your filing, and include your payment check.
Finally, mail both completed forms, along with the payment voucher and check, to the official IRS mailing address.
Note: Manual filing requires the submission of two forms, but with the online filing method, this double-filing process is eliminated. You can complete everything in a single, streamlined process online.
Online Filing Form 6627:
Filing Form 6627 online is simple and efficient. Here's how you can do it using an IRS-approved portal like eFile720.com:
Choose an online portal: Select a trusted IRS-approved platform such as eFile720.com to file your Form 6627.
Create or log in to your account:
If you’re a new user, create a free account.
If you already have an account, log in to proceed.
Enter business details: Provide your business name, type, EIN, and contact information.
Enter tax details: Specify the tax year and quarter for your filing.
Select form type: Choose "Form 720" from the dropdown menu. There’s no need to separately select Form 6627 as it is automatically included in the process.
Input environmental tax details:
In the left panel under Form 720, there is a section for environmental tax, where all the IRS numbers are listed.
Select the relevant category for your business.
Enter quantities: Based on your selection, you will be prompted to input the required quantities. The system will automatically calculate the tax and display the total on your dashboard.
Complete payment: Finalize your filing by choosing a payment method. Available options include Electronic Funds Withdrawal (Direct Debit) or the Electronic Federal Tax Payment System (EFTPS).
With this online method, your Form 6627 is filed along with Form 720 in a single submission. Once your filing is approved by the IRS, an acknowledgment will be sent to your mailing address, completing the process efficiently and without the need for double filing.
File your Federal Excise Tax with us today and experience the comfort!
WRAP:
After reading this blog, you should now have a clearer understanding of how to file your Form 6627, the two available filing methods, and how using our portal, eFile720, simplifies the process. By choosing the online method, you can save time, reduce errors, and complete your filing efficiently with minimal hassle.
FAQs
1. Who has to pay excise taxes to the federal government?
Businesses that manufacture, import, sell or distribute goods and provide related services within one of the categories identified by IRS do have to calculate and remit the Excise Tax.
2. How are the Federal Excise Tax Rates determined?
The Federal Excise Tax Rates are determined by category as set forth by the IRS.
The rates may be set based on the number of the units, by a fixed percent of the sales price or on a flat per-item basis for specific goods and/or services.
3. Is every company required to file a Federal Excise Tax Return?
NO. Only businesses that deal with goods and/or service offerings that are subject to excise tax should file a Federal Excise Tax Return.
Some of the examples are distributors of fuels, manufacturers of fuels, providers of aviation services, operators of tanning salons and sellers of large trucks.
4. How often does a business have to file its Excise Taxes?
All businesses must file their Excise Taxes quarterly, which may be completed on Form 720, with the exception of the volume of taxable activity.
5. Does a business have to file its Excise Taxes online?
There is no requirement that a business electronically file Excise Taxes.
But it is highly advised since it will minimize errors, speed up the processing and aid in consistently applying tax rates correctly at the time of filing.