How to Fill Out IRS Form 720 (w/Examples) + FAQs

To fill out IRS Form 720, gather all your excise tax information for the quarter, complete each relevant section of the form (Parts I, II, and III, plus any required schedules), and submit it by the due date with payment of any tax owed. This means entering your business details, listing taxable activities and their taxes, totaling the amounts, and signing the form. Below, we’ll walk through every step, requirement, and tip in detail.

Did you know? Nearly $87 billion in federal excise taxes are collected via Form 720 each year. These taxes fund highways, airports, trust funds, and more – yet many businesses aren’t sure if Form 720 applies to them.

In this guide, you’ll discover:

🧐 What Form 720 is & who must file it – Understand excise taxes (like fuel, airline tickets, heavy trucks, indoor tanning, etc.) and find out if they apply to your business.
📆 Key deadlines & requirements – Learn when Form 720 is due each quarter, federal rules (like the $2,500 deposit threshold), and how state excise taxes differ from federal.
✍️ Step-by-step instructions – A detailed, line-by-line walkthrough for completing Form 720, including examples for different excise tax scenarios (fuel, transportation, tanning services, PCORI fees, etc.).
⚠️ Common mistakes & fixes – Avoid costly errors (like missing a signature or misclassifying a tax) and see how to correct a filed Form 720 using Form 720-X if needed.
💻 E-filing vs. paper filing – Compare electronic filing vs. mailing your return, with a handy pros and cons table and FAQs on penalties, amendments, and more.

Each section below builds your expertise so you can fill out Form 720 confidently and maintain full compliance with IRS excise tax rules. Let’s dive in!

What Is IRS Form 720 and Why Does It Matter?

IRS Form 720, Quarterly Federal Excise Tax Return, is the form businesses use to report and pay federal excise taxes on specific goods, services, and activities. Excise taxes are indirect taxes on things like fuel, air travel, heavy trucks, indoor tanning, certain medical devices, and more. Unlike sales tax (which is charged to consumers), excise taxes are often built into the price of products and collected by the manufacturer or seller, who then remits them to the IRS.

Indirect tax on specific items: Excise taxes typically target particular goods or activities (often for policy reasons, such as discouraging harmful products or funding related infrastructure). For example, there are federal excise taxes on gasoline, airline tickets, tobacco, firearms, coal, indoor tanning services, certain vaccines, and more. The end consumer usually doesn’t see an “excise tax” line on a receipt – instead, the tax is included in the price (think of the gas you buy for your car, which includes ~$0.184/gal in federal tax).
Collected by businesses: If your business manufactures, sells, or uses products/services subject to excise tax, you’re responsible for collecting that tax and filing Form 720 to report and pay it to the IRS. In other words, excise taxes are separate from income taxes and sales taxes – Form 720 is completely independent of your annual income tax return.
Why it matters: Excise taxes fund important federal programs (e.g. highway trust fund, airport and airway trust fund). Filing Form 720 ensures those taxes make it to the right place. It’s also required by law – failing to file or pay can result in hefty penalties (5% of the tax per month, up to 25%). In short, if you have excise tax obligations, Form 720 is not optional.

Examples of excise taxes that go on Form 720: Federal excise tax is imposed on a wide variety of things. Here are a few examples (we’ll cover many of these later):

Fuel excise taxes: Gasoline, diesel, kerosene, compressed natural gas, etc., have per-gallon taxes (e.g. 18.4¢ per gallon of gasoline) that fuel wholesalers pay to the IRS. These are reported in Part I of Form 720.
Transportation taxes: Commercial air travel tickets (7.5% fare tax plus segment fees), air cargo, and even ship passenger taxes for voyages are excise taxes reported on Form 720.
Manufacturing taxes: Certain goods face excise taxes at manufacturing or sale – e.g. heavy highway trucks and trailers (12% of retail price), firearms and ammunition, coal, tires, “gas guzzler” automobiles, etc.
Consumer services: Indoor tanning services incur a 10% excise tax under the Affordable Care Act, reported on Form 720 (IRS No. 140).
Health-related excise fees: Certain vaccines are taxed (to fund vaccine injury trust fund), and health insurers or self-insured plans pay the PCORI fee (Patient-Centered Outcomes Research Institute fee) annually via Form 720.
Foreign insurance & other categories: Policies issued by foreign insurers, sale of ozone-depleting chemicals, sport fishing equipment, bows and arrows, and more – Form 720 covers a long list of excise taxes (Parts I and II list them by IRS code number).

What Form 720 is not for: Not all excise taxes use Form 720. Notably, excise taxes on alcohol, tobacco, and firearms (regulated by the Alcohol and Tobacco Tax and Trade Bureau) are reported on separate forms (e.g. TTB Form 5000.24 for alcohol/tobacco) – not on IRS Form 720. Similarly, the new 1% stock repurchase excise tax for public companies is now reported on Form 720 (recent revisions include it as IRS No. 150 in Part II) after initially being handled separately. Always ensure you’re using the right form for the specific tax.

In summary, Form 720 is the IRS’s catch-all return for federal excise taxes. If your business activities fall into any excise tax categories, you must file Form 720 each quarter to report and pay those taxes.

Who Needs to File Form 720 (And Which Taxes Trigger It)?

Any business or individual that had liability for any of the federal excise taxes listed on Form 720 during a quarter is required to file Form 720 for that quarter. In plain terms, if you sold or used a product or service in a quarter that carries a federal excise tax, you must file Form 720 (even if you already paid the tax via deposits – more on deposits later). Conversely, if you have no excise-taxable activities, you generally do not need to file Form 720 for that period.

IRS filing tests: The IRS provides two simple criteria to determine filing obligation:

Did you collect or owe any excise tax this quarter? If yes, file Form 720 for that quarter. (Examples: sold taxable fuel, provided air transportation, sold a truck subject to retail excise, operated a tanning salon, etc.)
Did you collect any excise tax in a previous quarter of this calendar year and haven’t marked a final return yet? If yes, you must continue filing Form 720 each subsequent quarter of the year even if you have no current liability, until you file a return marked “Final” to formally close out your excise tax account. This ensures that if a business had excise activity earlier in the year and then stopped, the IRS is notified that the obligation ended (more on final returns below).

Common businesses that file Form 720 include:

Fuel distributors and manufacturers (gasoline refiners, importers, wholesalers) – fuels are a big excise category.
Airlines and transportation companies – passenger airlines, air charter operators, freight carriers by air, cruise ship operators (for the ship passenger tax).
Manufacturers/Importers of specific goods – e.g. tire manufacturers, vaccine manufacturers, archery equipment makers, coal mining companies (for coal excise), auto manufacturers (for gas guzzler tax), etc.
Retailers of heavy vehicles – sellers of heavy trucks, trailers, and tractors (subject to 12% retail excise).
Insurance companies/brokers for foreign policies – those who issue policies through foreign insurers (excise on premiums).
Indoor tanning providers – salons must charge a 10% excise on tanning services and file Form 720.
Self-insured health plan sponsors – employers with certain self-insured medical plans or HRAs must file annually for the PCORI fee (see dedicated section below).

If your business does not deal in any of the taxable products/services, you likely don’t need to file Form 720 at all. For example, a consulting firm, a restaurant, or a software company with no excise-taxable sales has no Form 720 requirement. It’s possible that when you applied for an EIN, the IRS’s system indicated Form 720 due (this sometimes happens if certain business categories are checked by mistake). If you’re certain no excise taxes apply, you can ignore Form 720 filing requirements – or file a one-time $0 “Final Return” to notify the IRS you won’t be filing going forward. (Filing a $0 final Form 720 is optional but can stop automated notices.)

Important: If you accidentally indicated on your EIN application that you have excise taxes (when you don’t), the IRS might expect a Form 720. In that case, it’s harmless to file a Form 720 with zero liability and check the “Final Return” box (on page 1 of the form) to clear the requirement. This tells the IRS you’re not actually liable for excise taxes, preventing future notices.

Finally, note that state and local excise taxes are separate from the federal excise taxes on Form 720. Many states impose their own excise taxes (on fuel, tobacco, cannabis, etc.), which require state-level filings – but those do not get reported on Form 720. So you might file Form 720 for federal taxes and also have to file a state excise tax return for state taxes on a product. Always check state requirements for any excise-like taxes your business faces (for example, state gasoline taxes are reported to your state’s revenue department, not the IRS).

When Is Form 720 Due? (Quarterly Deadlines & Filing Frequency)

Form 720 is a quarterly return, due by the last day of the month following the end of each calendar quarter. In other words:

1st Quarter (Jan – Mar): Due by April 30
2nd Quarter (Apr – Jun): Due by July 31
3rd Quarter (Jul – Sep): Due by October 31
4th Quarter (Oct – Dec): Due by January 31 (of the next year)

If the normal due date falls on a weekend or federal holiday, the deadline moves to the next business day. For example, if July 31 is a Sunday, the Q2 Form 720 would be due on Monday, August 1.

Filing frequency: Most excise taxpayers will file four times per year (once for each quarter) as long as they have ongoing excise tax liability. However, there are a couple of nuances:

One-time or occasional filers: If you only incur an excise tax in a single quarter (e.g. you made one sale of a taxable item), you file for that quarter. If you don’t expect any further excise activity, you can mark it as a final return. You would not file again unless you have another excise tax event. Example: You import a piece of equipment in Q1 that triggers an excise tax – you file Form 720 for Q1. If that’s a one-off event, you mark it final. You do not need to file Q2–Q4 with $0 each, unless the IRS instructs you otherwise.
Annual PCORI fee filers: Some businesses only use Form 720 to pay the PCORI fee (Patient-Centered Outcomes Research fee) for self-insured health plans or HRAs. The PCORI fee is only filed once per year (on the second-quarter Form 720, due July 31). If you owe PCORI but no other excise taxes, you file Form 720 just for Q2 each year – you do not have to file in other quarters. (We cover PCORI in detail below.)

Extensions: There is no specific extension form for Form 720. The quarterly due dates are firm. If you cannot file on time, the IRS may assess a failure-to-file penalty unless you show reasonable cause. It’s best to file timely even if you can’t pay in full (to avoid the larger late-filing penalty). There’s also no separate extension to pay excise taxes – they’re due by the due date as well.

Penalties for late filing/payment: Missing a Form 720 deadline can be expensive. The failure-to-file penalty is typically 5% of the tax due per month (or part of month) up to 25%. There’s also a failure-to-pay penalty of 0.5% per month up to 25%, and interest on any unpaid tax. The IRS will send penalty notices if a required Form 720 is late or not filed. Always file on time, even if you’re unsure of exact figures (you can amend later), to minimize penalties.

Tip: Mark your calendar for the four due dates above. Many businesses set reminders for April 30, July 31, Oct 31, Jan 31 every year for excise filings. If you e-file, you can file early in the month – you don’t have to wait until the last day.

What Are the Federal Excise Tax Payment Requirements?

Filing Form 720 is only part of excise tax compliance – paying the taxes is the other part. Here’s what you need to know about depositing and paying excise taxes:

1. Quarterly payment vs. semi-monthly deposits: Some excise taxes must be deposited throughout the quarter, while others can be paid with the quarterly return. The IRS divides the Form 720 taxes into two groups:

Part I taxes: These are excise taxes that generally require semi-monthly deposits (twice a month) because they tend to be larger, ongoing liabilities (e.g. fuel taxes, air travel taxes, etc.). If you owe these, you usually deposit the tax as you go, then report it on Form 720. However, if your total Part I tax for the quarter does not exceed $2,500, you’re allowed to just pay it with the Form 720 instead of making early deposits. In short, Part I taxes > $2,500/quarter → deposit required; ≤ $2,500 → pay at filing.
Part II taxes: These are typically smaller or one-off excise taxes (or annual taxes like PCORI). They do not require semi-monthly deposits; you simply pay them when you file the quarterly return. Examples include indoor tanning tax, PCORI fee, sport fishing equipment tax, etc.

2. Deposit schedule (for large Part I liabilities): If you do have >$2,500 in Part I taxes, the IRS requires semi-monthly deposits via the Electronic Federal Tax Payment System (EFTPS) or similar electronic transfer. Each month is split into two deposit periods: 1st–15th and 16th–end of month. Deposits for each period are due by the 14th day following that period (generally, 29th of the month for the first period, and 14th of the next month for the second period). For most excise taxes, this means you’re paying the tax roughly in real-time as the transactions occur. Important: Even with deposits, you still file Form 720 quarterly to reconcile what you owe versus what you deposited.

Safe Harbor Rule: The IRS allows a “look-back” safe harbor for deposits. If you had a liability in the same quarter of the prior year, you can deposit based on that (as a minimum) to avoid penalties, even if the current quarter’s actual liability is higher. This is a bit advanced; see IRS Publication 510 or Form 720 instructions if this applies. But always deposit at least 95% of your actual liability by each deposit date to be safe.

3. Payment methods: For any amount due with Form 720 (e.g. if you have Part II taxes or Part I taxes under $2,500, or you under-deposited), you can pay by check or electronically:

If mailing a paper return with a check, include the Form 720-V payment voucher from the form instructions. Make checks payable to “United States Treasury.”
The IRS prefers electronic payments. You can use EFTPS to pay the balance (EFTPS can handle one-time payments as well as deposits). In fact, if you owe any excise tax at filing, the IRS mandates electronic payment in many cases. Using EFTPS or Direct Pay ensures the payment is logged immediately. If you do use EFTPS for a quarterly payment, there’s a special option for “Form 720 balance due” for the quarter.
Note: If you are paying with the return (no prior deposits), the payment is due by the return due date as well. Initiate EFTPS payments at least a day before the deadline (by 8 PM EST the day prior) to ensure timely receipt.

4. Overpayments and credits: If you overpaid (your deposits exceeded actual liability), Form 720 Part III has lines to either claim a credit forward or request a refund. You can check a box to have an overpayment applied to the next quarter or refunded. The IRS will refund overpayments unless instructed to apply to next return. In many cases, businesses just apply small overpayments to next quarter to simplify.

5. Special cases (refunds via Form 8849): Certain excise tax credits or refunds are not claimed on Form 720 itself but on Form 8849 (Claim for Refund of Excise Taxes). For example, if you sold gasoline to a state government (tax-free) but had paid excise, or you used an alternative fuel mixture qualifying for a credit, you might file Form 8849 to get money back. Schedule C of Form 720 also allows some credits against tax liability during the quarter (like credit for certain nontaxable uses of fuels). This is a complex area – the key point is to pay the correct tax on time, then later sort out credits/refunds via the proper form if needed.

Bottom line: Pay attention to the $2,500 rule. If your excise taxes are modest, you likely can pay when filing. If they’re larger, make sure you’re enrolled in EFTPS and deposit on schedule to avoid a 10% failure-to-deposit penalty. When in doubt, err on the side of depositing or paying early – the IRS will never penalize you for paying excise tax too soon, but they will if you pay late.

How to Fill Out Form 720 (Step-by-Step Guide)

Now, let’s get into the line-by-line process of filling out Form 720. The form itself is structured into three main parts (I, II, III) and three schedules (A, C, T). It may look daunting at first, but if you break it down section by section, it’s manageable. You can follow these steps:

1. Obtain the Latest Form 720 and Instructions

First, ensure you have the current version of Form 720 (as of 2025, the form is revised June 2025). You can download it from the IRS website. It’s wise to also have the Instructions for Form 720 on hand – they contain tax rates, IRS numbers, and detailed guidance.

Form 720 is typically a 7-page PDF (including schedules and payment voucher). If you prefer to fill it out by hand, print it. Otherwise, you can fill it digitally (the PDF is fillable) or use tax software/authorized e-file (covered later).

Have your records for the quarter ready: invoices or logs of taxable sales, gallons sold, tickets sold, etc., depending on the taxes you owe. You’ll need quantities (gallons, number of items) or dollar amounts of sales, and any tax rates from the Instructions.

2. Header Information (Top of Form 720)

At the very top of Form 720, fill in the basic information:

Name (and business name) – If you’re a business entity, use the name exactly as it appears on your EIN letter or IRS records. Include any “DBA” if applicable.
Address – Your mailing address (street, city, state, ZIP). This is where the IRS will mail any correspondence.
Employer Identification Number (EIN) – This is crucial. Form 720 is filed under your EIN (not SSN, even for sole proprietors). Make sure it’s correct.
Quarter Ending – Check the appropriate box for the quarter of the calendar year you are filing for (1st, 2nd, 3rd, or 4th quarter). The form has checkboxes for these.
Final Return, Amended Return, etc.: On the right side of the header, you’ll see checkboxes. Check “Final Return” if this is your last Form 720 (e.g. you ceased the excise activity or closed the business). Check “Amended Return” only if you are correcting a previously filed 720 for the same quarter (though typically you’d use Form 720-X to amend; more on that later).

Make sure to only check one quarter and only one of the special boxes if applicable. Many errors occur here (e.g. checking “Amended” by mistake or wrong quarter).

3. Part I – Federal Excise Taxes Requiring Deposit (Quarterly Excise Tax Liability)

Part I is the first section of the form where you list excise taxes that generally require semi-monthly deposits (Group I excise taxes). This includes most of the big excise categories: fuels, communications, air transportation, ozone-depleting chemicals, foreign insurance, manufacturers taxes on coal/trucks/vaccines, etc.

How Part I is structured: There will be several columns:

IRS No. – a code for each tax. (For example, 22 for local telephone service, 62 for gasoline, 97 for vaccines, etc. The form lists many of these in order.)
Tax – description of the tax (e.g. “Gasoline (rate: $0.184/gal)” might be abbreviated).
Rate – the tax rate per unit (if applicable; some have a percentage or flat rate).
Taxable Quantity – where you enter how many units or what amount was taxed.
Tax Liability – the actual tax amount you owe for that line (rate × quantity, or percentage of sales, etc.).

Go down the list of taxes in Part I and fill in each line that applies to you in the quarter:

For example, if you sold 10,000 gallons of gasoline, find the line for gasoline (IRS No. 62) with rate $0.184/gal, enter “10,000” in quantity, and compute tax = 10,000 × $0.184 = $1,840. Enter $1,840 in the tax column.
If you had no activity for a listed tax, leave that line blank (don’t write zero, just blank).
Use the exact units the form expects. Fuel is gallons; coal might be tons or dollars depending on line; vaccines would be doses sold, etc. The Form 720 instructions detail each IRS No. and how to compute it.
Multiple rates: Some items have multiple lines for different rates. For example, diesel fuel has separate lines for diesel removed at terminal rack vs. other taxable events (IRS No. 60(a) vs 60(b)). Make sure to use the correct one.

As you fill Part I, sum up all the tax liabilities you entered. There will be a line at the end of Part I, line 1, to total them up.

Tip: Double-check calculations. Many Part I excise taxes are straightforward multiplication, but ensure you’re using the correct rate (rates can change if laws change, so use the current form’s rate). If the tax is a percentage of sales (like 12% for heavy trucks), multiply your sales amount by that percentage.

Also, note that if you have any Part I tax liability at all, you’ll need to complete Schedule A (we’ll get to Schedule A, which tracks your deposits and liability by period). Schedule A is required if you report any amount in Part I.

4. Part II – Other Excise Taxes (No Deposit Required)

Part II lists the excise taxes that are generally paid with the return (quarterly) rather than via semimonthly deposits. These are often more niche or less frequent taxes. Examples in Part II:

Taxes on certain sporting goods (fishing equipment, bows, arrow shafts).
Inland waterways fuel use tax.
The PCORI fee (IRS No. 133, for applicable health plans).
Section 40 fuels, floor stocks taxes, and (newly added) the stock repurchase tax (IRS No. 150).
Other items not in Part I.

Fill out Part II similar to Part I: for any applicable tax, enter the taxable quantity or amount and compute the tax. Many Part II taxes are percentage-of-price (e.g. fishing equipment 10% of sales, bows 11% of sales) or flat dollar per unit (arrow shafts $0.55 each, etc.).

If you’re filing an annual PCORI fee in the second quarter, this is where you report it:

Find IRS No. 133 “Patient-Centered Outcomes Research Fee”. There are typically two lines (a) and (b) for different plan types. Enter the number of covered lives your plan had, multiply by the applicable fee (e.g. $3.00, $3.22, or $3.47 per life depending on plan year end – check the IRS notice for the exact rate for your year), and compute the total fee. This is usually done only on the Q2 return due July 31. Remember: If you only file for PCORI once a year, you’ll mark other quarters as not filed at all (which is fine).
If you have no other excise taxes, Part II might only have that one line filled.

Once you’ve entered any relevant Part II taxes, total them on the Part II total line (line 2).

If you had absolutely no Part II taxes, you can leave Part II blank or write 0 on the total line. (Many filers will have entries in either Part I or Part II or both, depending on their activities.)

5. Part III – Total Tax, Credits, and Balance Due

Part III is where it all comes together and you calculate what you owe or any overpayment. Here’s the breakdown of Part III lines:

Line 3: Total Tax. This is simply Part I total (line 1) plus Part II total (line 2). Add them up to get your total excise tax liability for the quarter.
Line 4: Claims. This is where you enter any approved refunds or credits you are claiming on this return via Schedule C. Schedule C (attached separately) is used if you have certain allowable credits against your excise taxes – for example, if you sold taxed fuel to an exempt party and can claim a credit, or alternative fuel credits. If you filled out Schedule C for such claims, total the claim amounts and enter on line 4. (If you have no Schedule C credits, enter 0 on line 4.)
Line 5: Deposits made for the quarter. Here you enter the sum of all deposits you paid to the IRS for this quarter’s excise taxes. This includes any EFTPS deposits you made semi-monthly for Part I taxes. It also includes any overpayment you elected to apply from the previous quarter (which is effectively a credit carried in). Basically, it’s money you’ve already paid toward the tax.
Safe Harbor checkbox: There’s a small box on line 5 to check if you used the “safe harbor” deposit rule (meaning you deposited based on last year’s liability). Check it if applicable (most small filers won’t use this).
Line 6: Overpayment from previous quarters. If you had an overpayment on the prior Form 720 and chose to apply it forward, enter that amount on line 6.
Line 7: Amount from Form 720-X on line 6. This only applies if you amended a prior quarter using Form 720-X and that adjustment is part of the overpayment on line 6. Enter the portion from 720-X on line 7 (most filers will leave this blank unless they did an amendment that affected a carryforward).
Line 8: Add lines 5 and 6. This is the total of your deposits and prior credits.
Line 9: Add lines 4 (claims) and 8. This represents total credits/payments available.
Line 10: Balance Due. If line 3 (total tax) is greater than line 9 (credits+payments), the difference is your Balance Due. This is the amount you need to pay with the return. The form instructs: pay the full amount with the return. You’ll typically round to the nearest cent. If you have a balance due, you can pay by EFT or check (with Form 720-V voucher). Be sure to pay by the due date to avoid interest.
Line 11: Overpayment. If line 9 is greater than line 3, you have an Overpayment (you paid more in deposits/credits than the tax due). Enter the difference here. Then check one of the boxes to indicate whether you want the overpayment applied to your next return or refunded. If you expect ongoing excise tax, it’s often easier to apply it forward. If you’re ending your excise activity or just prefer the cash, ask for a refund. (The IRS will send a refund check or direct deposit if you choose refund.)

Double-check your arithmetic in Part III carefully. It’s easy to transpose a number or carry a wrong sum. The IRS does cross-verify your deposits (they have records from EFTPS) and will correct math errors, but mistakes can delay processing or trigger notices.

6. Schedule A – Excise Tax Liability (by Period)

If you had any Part I taxes, you must complete Schedule A (it’s on page 2 of Form 720). Schedule A is essentially a breakdown of your tax liability by semi-monthly period.

How to fill Schedule A:

It’s a table with rows for each semi-monthly period in the quarter (e.g. Jan 1–15, Jan 16–31, Feb 1–15, etc.).
You will enter the net tax liability incurred during each period for Part I taxes only. Net liability means the excise tax amount for that period minus any Schedule C credits claimed for that period.
For example, if in the period Jan 1–15 you sold fuel incurring $5,000 of excise tax, you’d put $5,000 in that row. Do this for each period. Periods with no activity can be 0 or blank.
At the bottom, total the liability for the quarter – that total should match the Part I total tax on line 1 of Form 720.
Schedule A helps IRS ensure you deposited on time. They compare each period’s liability to your deposit history (remember, deposits are due 14 days after each period). If you didn’t deposit at least 95% of a period’s liability by the due date, you might get a failure-to-deposit penalty. So, accuracy here matters.

If you qualify to pay quarterly (Part I under $2,500), you still fill out Schedule A but you would simply show the liability in the period it was incurred and the rest zeros. The deposits might be none until the quarterly payment (which is okay if under threshold).

If you had only Part II taxes and no Part I taxes, you do not need Schedule A. (For example, a tanning salon with only indoor tanning tax would skip Schedule A.)

7. Schedule C – Claims (Credits and Refunds)

Schedule C (also on page 2) is where you detail any credit or refund claims you’re taking on this return. This can get complex – it’s optional and only used if you have specific situations like:

Nontaxable uses of fuel (e.g. you used diesel for home heating which is exempt, after having paid excise on it).
Tax-paid sales that later qualify for exemption (e.g. sales to state government, export, etc.).
Alternative fuel or biodiesel mixture credits.
The Section 4051(d) tire credit (credit for certain tires sold on new heavy trucks).

If you have such a claim, you’d fill out the applicable credit reference number on Schedule C and the amount. The instructions for Schedule C in Form 720 tell you which credits you can claim here. Often, businesses file Form 8849 instead to get refunds for certain items if they don’t have current tax to offset. But Schedule C is useful if you want to net the credits against your tax due in the same quarter.

For a first-timer, you might not use Schedule C at all. If you do, ensure you meet all conditions (some require supporting documents or certification).

Any total from Schedule C you carry to Part III, line 4 (as discussed earlier).

8. Schedule T – Two-Party Exchange Information (Fuels)

Schedule T (page 3 of the form) is a specialized schedule for reporting two-party exchanges of taxable fuel. This only applies to certain fuel transactions between registered terminals where no tax is imposed at the time of transfer. If you don’t know what this is, you likely don’t need to fill it. It’s used by fuel industry players to report volumes of fuel exchanged.

Unless you’re in the petroleum business dealing with terminals, you can skip Schedule T. If you are, you’ll list the volume of fuel exchanged, the terminal, etc., as required by the schedule.

9. Signature and Paid Preparer

Finally, once all parts and any needed schedules are filled, sign and date the form. The signature block is at the bottom of page 1:

Signature – If you’re filing as an individual (sole prop), you sign. If on behalf of a corporation/LLC, an authorized officer (e.g. president, tax officer) signs. Include your title (e.g. “Owner”, “CFO”, “Treasurer”) and the date of signing.
Print name below signature (legibly).
Telephone number – provide a contact number in case the IRS has questions.
If you have a third-party designee (like if you want your CPA to be able to discuss the return with the IRS), you can check “Yes” and enter their name and phone and a 5-digit PIN for verification. Otherwise, check “No” for third-party designee.
Paid Preparer Use Only – If a tax preparer filled out the form for you, they must fill this section with their name, PTIN, firm, etc. If you did it yourself, leave the preparer section blank.

Double-check that you signed – an unsigned Form 720 is considered not filed in the eyes of the IRS (which can lead to penalties). One of the most common mistakes is forgetting to sign and date the return, so don’t overlook this simple step.

10. Attachments

Ensure any required attachments are included:

If you filled out Schedule C for claims, attach it.
If you needed Form 6627 (Environmental Taxes) for certain Part I items like ODCs or chemical taxes, attach Form 6627 (the form instructions will tell you if it’s required for your situation).
Any supporting statements (rarely needed unless the form couldn’t fit something).
If you owe tax and are sending a check, include the payment voucher (Form 720-V) with your check. The voucher is typically part of the form pages or instructions.

11. Review and Mail/E-File

Take a moment to review everything. Compare this quarter’s figures with last quarter (if similar business activity) to see if any numbers look way off, which could catch a data entry mistake. Ensure totals in Part I and Part II equal what’s on Schedule A etc.

If all looks good, it’s time to file:

Electronic Filing: The IRS strongly encourages e-filing Form 720 whenever possible. If you go this route, you’ll use an IRS-approved e-file provider (see section on e-filing vs paper below). You’ll get an acknowledgment that your return was received.
Paper Filing: If mailing, send the return to the correct IRS address. As of current instructions, if you’re not including a payment, Form 720 is mailed to:
Department of the Treasury
Internal Revenue Service
Ogden, UT 84201-0009.
If you are including a payment (check), mail it to:
Internal Revenue Service
P.O. Box 409101
Ogden, UT 84409 (this is a designated lockbox for payments – always verify from the latest instructions, as addresses can change).
Consider using a trackable mailing method (certified mail or a private delivery service approved by the IRS) to have proof of timely filing.

That’s it – you’ve completed Form 720! Retain a copy of the filled form and any deposit records in your files. The IRS may take several weeks to process a paper return. If e-filed, processing is quicker and you’ll know it was received right away.

Summary of Steps (for quick reference):

Fill top section – Business name, EIN, quarter, etc.
Part I – Enter excise taxes for all applicable Part I items; total them.
Part II – Enter excise taxes for Part II items; total them.
Part III – Calculate total tax, subtract credits (Schedule C) and deposits, figure balance due or overpayment.
Schedule A – If any Part I tax, break down by period (or if ≤$2,500, still show liability in the correct period).
Schedule C – If claiming credits/refunds this quarter, detail them.
Sign and date the return (and get preparer signature if applicable).
Include payment (via EFTPS or check with voucher) for any balance due.
File (e-file or mail by the due date).

Next, we’ll look at some real-life examples to solidify these steps, then cover common mistakes and special situations like amendments.

Examples: Filling Out Form 720 in Real Scenarios

To illustrate how Form 720 works, let’s walk through a few hypothetical scenarios for different businesses. These examples will show which parts of the form are relevant and how to calculate the taxes:

Business Scenario	Excise Tax Obligation (Form 720 Reporting)
Indoor Tanning Salon – $50,000 of tanning service revenue in Q1.	10% Indoor Tanning Services Tax = $5,000. (Part II, IRS No. 140). No Part I taxes. Salon will file Form 720 for Q1, enter $5,000 on the indoor tanning line in Part II, and pay $5,000 by April 30. (No deposits required; tax is paid with return.)
Fuel Distributor – Sold 100,000 gallons of gasoline in Q2.	Gasoline Excise Tax = 100,000 × $0.184 = $18,400. (Part I, IRS No. 62). Because $18,400 > $2,500, this company must have made semi-monthly deposits via EFTPS during Q2. On Form 720, they’ll report the $18,400 on the gasoline line in Part I, fill Schedule A with liability per period, and subtract deposits on Part III line 5. Any small difference is paid/refunded. Due by July 31.
Charter Airline – Flew 500 domestic passenger segments with $100,000 in fares in Q3.	Air Transportation Taxes: 7.5% ticket tax on $100,000 = $7,500, plus domestic segment fee (let’s say $4.50 per segment × 500 = $2,250). Total = $9,750. (Part I, IRS Nos. 26 for persons, 27 for segment fees). These require deposits if >$2,500. The charter operator would report $7,500 on line 26 and $2,250 on line 27 in Part I. They likely deposited throughout Q3 and will true-up on Form 720 due Oct 31.
Heavy Truck Dealer – Sold a new tractor-trailer for $200,000 in Q4.	Retail Excise Tax on Heavy Trucks: 12% of $200,000 = $24,000. (Part I, IRS No. 33). Since $24,000 > $2,500, the dealer should have deposited excise tax (or can deposit immediately upon sale). On Form 720 for Q4, they report $24,000 on the truck sales line. If it’s a one-time sale, they might file that quarter’s return and mark it final (if exiting the excise business).
Self-Insured Health Plan – 100 covered lives, plan year ended Dec 31, 2024.	PCORI Fee (for 2024 plan year) = 100 × $3.47 = $347. (Part II, IRS No. 133, filed on 2025 Q2 return). The plan sponsor will file Form 720 for 2nd quarter 2025 (due July 31, 2025), reporting $347 on the PCORI line. No other quarters need filing. No deposits needed (PCORI is annual).

These examples show the diversity of excise taxes. In practice, you would only fill the lines that apply to your situation. It’s normal for most lines on Form 720 to be blank – just be sure the ones you do fill are correct.

Common Mistakes to Avoid When Filing Form 720

Filing Form 720 involves many details, and mistakes can lead to IRS notices or penalties. Here are some common errors and how to avoid them:

❌ Forgetting to sign or date the return: An unsigned Form 720 is invalid. Always double-check that you (and your tax preparer, if any) have signed and dated the form before sending it. This is one of the top mistakes the IRS sees.
❌ Using the wrong quarter or form revision: Make sure you check the correct quarterly box and use the latest form. Filing for the wrong period (e.g. mixing up calendar quarters) can cause confusion. And don’t use an outdated version of Form 720 if rates have changed – download a fresh form each time to be safe.
❌ Misreporting excise tax categories: Ensure you’re reporting your activity on the correct IRS No. line. For example, don’t accidentally put a diesel sale under gasoline, or report something in Part II that belongs in Part I. Read the line descriptions and the Form 720 instructions if unsure. Misclassification can result in the IRS thinking you missed a tax or filed incorrectly.
❌ Mathematical errors: Because Form 720 involves multiple calculations (rates × quantities, summing totals), simple math errors are common. Use a calculator and re-check your multiplication and addition. The IRS will correct arithmetic mistakes, but that might delay processing or generate correspondence.
❌ Not filing because no tax due: If you had an excise liability in a prior quarter and haven’t filed a final return, you are expected to file even a $0 return for subsequent quarters. Skipping a required filing (even if you owe nothing) can trigger a failure-to-file penalty. If you truly have ceased the taxable activity, file one last return and mark it Final to close it out.
❌ Missing the $2,500 deposit rule: Some filers mistakenly pay the tax with the return despite owing well over $2,500, or vice versa. Remember: if Part I taxes > $2,500, you should have deposited (if you didn’t, you may get a penalty of 10% for late deposits). Conversely, if under $2,500, you can simply pay at filing – no need to deposit. Plan accordingly and don’t miss deposit deadlines.
❌ Late filing or payment: Filing even a few days late without reasonable cause means a penalty. If you’re running close to the deadline, send by certified mail or e-file to get timely acceptance. If you can’t pay in full, file the return on time anyway and pay what you can – this avoids the harsher late-filing penalty (5% a month), and you’ll only incur the smaller late-payment penalty on the unpaid amount.
❌ Ignoring the need for Form 720-X to amend: If you find an error after filing (e.g. you underreported excise tax), do not file a second Form 720 for that quarter. The IRS expects amendments via Form 720-X (discussed below) to correct a filed return. Filing a “duplicate” 720 can be seen as a frivolous or erroneous filing, possibly leading to confusion or penalties.
❌ Not including required attachments: For example, failing to include Form 6627 for certain environmental taxes, or forgetting Schedule C when you claimed a credit on line 4. Always attach all schedules you used. If you’re claiming a credit, ensure you’re entitled to it and keep documentation (the IRS may ask for proof).
❌ Payment mistakes: If mailing a check, make sure it’s addressed properly (to “U.S. Treasury”), write your EIN, “Form 720”, and quarter/year on the memo. And mail it to the correct payment address. A common issue is mailing the return and check to the wrong IRS office, which can delay processing. Using the payment voucher (720-V) will help route it correctly. Also, bouncing a check or a rejected EFT will not only trigger penalties but also a bad-check penalty.
❌ Duplicate filings: Don’t file multiple 720s for the same quarter. Sometimes businesses panic and resend a return – this can trigger duplicate filing notices or penalties. If you e-file, do not also mail a paper copy. One return per quarter is all that’s required (unless the IRS specifically asks for something).

Pro Tip: After filing, keep an eye out for any IRS notices. If something was amiss (say you mis-typed a figure), the IRS might send a notice adjusting the return or assessing a penalty. Respond promptly – often, if it’s a first-time issue or a small mistake, penalties can be abated for reasonable cause or first-time abatement.

The best defense against errors is careful review and understanding the form. The fact that you’re reading this in-depth guide means you’re on the right track to avoiding these pitfalls!

How to Correct or Amend Form 720 (Using Form 720-X)

Mistakes happen. If after filing Form 720 you realize something was wrong – maybe you underreported a tax (owed more than you thought) or overreported (paid too much) – the IRS has a specific procedure to correct it. You do not submit another Form 720 for that quarter. Instead, you use Form 720-X (Amended Quarterly Federal Excise Tax Return).

When to use Form 720-X:
Use Form 720-X to make adjustments to any liability reported on a previously filed Form 720. For example:

You discover that you sold additional taxable gallons last quarter that you forgot to include.
You claimed a credit on Schedule C that you weren’t actually entitled to, or vice versa.
You mistakenly reported an activity under the wrong tax category.

Key points about Form 720-X:

It’s filed separately from Form 720 (not attached to a current 720). It acts like an amended return for a specific quarter in the past.
You’ll need to file a 720-X for each quarter you are correcting.
On Form 720-X, you’ll indicate the quarter/year, the IRS Nos. being corrected, and the amount of adjustment (increase or decrease in tax). You also provide an explanation of the reason for the change.
If you owe additional tax as a result of the amendment, pay it with the Form 720-X (and expect the IRS to bill you interest on the late-paid amount). If you are due a refund, the IRS will process that, or you can choose to apply it as an overpayment to next quarter (if you still file 720 regularly).
You generally have a statute of limitations (typically 3 years from the original filing date) to amend and claim any refunds. For underpaid tax, there’s also a period the IRS can assess it if you don’t amend, so it’s better to voluntarily correct it via 720-X.
Do not use Form 720-X to adjust any Schedule C claims that were on the original 720, except for certain fuel credits and tire credit as noted in its instructions. Other claim adjustments might require Form 8849.

Example: You filed your Q1 Form 720 reporting $10,000 in tax, but later realize it should have been $12,000 (say you missed some sales). You should file a Form 720-X for 1st Quarter of that year, showing +$2,000 adjustment for the relevant IRS No. Pay the $2,000 (plus any interest the IRS calculates). This amends the record. The IRS will send a confirmation or bill for interest. By doing this, you avoid heavier penalties since you came forward to fix it.

Similarly, if you overpaid, Form 720-X can claim a refund or credit. For instance, you paid for 1,000 vaccine doses but actually sold only 800. 720-X would show the reduction, and you’d get a refund of the overpaid amount (or you could apply it).

Filing Form 720-X: It’s a simple 2-page form. Fill out the taxpayer info and quarter, then complete Part I for adjustments (Part II is explanation). Mail it to the address specified (often the Cincinnati IRS center for amended excise forms, check instructions).

One thing to note: If the only error was a small overpayment, you could alternatively just claim it on the next Form 720 as a credit (through Schedule C or as an overpayment carry) without filing 720-X. But the proper formal way is 720-X, especially for underpayments or significant errors.

Bottom line: Yes, you can amend Form 720 – but do it the right way. Form 720-X exists for this purpose. Promptly correcting mistakes shows good faith and can help get penalties forgiven. Always attach a clear explanation on 720-X; the IRS needs to understand what happened. After you file a 720-X, you can track the status of an amended return via the IRS “Where’s My Amended Return” tool or by contacting the IRS if a refund is due.

Filing Form 720: Electronic vs. Paper (Manual vs. E-Filing)

The IRS allows Form 720 to be filed electronically, and in fact they encourage it for faster processing. Let’s compare manual (paper) filing with electronic filing:

Manual (Paper) Filing	Electronic Filing (E-file)
Pros: No special software needed; you can fill and mail the form yourself. You avoid any third-party provider fees. You have a physical paper trail.	Pros: Instant submission and acknowledgment from the IRS. Much faster processing and typically fewer errors (software does calculations and validation). No risk of mail delays or lost paperwork. Easier to pay electronically at the same time.
Cons: Slower delivery and IRS processing – could take weeks for the IRS to process your return. You won’t know if it’s received unless you send by certified mail. Manual math mistakes are more likely. Mail could be lost or delayed.	Cons: Requires using an IRS-approved e-file transmitter/software (can’t just email the form). These providers charge a fee (often around $50-70 for a Form 720 filing). You need internet access and to set up an account with a provider. If you’re not tech-savvy, there’s a slight learning curve.

In summary, e-filing is usually the better option for most businesses: it’s quicker and provides peace of mind with a confirmation. According to the IRS, e-filing Form 720 results in fewer errors and you get a proof of receipt. The trade-off is the cost of using an approved e-file service (the IRS does not have a free direct e-file portal for Form 720; you must go through a third-party transmitter). Some known providers for Form 720 e-filing include excise tax specialists like ExpressTax or efile720, etc.

If you have a very simple return or don’t want to pay a fee, paper filing is perfectly acceptable (the IRS still processes paper Form 720s). Just factor in mailing time and keep proof of timely mailing. During peak times or if there are mailing backlogs, paper forms could see delays (as happened in recent years with IRS processing delays).

Choosing your method: If you’re cutting it close to the deadline, e-file is safer (since mailing on the due date might risk being late if not postmarked in time). If you have reliable mail tracking and send early, paper is fine.

One strategy some businesses use is to e-file if there’s a payment due (to ensure prompt posting of payment and avoid any misapplied checks), and maybe paper-file if no tax due. But with e-filing being so convenient, more are shifting to full e-file.

Note: The IRS maintains a list of approved Form 720 e-file transmitters on their website. You can choose one, create an account, and input your Form 720 information. The software usually mirrors the form layout and then transmits the data to the IRS. You can pay via ACH through the software or separately through EFTPS.

Pros and Cons Quick Reference:

E-Filing Pros: Speed, confirmation, reduced errors, faster refunds if any, no mail issues.
E-Filing Cons: Provider fees, need to use software.
Paper Filing Pros: No fee, can be done by hand, tangible copy.
Paper Filing Cons: Slower, risk of mailing problems, no immediate confirmation.

Most mid-to-large businesses with excise taxes opt to e-file because timeliness and accuracy are crucial (especially those needing to make deposits – they often integrate e-filing as part of their compliance process). Small businesses with an occasional Form 720 (like the once-a-year PCORI fee filers) might go either way; many do paper for an annual filing since it’s just one form, but others e-file to ensure it’s done right.

In the end, choose the method that ensures you file on time and accurately. The IRS is receiving Form 720 either way. Just remember: if you paper file, mail to the correct address and consider using an approved carrier if last-minute (the IRS accepts certain express services and treats the ship date as the filing date, similar to postmark rules).

FAQ – Frequently Asked Questions about Form 720

Let’s address some common questions that taxpayers have about Form 720, based on real queries (yes – people often ask these!).

Q1: Do all businesses need to file Form 720?
A1: No. Only businesses that deal in specific goods or services subject to federal excise taxes must file Form 720. If your business has no excise tax liability, you don’t file this form.

Q2: My business had no excise sales this quarter – do I still file a Form 720?
A2: No. Generally, if you had no excise tax liability for the quarter, you are not required to file Form 720 for that quarter (unless the IRS instructed you to, or you filed earlier quarters without marking final).

Q3: Is Form 720 filed quarterly?
A3: Yes. In most cases, Form 720 is a quarterly filing (due April 30, July 31, Oct 31, Jan 31). An exception is the PCORI fee, which is reported annually on the Q2 return (due July 31 each year).

Q4: Can I file Form 720 electronically?
A4: Yes. The IRS accepts Form 720 via e-file through approved providers. E-filing is encouraged and provides immediate confirmation of receipt.

Q5: Where do I mail Form 720 if filing by paper?
A5: Ogden, Utah. The mailing address is the IRS in Ogden, UT (separate PO boxes for with-payment vs. without-payment). Check the latest instructions for the exact address to use.

Q6: Are there penalties for filing Form 720 late?
A6: Yes. The IRS can impose a late-filing penalty of 5% of the tax per month (up to 25%) for a late Form 720, plus interest and possibly a late-payment penalty if tax isn’t paid on time.

Q7: Do I need to pay excise tax deposits during the quarter?
A7: Yes, if your Part I excise taxes exceed $2,500 for the quarter. In that case, you must make semi-monthly deposits via EFTPS. If your Part I taxes are ≤ $2,500, you can pay with the quarterly return.

Q8: I only file Form 720 for the annual PCORI fee – do I file every quarter?
A8: No. If PCORI is your only excise liability, you file Form 720 only once a year (the second quarter, due July 31). You do not need to file in other quarters.

Q9: My company sells alcohol/tobacco. Do we report those excise taxes on Form 720?
A9: No. Federal excise taxes on alcohol and tobacco are filed with the TTB (Alcohol & Tobacco Tax and Trade Bureau) on separate forms, not on IRS Form 720.

Q10: How do I correct a mistake on Form 720 after it’s filed?
A10: File Form 720-X. To amend a previously filed Form 720, use Form 720-X for that quarter. It lets you report any increase or decrease in tax and explain the change.

Q11: Can I include Form 720 with my income tax return or other filings?
A11: No. Form 720 is filed separately (different address/efile) from income tax returns. It’s a standalone excise tax return and not attached to Form 1120 or 1040, etc.

Q12: If I overpaid excise tax, can I get a refund?
A12: Yes. You can either claim a credit on the next Form 720 or file Form 720-X/8849 for a refund. On the return, report overpayments on line 11 and choose refund or credit forward.

Q13: Is excise tax the same as sales tax?
A13: No. Excise taxes are specific federal taxes on certain goods/services (reported on Form 720) and are separate from sales tax, which is a state/local tax on general sales.

Q14: Does Form 720 apply to state excise taxes too?
A14: No. Form 720 is only for federal excise taxes. State excise or specialty taxes (like state fuel tax, cannabis tax, etc.) are reported to state agencies, not the IRS.

Q15: Will the IRS notify me if I’m supposed to file Form 720?
A15: No. It’s your responsibility to know if your activities trigger excise taxes. The IRS might mention potential forms when issuing an EIN, but it’s up to you to file if liable.