Instructions For Form 720 - Quarterly Federal Excise Tax Return

You will automatically be enrolled in EFTPS when

Additional deposit of taxes in September 2007

TIP

you apply for an EIN. You will receive a separate

For the Period

mailing containing instructions for activating your

Beginning

Ending

Due Date

EFTPS enrollment after you receive your EIN. You will still

Type of Tax

have the option to use FTD coupons, but see Electronic

deposit requirement on page 7.

Regular method taxes

EFTPS

Sept. 16

Sept. 26

Sept. 28

When To Make Deposits

Non-EFTPS

Sept. 16

Sept. 25

Sept. 28

There are two methods for determining deposits: the regular

Alternative method taxes (IRS

method and the alternative method.

Nos. 22, 26, 27, and 28)

The regular method applies to all taxes in Part I of Form

(based on amounts billed)

720 except for communications and air transportation taxes

EFTPS

Sept. 1

Sept. 11

Sept. 28

if deposits are based on amounts billed or tickets sold,

Non-EFTPS

Sept. 1

Sept. 10

Sept. 28

rather than on amounts actually collected. See Alternative

See Electronic deposit requirement above.

method below.

If you are depositing more than one tax under a method,

For the remaining days in September, be sure to

combine all the taxes under the method and make one

make your deposits by the regular due date.

deposit for the semimonthly period.

CAUTION

Regular method. The deposit of tax for a semimonthly

period is due by the 14th day following that period.

Amount To Deposit

Generally, this is the 29th day of a month for the first

semimonthly period and the 14th day of the following month

Deposits of taxes for a semimonthly period must be at least

for the second semimonthly period. If the 14th or the 29th

95% of the amount of net tax liability for that period, unless

day falls on a Saturday, Sunday, or legal holiday, you must

the safe harbor rule applies. See Safe Harbor Rule below.

make the deposit by the immediately preceding day that is

The net tax liability for a semimonthly period is the total

not a Saturday, Sunday, or legal holiday.

liability for the period minus any claims allowed on Schedule

Alternative method (IRS Nos. 22, 26, 27, and 28).

C for the period. Net tax liability for a semimonthly period

Deposits of communications and air transportation taxes

may be figured by dividing the net tax liability for the month

may be based on taxes included in amounts billed or tickets

by 2, provided this method of computation is used for all

sold during a semimonthly period instead of on taxes

semimonthly periods in the calendar quarter.

actually collected during the period. Under the alternative

method, the tax included in amounts billed or tickets sold

The net tax liability for a semimonthly period is not

during a semimonthly period is considered collected during

reduced by any amounts from Form 720X.

the first 7 days of the second following semimonthly period.

CAUTION

The deposit of tax is due by the 3rd banking day after the

7th day of that period.

Safe Harbor Rule

Example. The tax included in amounts billed or tickets

The safe harbor rule applies separately to deposits under

sold for the period June 16-30, 2007, is considered collected

the regular method and the alternative method. Persons

from July 16-22, 2007, and must be deposited by

who filed Form 720 for the look-back quarter (the 2nd

July 25, 2007.

calendar quarter preceding the current quarter) are

considered to meet the semimonthly deposit requirement if

To use the alternative method, you must keep separate

the deposit for each semimonthly period in the current

accounts of the tax included in amounts billed or tickets sold

quarter is at least

(16.67%) of the net tax liability reported

during the month and report on Form 720 the tax included in

for the look-back quarter.

amounts billed or tickets sold and not the amount of tax that

is actually collected. For example, amounts billed in

For the semimonthly period for which the additional

December, January, and February are considered collected

deposit is required (September 1-11 and 16-26 for EFTPS,

during January, February, and March and are reported on

or September 1-10 and 16-25 for non-EFTPS), the

Form 720 as the tax for the 1st quarter of the calendar year.

additional deposit must be at least

(12.23%),

The separate account for each month must reflect:

(11.12%) for non-EFTPS, of the net tax liability reported for

the look-back quarter. Also, the total deposit for that

1. All items of tax included in amounts billed or tickets

semimonthly period must be at least

(16.67%) of the net

sold during the month, and

tax liability reported for the look-back quarter.

2. Other items of adjustment relating to tax for prior

months (within the statute of limitations on credits or

Exceptions. The safe harbor rule does not apply to:

•

refunds).

The 1st and 2nd quarters beginning on or after the

effective date of an increase in the rate of tax unless the

The separate account for any month cannot include an

deposit of taxes for each semimonthly period in the calendar

adjustment resulting from a refusal to pay or inability to

quarter is at least

(16.67%) of the tax liability you would

collect unless the refusal has been reported to the IRS. See

have had for the look-back quarter if the increased rate of

Communications and Air Transportation Taxes —

tax had been in effect for that look-back quarter;

Uncollected Tax Report on page 4.

•

Any quarter if liability includes any tax not in effect

The net tax liability that is considered collected during

throughout the look-back quarter; or

•

the semimonthly period must be either:

For deposits under the alternative method, any quarter if

•

The net amount of tax reflected in the separate account

liability includes any tax not in effect throughout the

for the corresponding semimonthly period of the preceding

look-back quarter and the month preceding the look-back

month, or

quarter.

•

One-half of the net amount of tax reflected in the separate

Requirements to be met. For the safe harbor rule to

account for the preceding month.

apply, you must:

Special rule for deposits of taxes in September 2007. If

•

Make each deposit timely at an authorized financial

you are required to make deposits, see the chart below. The

institution, and

special rule does not apply to taxes not required to be

•

Pay any underpayment for the current quarter by the due

deposited (see Payment of Taxes on page 7). See

date of the return.

Regulations sections 40.6302(c)-2 and 40.6302(c)-3 for

rules to figure the net tax liability for the deposits due in

If you meet the requirements and use the safe harbor

September.

rule, check the box on line 5 of Form 720.

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Instructions For Form 720 - Quarterly Federal Excise Tax Return - 2007 Page 8

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