Instructions For Form 720 - Quarterly Federal Excise Tax Return

Schedule C to reduce your taxable fuel liability reported on

registration number on line 15d and enter the applicable

Form 720.

CRN.

•

The total amount of the alternative fuel credit for the

Claim requirements. See Claim requirements for lines 1

period is limited to the claimant’s section 4041 liability

through 6 and lines 15b – 15d on page 10.

reported on Form 720. Any excess of the section 4041

Line 15e. Registered Credit Card Issuers

liability must be claimed as a credit on Form 4136.

•

The total amount of the alternative fuel mixture credit for

Allowable sales. The gasoline (CRN 362), aviation

the period can be claimed on Schedule C (Form 720),

gasoline (CRN 324), diesel fuel (CRN 360), kerosene (CRN

Schedule 3 (Form 8849), or Form 4136.

346), or kerosene for use in aviation (CRN 369) must have

Claim requirements. To claim either credit, you must be

been purchased with a credit card issued to the ultimate

registered by the IRS. To claim the alternative fuel mixture

purchaser during the period of claim:

•

credit, the following requirements must be met if the credit

For gasoline or aviation gasoline, for the exclusive use by

exceeds the amount of taxable fuel liability reported.

a state or local government (including essential government

use by an Indian tribal government) or for the exclusive use

1. The claim must be for an alternative fuel mixture sold

of a nonprofit educational organization; or

or used (as described above under Claimant) during a

•

For diesel fuel, kerosene, or kerosene for use in aviation,

period that is at least 1 week.

for the exclusive use by a state or local government

2. The amount of the claim must be at least $200. To

(including essential government use by an Indian tribal

meet the minimum, amounts from lines 12, 13, and 14 may

government).

be combined.

Claimant. The registered credit card issuer is the only

If requirements 1 and 2 above are not met, see Annual

person eligible to make this claim if the credit card issuer:

Claims below.

1. Is registered by the IRS;

Registration number. You must enter your registration

2. Has not collected the amount of tax from the ultimate

number in the space provided.

purchaser or has obtained the written consent of the

ultimate purchaser to make the claim;

Annual Claims

3. Certifies that it has repaid or agreed to repay the

If a claim on lines 1 – 9, 12 – 14, or 15b – 15e was not made

amount of tax to the ultimate vendor, has obtained the

for any gallons, an annual claim may be made. Generally,

written consent of the ultimate vendor to make the claim, or

an annual claim is made on Form 4136 for the income tax

has otherwise made arrangements which directly or

year during which the fuel was used by the ultimate

indirectly provide the ultimate vendor with reimbursement of

purchaser, sold by the registered ultimate vendor, used to

the tax; and

produce an alcohol fuel mixture and biodiesel mixture, or

4. Has in its possession an unexpired certificate from the

used in mobile machinery. See Form 4136 for more

ultimate purchaser and has no reason to believe any of the

information.

information in the certificate is false. See Model Certificate R

in Pub. 510.

Line 15. Other Claims

If any of these conditions is not met, the credit card issuer

For claims under section 6416(b)(2) relating to certain uses

must collect the tax from the ultimate purchaser and only the

and resales of certain articles subject to manufacturers or

ultimate purchaser can make the claim.

retailers excise taxes, claimant certifies that it sold the article

at a tax-excluded price, repaid the amount of tax to the

Claim requirements. The following requirements must be

ultimate vendor, or has obtained the written consent of the

met.

ultimate vendor to make the claim; and has the required

1. The claim must be for gasoline, aviation gasoline,

supporting information.

diesel fuel, kerosene, or kerosene for use in aviation sold

Lines 15b and 15c. Exported Dyed Diesel Fuel

during a period that is at least 1 week.

2. The amount of the claim must be at least $200 ($100

and Exported Dyed Kerosene

for kerosene or kerosene for use in aviation).

For exported dyed diesel fuel and exported dyed kerosene,

3. Claims must be filed by the last day of the first quarter

see Exported taxable fuel on page 10. The claim rate for

following the earliest quarter of the claimant’s income tax

each fuel is $.001.

year included in the claim. For example, a calendar year

income taxpayer’s claim for the first quarter is due June 30 if

Line 15d. Diesel-Water Fuel Emulsion

filed on Form 8849. However, Form 720 must be filed by

The claim rate for the nontaxable use of a diesel-water fuel

April 30.

emulsion taxed at $.198 (CRN 309) is $.197. The fuel must

4. The claimant must enter its registration number on line

have been used during the period of claim for type of use 1,

15e, the amount of the claim, and the applicable CRN (see

2, 3, 5, 6, 7, 8, or 12. For type of use 5, the claim rate is

Allowable sales above). If the claim is for more than one

$.124 (CRN 309). For use in trains, the claim rate in $.174

fuel, use the blank lines 15f through 15i, or attach a

(CRN 309). For type of use 3 (exported), the claim rate is

separate sheet listing the fuels, amount, and CRN.

$.198 (CRN 306) and is reported on line 15d.

The claim rate for undyed diesel fuel taxed at $.244 (CRN

Line 15f. Other Claims

310) and used to produce a diesel-water fuel emulsion is

$.046 per gallon of diesel fuel so used (blender claims). The

Do not use line 15f to make communication tax

claimant must attach a statement certifying that: (a) the

claims for nontaxable service. See Communications

claimant produced a diesel-water fuel emulsion containing at

Taxes on page 3.

CAUTION

least 14% water, (b) the emulsion additive is registered by a

United States manufacturer under section 211 of the Clean

Use line 15f for claims relating to taxes listed in the table

Air Act with the EPA, (c) the claimant used undyed diesel

below. See Pub. 510 for information on allowable claims

fuel taxed at $.244 to produce the diesel-water emulsion,

relating to these taxes. If you need additional space, attach

and (d) the claimant sold or used the diesel-water fuel

other sheet(s). You must include the following information

emulsion in the blender’s trade or business. The blender

for each claim.

•

claimant must be registered by the IRS and must enter their

A detailed description of the claim.

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Instructions For Form 720 - Quarterly Federal Excise Tax Return - 2006 Page 14

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