Instructions For Form 720 - Quarterly Federal Excise Tax Return

EIN, you may apply for one online. Go to the IRS website at

request a credit or refund as described below and in Notice

and click on the “Employer ID

2006-50.

Numbers” link. You may also apply for an EIN by calling

Collectors. The collector may request a credit or refund

1-800-829-4933 (hours of operation are Monday - Friday,

only if it has repaid the tax to the person from whom the tax

7:00 a.m. to 10:00 p.m. local time), or you can fax or mail

was collected, or obtained the consent of that person to the

Form SS-4, Application for Employer Identification Number,

allowance of the credit or refund. These requirements also

to the IRS.

apply to nontaxable service refunds.

Collectors using the regular method for deposits.

Signature

Collectors using the regular method for deposits must use

Form 720X to request a credit or refund.

Form 720 must be signed by a person authorized by the

entity to sign this return.

Collectors using the alternative method for deposits.

Collectors using the alternative method for deposits must

Third Party Designee

adjust their separate accounts for the credit or refund. For

more information, see Alternative method on page 8.

If you want to allow an employee of your business, a return

Form 720 taxpayers. Credits or refunds for nontaxable

preparer, or other third party to discuss your Form 720 with

service that was billed after February 28, 2003, and before

the IRS, check the “Yes” box in the Third Party Designee

August 1, 2006, can be requested by taxpayers only on their

section of Form 720. Also, enter the designee’s name,

2006 federal income tax returns. Instructions to request the

phone number, and any five digits that person chooses as

credit or refund will be available with the 2006 income tax

his or her personal identification number (PIN).

returns. Do not use Form 8849, Form 720, or Form 843 to

By checking the “Yes” box, you are authorizing the IRS to

make claims for nontaxable service; the IRS will not process

speak with the designee to answer any questions relating to

these claims.

the processing of or the information reported on

Form 720. You are also authorizing the designee to:

Air Transportation Taxes

•

Exchange information concerning Form 720 with the IRS,

and

Who Must File

•

Respond to certain IRS notices that you have shared with

The person receiving the payment for air transportation

your designee relating to Form 720. The IRS will not send

services must collect and pay over the tax and file the

notices to your designee.

return. Enter the amount of tax collected or considered

You are not authorizing the designee to receive any

collected for the quarter.

refund check, bind you to anything (including additional tax

Transportation of Persons by Air (IRS No. 26)

liability), or otherwise represent you before the IRS. If you

The tax on transportation of persons by air is made up of the

want to expand the designee’s authority, see Publication

percentage tax and the domestic segment tax. Add the

947, Practice Before the IRS and Power of Attorney.

percentage tax and the domestic segment tax to get the

The authorization will automatically expire one year from

total tax on transportation of persons by air.

the due date (without regard to extensions) for filing your

Percentage tax. The percentage tax is 7.5% for amounts

Form 720. If you or your designee want to revoke this

paid for taxable transportation of persons by air.

authorization, send a written statement of revocation to the

Domestic segment tax. For amounts paid for each

Internal Revenue Service Center, Cincinnati, OH 45999.

domestic segment of taxable transportation of persons by

See Publication 947 for more information.

air, the domestic segment tax is $3.30 per segment for

transportation that begins in 2006.

Part I

Rural airports. If a segment is to or from a rural airport,

the domestic segment tax does not apply.

Environmental Taxes

Transportation of Property by Air (IRS No. 28)

Use Form 6627, Environmental Taxes, to figure the

environmental taxes on:

The tax is 6.25% of amounts paid for transportation of

•

Oil spill liability, IRS Nos. 18 and 21;

property by air.

•

Ozone-depleting chemicals (ODCs), IRS No. 98;

•

Use of International Air Travel Facilities

Imported products that used ODCs as materials in the

(IRS No. 27)

manufacture or production of the product, IRS No. 19; and

•

The floor stocks tax on ODCs, IRS No. 20.

For amounts paid during 2006, the tax on international

flights is:

Attach Form 6627 to Form 720. The tax rates for these

•

$14.50 per person for flights that begin or end in the

taxes are shown on Form 6627.

United States or

•

Communications Taxes

$7.30 per person for domestic segments that begin or end

in Alaska or Hawaii (applies only to departures).

Who Must File

Communication and Air Transportation

The person receiving the payment for communications

Taxes—Uncollected Tax Report

services must collect and pay over the tax and file the

A separate report is required to be filed by collecting agents

return. Enter the amount of tax collected or considered

of communications services (local and teletypewriter

collected for the quarter.

service) and air transportation taxes if the person from

Communications Services (IRS No. 22)

whom the facilities or services tax (the tax) is required to be

collected (the taxpayer) refuses to pay the tax, or it is

The tax is 3% of amounts paid for local telephone service

impossible for the collecting agent to collect the tax. The

and teletypewriter exchange service.

report must contain the following information: the name and

Credits or Refunds

address of the taxpayer, the type of facility provided or

If tax is collected and paid over for nontaxable services from

service rendered, the amount paid for the facility or service

the communications tax, the collector or taxpayer may

(the amount on which the tax is based), and the date paid.

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Instructions For Form 720 - Quarterly Federal Excise Tax Return - 2006 Page 3

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