Instructions For Form 720 - Quarterly Federal Excise Tax Return

Collectors of the communications tax are not

IRS Nos. 105, 107, 119, and 111. Tax is imposed at $.001

required to report any refusal to pay the tax on

per gallon on removals, entries, and sales of gasoline, diesel

nontaxable service that is billed after May 25, 2006.

fuel, and kerosene described as exempt transactions.

CAUTION

•

IRS No. 105, Dyed diesel fuel, LUST tax.

Regular method taxpayers. For regular method taxpayers,

•

IRS No. 107, Dyed kerosene, LUST tax.

the report must be filed by the due date of the Form 720 on

•

IRS No. 119, LUST tax, other exempt removals. Report

which the tax would have been reported.

gasoline blendstocks, kerosene used for a feedstock

Alternative method taxpayers. For alternative method

purpose, and diesel fuel or kerosene sold or used in Alaska.

•

taxpayers, the report must be filed by the due date of the

IRS No. 111, Kerosene for use in aviation, LUST tax on

Form 720 that includes an adjustment to the separate

nontaxable uses, including foreign trade. Report gallons of

account for the uncollected tax. See Alternative method on

kerosene removed directly from a terminal into the fuel tank

page 8.

of an aircraft for nontaxable uses or for use in foreign trade.

Where to file. Do not file the uncollected tax report with

Multiply the total number of gallons subject to tax for each

Form 720. Instead, mail the report to:

fuel by $.001 and make the entry in the tax column.

Internal Revenue Service

Kerosene (IRS No. 35). If you are liable for the kerosene

Collected Excise Tax Coordinator

tax on removal at the terminal rack, report these gallons on

S:C:CP:RC:EX

line 35(a). If you are liable for the kerosene tax on events

1111 Constitution Avenue NW, IR-2016

other than removal at the terminal rack, report these gallons

Washington, DC 20224

of kerosene on line 35(b).

Fuel Taxes

Multiply the total number of gallons subject to tax on lines

(a) and (b) by $.244 and make one entry in the tax column.

First taxpayer’s report. If you are reporting gallons of

taxable fuel that may again be subject to tax, you may need

Also see Schedule T, Two-Party Exchange Information

to file a first taxpayer’s report. The report must contain all

Reporting on page 9 if applicable.

the information as shown in the Model Certificate B in the

Kerosene for use in aviation (IRS Nos. 69, 77, and 111).

Appendix of Publication 510.

Generally, kerosene is taxed at $.244 per gallon.

The person who paid the first tax must:

•

For kerosene removed directly from a terminal into the

Give a copy of the first taxpayer’s report to the buyer;

•

fuel tank of an aircraft for use in noncommercial aviation, the

File the first taxpayer’s report with Form 720 for the

tax rate is $.219 per gallon. Report these gallons on the line

quarter for which the report relates; and

•

for IRS No. 69.

Write “EXCISE — FIRST TAXPAYER’S REPORT” across

•

For kerosene removed directly from a terminal into the

the top of a separate copy of the report, and by the due date

fuel tank of an aircraft for use in commercial aviation (other

of Form 720, send the copy to: Internal Revenue Service

than foreign trade), the tax rate is generally $.044 per gallon.

Center, Cincinnati, OH 45999-0555.

Report these gallons on the line for IRS No. 77.

Diesel fuel (IRS No. 60). If you are liable for the diesel fuel

•

For kerosene removed directly from a terminal into the

tax on removal at the terminal rack, report these gallons on

fuel tank of an aircraft for nontaxable uses or for use in

line 60(a). If you are liable for the diesel fuel tax on events

foreign trade, the tax rate is generally $.001 per gallon.

other than removal at the terminal rack, report these gallons

Report these gallons on the line for IRS No. 111.

on line 60(b). If you are liable for the diesel fuel tax because

Other fuels (IRS No. 79). You are liable for the tax on the

you have produced diesel fuel by blending biodiesel with

fuels listed below when they are delivered into the fuel

taxed diesel fuel outside of the bulk transfer/terminal

supply tank of a motor vehicle or motorboat (or trains for

system, report these gallons of biodiesel on line 60(c). If you

B-100). Use the following table to determine the tax for each

report gallons on line 60(c), do not report those gallons on

gallon. Fill in the number of gallons and the appropriate rate

line 60(b).

in the Rate column on the line for IRS No. 79. If more than

Multiply the total number of gallons subject to tax on lines

one rate applies, leave the Rate column blank and attach a

(a), (b), and (c) by $.244 and make one entry in the tax

schedule showing the rates and number of gallons taxed at

column.

each rate.

Also see Schedule T, Two-Party Exchange Information

Reporting on page 9 if applicable.

Fuel

Tax Rate

Diesel-water fuel emulsion (IRS No. 104). If you are liable

per Gallon

for the reduced rate (see below) of tax on a diesel-water fuel

Qualified —

emulsion removal at the terminal rack or other taxable

Ethanol produced from coal . . . . . . . . . . . . . . . . . . .

.1325

event, report these gallons on the line for IRS No. 104.

Methanol produced from coal . . . . . . . . . . . . . . . . .

.1235

Requirements. All of the following requirements must be

Partially exempt —

met to be eligible for the reduced rate: (a) the diesel-water

Ethanol produced from natural gas . . . . . . . . . . . . . .

.114

fuel emulsion must contain at least 14% water, (b) the

Methanol produced from natural gas . . . . . . . . . . . .

.0925

emulsion additive must be registered by a United States

B-100 (100% biodiesel) . . . . . . . . . . . . . . . . . . . . . .

.244

manufacturer under section 211 of the Clean Air Act with the

Other fuels not shown . . . . . . . . . . . . . . . . . . . . . . .

.184

EPA, and (c) the taxpayer must be registered by the IRS. If

these requirements are not met, you must report the sale,

removal, or use of a diesel-water fuel emulsion as diesel

Gasoline (IRS No. 62). If you are liable for the gasoline tax

fuel.

on removal at the terminal rack, report these gallons on line

62(a). If you are liable for the gasoline tax on events other

Dyed diesel fuel used in trains (IRS No. 71). If you are

than removal at the terminal rack, report these gallons on

liable for the tax on dyed diesel fuel used in trains, report the

line 62(b). If you are liable for the gasoline tax because you

number of gallons subject to tax on the line for IRS No. 71.

have blended alcohol with taxed gasoline outside of the bulk

The tax on dyed diesel fuel used in trains applies at

transfer/terminal system, report these gallons of alcohol on

the rate listed on Form 720. This is in addition to all

line 62(c). If you report gallons on line 62(c), do not report

other taxes imposed on the sale or use of the fuel.

CAUTION

those gallons on line 62(b).

-4-

Instructions For Form 720 - Quarterly Federal Excise Tax Return - 2006 Page 4

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