Instructions For Form 720 - Quarterly Federal Excise Tax Return

•

The gas guzzler tax and/or the luxury tax is being paid

tickets sold during a semimonthly period is considered

on a one-time filing. See One-Time Filings on page 1.

collected during the first 7 days of the second following

•

The liability is for taxes listed in Part II (Form 720),

semimonthly period. The deposit of tax is due by the 3rd

except for the floor stocks tax, which generally require a

banking day after the 7th day of that period.

single deposit. See Floor Stocks Tax on page 6.

Example. The tax included in amounts billed or

•

The tax liability is for the removal of a batch of gasohol

tickets sold for the period June 16-30, 2002, is

from an approved refinery by bulk transfer, if the refiner

considered collected from July 16-22, 2002, and must be

elects to treat itself for that removal as not registered

deposited by July 25, 2002.

under section 4101. See Regulations section 48.4081-3.

To use the alternative method, you must keep a

How To Make Deposits

separate account of the tax included in amounts billed or

tickets sold during the month and report on Form 720 the

To avoid a penalty, make your deposits timely and do not

tax included in amounts billed or tickets sold and not the

mail your deposits directly to the IRS. Records of your

amount of tax that is actually collected. For example,

deposits will be sent to the IRS for crediting to your

amounts billed in December, January, and February are

accounts.

considered collected during January, February, and

Electronic deposit requirement. You must make

March and are reported on Form 720 as the tax for the

electronic deposits of all depository taxes (such as

1st quarter of the calendar year.

deposits for employment tax, excise tax, and corporate

The net amount of tax that is considered collected

income tax) using the Electronic Federal Tax Payment

during the semimonthly period must be either:

•

System (EFTPS) in 2002 if:

The net amount of tax reflected in the separate

•

The total deposits of such taxes in 2000 exceeded

account for the corresponding semimonthly period of the

$200,000 or

preceding month or

•

You were required to use EFTPS in 2001.

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

If you are required to use EFTPS and fail to do so, you

separate account for the preceding month.

may be subject to a 10% penalty. If you are not required

Special rule for deposits of taxes in September 2002.

to use EFTPS, you may participate voluntarily. To get

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

more information or to enroll in EFTPS, call

The special rule does not apply to taxes not required to

1-800-555-4477 or 1-800-945-8400.

be deposited (see Payment of Taxes on page 6). See

Depositing on time. For EFTPS deposits to be on

Regulations section 40.6302(c)-2 for rules to figure the

time, you must initiate the transaction at least one

net tax liability for the deposits due in September.

business day before the date the deposit is due.

Federal Tax Deposit Coupons. If you are not making

Additional deposit of taxes in September 2002

deposits by EFTPS, use Form 8109, Federal Tax

For the Period

Deposit Coupon, to make the deposits at an authorized

financial institution. See the instructions in the coupon

Beginning

Ending

Due Date

book for additional information. If you do not have a

Type of Tax (IRS No.)

coupon book, call 1-800-829-1040.

Regular method taxes

When To Make Deposits

EFTPS

Sept. 16

Sept. 26

Sept. 30

Non-EFTPS

Sept. 16

Sept. 25

Sept. 27

There are two methods for determining deposits:

•

Regular method and

Alternative method taxes (22,

•

26, 27, and 28) (based on

Alternative method.

amounts billed)

The regular method applies to all taxes in Part I of

Form 720 except for communications and air

EFTPS

Sept. 1

Sept. 11

Sept. 30

transportation taxes (IRS Nos. 22, 26, 27, and 28) if

Non-EFTPS

Sept. 1

Sept. 10

Sept. 27

deposits are based on amounts billed or tickets sold,

See Electronic deposit requirement above.

rather than on amounts actually collected. See

Alternative method below.

For the remaining days in September, be sure to

If you are depositing more than one tax under a

make your deposits by the regular due date.

method, combine all the taxes under the method and

CAUTION

make one deposit for the semimonthly period.

Regular method. The deposit of tax for a semimonthly

Amount To Deposit

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

Deposits of taxes for a semimonthly period must be at

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

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

semimonthly period and the 14th day of the following

unless the safe harbor rule applies. See Safe Harbor

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

Rule below.

the 29th day falls on a Saturday, Sunday, or legal

The net tax liability for a semimonthly period is the

holiday, you must make the deposit by the immediately

total liability for the period minus any claims on Schedule

preceding day that is not a Saturday, Sunday, or legal

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

holiday.

may be figured by dividing the net tax liability for the

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

month by 2, provided this method of computation is used

Deposits of communications and air transportation taxes

for all semimonthly periods in the calendar quarter.

may be based on taxes included in amounts billed or

The net tax liability is not reduced by any amounts

tickets sold during a semimonthly period instead of on

from Form 720X.

taxes actually collected during the period. Under the

alternative method, the tax included in amounts billed or

CAUTION

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Instructions For Form 720 - Quarterly Federal Excise Tax Return - 2002 Page 7

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