Instructions For Form 720 - Quarterly Federal Excise Tax Return

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

Payment of Taxes

holiday.

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

Generally, semimonthly deposits of excise taxes are

Deposits of communications and air transportation taxes

required. A semimonthly period is the first 15 days of a

month (the first semimonthly period) or the 16th through

may be based on taxes included in amounts billed or

tickets sold during a semimonthly period instead of on

the last day of a month (the second semimonthly period).

taxes actually collected during the period. Under the

However, no deposit is required for the situations

alternative method, the tax included in amounts billed or

listed below; the taxes are payable with the return.

•

tickets sold during a semimonthly period is considered

The net liability for taxes listed in Part I (Form 720)

collected during the first 7 days of the second following

does not exceed $2,500 for the quarter.

•

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

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

banking day after the 7th day of that period.

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

•

Example. The tax included in amounts billed or

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

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

except for the floor stocks tax, that generally requires a

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

single deposit. See Floor Stocks Tax on page 6.

•

deposited by July 25, 2002.

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

from an approved refinery by bulk transfer, if the refiner

To use the alternative method, you must keep a

elects to treat itself for that removal as not registered

separate account of the tax included in amounts billed or

under section 4101. See Regulations section 48.4081-3.

tickets sold during the month and report on Form 720 the

tax included in amounts billed or tickets sold and not the

How To Make Deposits

amount of tax that is actually collected. For example,

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

amounts billed in December, January, and February are

mail your deposits directly to the IRS. Records of your

considered collected during January, February, and

deposits will be sent to the IRS for crediting to your

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

accounts.

1st quarter of the calendar year.

Electronic deposit requirement. You must make

The net amount of tax that is considered collected

electronic deposits of all depository taxes (such as

during the semimonthly period must be either:

•

deposits for employment tax, excise tax, and corporate

The net amount of tax reflected in the separate

income tax) using the Electronic Federal Tax Payment

account for the corresponding semimonthly period of the

System (EFTPS) in 2002 if:

preceding month or

•

The total deposits of such taxes in 2000 exceeded

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

$200,000 or

separate account for the preceding month.

•

You were required to use EFTPS in 2001.

Special rule for deposits of taxes in September 2002.

If you are required to use EFTPS and use Form 8109

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

instead, you may be subject to a 10% penalty. If you are

The special rule does not apply to taxes not required to

not required to use EFTPS, you may participate

be deposited (see Payment of Taxes above). See

voluntarily. To get more information or to enroll in

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

EFTPS, call 1-800-555-4477 or 1-800-945-8400; or visit

net tax liability for the deposits due in September.

the EFTPS Web Site at

Depositing on time. For EFTPS deposits to be on

Additional deposit of taxes in September 2002

time, you must initiate the transaction at least one

business day before the date the deposit is due.

For the Period

Federal Tax Deposit Coupons. If you are not making

Beginning

Ending

Due Date

Type of Tax (IRS No.)

deposits by EFTPS, use Form 8109, Federal Tax

Deposit Coupon, to make the deposits at an authorized

Regular method taxes

financial institution. See the instructions in the coupon

EFTPS

Sept. 16

Sept. 26

Sept. 30

book for additional information. If you do not have a

Non-EFTPS

Sept. 16

Sept. 25

Sept. 27

coupon book, call 1-800-829-4933.

Alternative method taxes (22,

When To Make Deposits

26, 27, and 28) (based on

There are two methods for determining deposits: regular

amounts billed)

method and alternative method.

EFTPS

Sept. 1

Sept. 11

Sept. 30

The regular method applies to all taxes in Part I of

Non-EFTPS

Sept. 1

Sept. 10

Sept. 27

Form 720 except for communications and air

See Electronic deposit requirement above.

transportation taxes if deposits are based on amounts

billed or tickets sold, rather than on amounts actually

collected. See Alternative method below.

For the remaining days in September, be sure to

make your deposits by the regular due date.

If you are depositing more than one tax under a

CAUTION

method, combine all the taxes under the method and

make one deposit for the semimonthly period.

Amount To Deposit

Regular method. The deposit of tax for a semimonthly

Deposits of taxes for a semimonthly period must be at

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

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

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

unless the safe harbor rule applies. See Safe Harbor

semimonthly period and the 14th day of the following

Rule below.

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

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

-7-

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

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