Instructions For Form 720 - Quarterly Federal Excise Tax Return

billed or tickets sold, rather than on amounts actually

Additional deposit of taxes in September 2006

collected. See Alternative method below.

For the Period

If you are depositing more than one tax under a

Beginning

Ending

Due Date

method, combine all the taxes under the method and

Type of Tax

make one deposit for the semimonthly period.

Regular method taxes

EFTPS

Sept. 16

Sept. 26

Sept. 29

Regular method. The deposit of tax for a semimonthly

Non-EFTPS

Sept. 16

Sept. 25

Sept. 28

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

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

Alternative method taxes (IRS

semimonthly period and the 14th day of the following

Nos. 22, 26, 27, and 28)

(based on amounts billed)

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

EFTPS

Sept. 1

Sept. 11

Sept. 29

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

Non-EFTPS

Sept. 1

Sept. 10

Sept. 28

holiday, you must make the deposit by the immediately

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

See Electronic deposit requirement on page 7.

holiday.

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

For the remaining days in September, be sure to

Deposits of communications and air transportation taxes

make your deposits by the regular due date.

may be based on taxes included in amounts billed or

CAUTION

tickets sold during a semimonthly period instead of on

Amount To Deposit

taxes actually collected during the period. Under the

alternative method, the tax included in amounts billed or

Deposits of taxes for a semimonthly period must be at

tickets sold during a semimonthly period is considered

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

collected during the first 7 days of the second following

unless the safe harbor rule applies. See Safe Harbor

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

Rule below.

banking day after the 7th day of that period.

The net tax liability for a semimonthly period is the

total liability for the period minus any claims allowed on

Example. The tax included in amounts billed or

Schedule C for the period. Net tax liability for a

tickets sold for the period June 16-30, 2006, is

semimonthly period may be figured by dividing the net

considered collected from July 16-22, 2006, and must be

tax liability for the month by 2, provided this method of

deposited by July 26, 2006.

computation is used for all semimonthly periods in the

To use the alternative method, you must keep a

calendar quarter.

separate account of the tax included in amounts billed or

The net tax liability for a semimonthly period is not

tickets sold during the month and report on Form 720 the

reduced by any amounts from Form 720X.

tax included in amounts billed or tickets sold and not the

CAUTION

amount of tax that is actually collected. For example,

amounts billed in December, January, and February are

Safe Harbor Rule

considered collected during January, February, and

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

Current Form 720 filers who have incurred liability

1st quarter of the calendar year.

for the oil spill liability tax beginning April 1, 2006,

cannot use the safe harbor method for deposits in

The separate account for each month must reflect:

CAUTION

the second and third calendar quarters of 2006. Deposits

1. All items of tax included in amounts billed or tickets

for the semimonthly periods in the second and third

sold during the month.

calendar quarters must not be less than 95% of the net

2. Other items of adjustment relating to tax for prior

tax liability for the semimonthly period.

months (within the statute of limitations on credits or

The safe harbor rule applies separately to deposits

refunds).

under the regular method and the alternative method.

Persons who filed Form 720 for the look-back quarter

The separate account for any month cannot include an

(the 2nd calendar quarter preceding the current quarter)

adjustment resulting from a refusal to pay or inability to

are considered to meet the semimonthly deposit

collect unless the refusal has been reported to the IRS.

requirement if the deposit for each semimonthly period in

See Communications and Air Transportation Taxes —

the current quarter is at least

(16.67%) of the net tax

Uncollected Tax Report on page 3.

liability reported for the look-back quarter.

The net tax liability that is considered collected during

For the semimonthly period for which the additional

the semimonthly period must be either:

deposit is required (September 1-11 and 16-26 for

•

The net amount of tax reflected in the separate

EFTPS, or September 1-10 and 16-25 for non-EFTPS),

account for the corresponding semimonthly period of the

the additional deposit must be at least

(12.23%),

preceding month or

(11.12%) for non-EFTPS, of the net tax liability

•

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

reported for the look-back quarter. Also, the total deposit

separate account for the preceding month.

for that semimonthly period must be at least

(16.67%)

of the net tax liability reported for the look-back quarter.

Special rule for deposits of taxes in September 2006.

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

Exceptions. The safe harbor rule does not apply to:

•

The special rule does not apply to taxes not required to

The 1st and 2nd quarters beginning on or after the

be deposited (see Payment of Taxes on page 7). See

effective date of an increase in the rate of tax unless the

Regulations sections 40.6302(c)-2 and 40.6302(c)-3 for

deposit of taxes for each semimonthly period in the

rules to figure the net tax liability for the deposits due in

calendar quarter is at least

(16.67%) of the tax liability

September.

you would have had for the look-back quarter if the

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Instructions For Form 720 - Quarterly Federal Excise Tax Return - 2006 Page 8

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