Instructions For Form 720 - Quarterly Federal Excise Tax Return

Percentage tax. The percentage tax is 7.5% for amounts

Fuel Taxes

paid for taxable transportation of persons by air.

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

Domestic segment tax. For amounts paid for each

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

domestic segment of taxable transportation of persons by

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

air, the domestic segment tax is $3.70 per segment for

the information as shown in the Model Certificate B in the

transportation that begins in 2010.

Appendix of Pub. 510.

Example. In January 2010, Frank Jones pays $265.40

The person who paid the first tax must:

to a commercial airline for a flight in January from

•

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

Washington to Chicago with an intermediate stop in

•

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

Cleveland. The flight comprises two segments. The price

quarter for which the report relates; and

includes the $240 fare and $25.40 excise tax [($240 × 7.5%)

•

Write “EXCISE — FIRST TAXPAYER’S REPORT” across

+ (2 × $3.70)] for which Frank is liable. The airline collects

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

the tax from Frank and submits it to the government.

of Form 720, send the copy to:

Charter flights. If an aircraft is chartered, the domestic

Department of the Treasury

segment tax for each segment of taxable transportation is

Internal Revenue Service

figured by multiplying the tax by the number of passengers

Cincinnati, OH 45999-0555

transported on the aircraft.

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

Example. In March 2010, Tim Clark pays $1,126.80 to

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

an air charter service to carry seven employees from

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

Washington to Detroit with an intermediate stop in

other than removal at the terminal rack, report these gallons

Pittsburgh. The flight comprises two segments. The price

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

includes the $1,000 charter payment and $126.80 excise tax

you have produced diesel fuel by blending biodiesel with

[($1,000 × 7.5%) + (2 × $3.70 × 7 passengers)] for which

taxed diesel fuel outside of the bulk transfer/terminal

Tim is liable. The charter service collects the tax from Tim

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

and submits it to the government.

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

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

line 60(b).

the domestic segment tax does not apply.

Multiply the total number of gallons subject to tax on lines

Transportation of Property by Air (IRS No. 28)

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

column.

The tax is 6.25% of amounts paid for transportation of

property by air.

Also see Schedule T — Two-Party Exchange Information

Reporting on page 10 if applicable.

Use of International Air Travel Facilities

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

(IRS No. 27)

liable for the reduced rate (see below) of tax on a

For amounts paid during 2010 the tax on international flights

diesel-water fuel emulsion removal at the terminal rack or

is:

other taxable event, report these gallons on the line for IRS

•

$16.10 per person for flights that begin or end in the

No. 104.

United States, or

Requirements. All of the following requirements must

•

$8.10 per person for domestic segments that begin or end

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

in Alaska or Hawaii (applies only to departures).

diesel-water fuel emulsion must contain at least 14% water,

Communications and Air Transportation

(b) the emulsion additive must be registered by a United

States manufacturer with the EPA under section 211 of the

Taxes—Uncollected Tax Report

Clean Air Act (as in effect on March 31, 2003), and (c) the

A separate report is required to be filed by collecting agents

taxpayer must be registered by the IRS. If these

of communications services (local and teletypewriter

requirements are not met, you must report the sale,

service) and air transportation taxes if the person from

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

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

fuel.

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

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

impossible for the collecting agent to collect the tax. The

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

report must contain the name and address of the taxpayer,

fuel, and kerosene described as exempt transactions.

the type of facility provided or service rendered, the amount

•

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

paid for the facility or service (the amount on which the tax is

•

IRS No. 107, Dyed kerosene, LUST tax.

based), and the date paid.

•

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

Regular method taxpayers. For regular method

gasoline blendstocks, kerosene used for a feedstock

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

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

•

Form 720 on which the tax would have been reported.

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

nontaxable uses. Report gallons of kerosene removed

Alternative method taxpayers. For alternative method

directly from a terminal into the fuel tank of an aircraft for

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

nontaxable uses.

Form 720 that includes an adjustment to the separate

account for the uncollected tax. See Alternative method (IRS

Multiply the total number of gallons subject to tax for each

Nos. 22, 26, 27, and 28) on page 9.

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

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

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

Form 720. Instead, mail the report to:

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

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

Internal Revenue Service

other than removal at the terminal rack, report these gallons

Excise Tax Program

of kerosene on line 35(b).

SE:S:SP:EX MS C9-109

5000 Ellin Rd.

Multiply the total number of gallons subject to tax on lines

Lanham, MD 20706

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

-4-

Instructions for Form 720 (Rev. 7-2010)

Instructions For Form 720 - Quarterly Federal Excise Tax Return - 2010 Page 4

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