Instructions For Form 720 - Quarterly Federal Excise Tax Return

LUST tax on inland waterways fuel use (IRS No. 125).

Note. Include on line 6 of your next return the amount from

The leaking underground storage tank (LUST) tax must be

line 11 you want to have applied to that return.

paid on any liquid fuel used on inland waterways that is not

If you owe other federal tax, interest, or penalty, the

subject to LUST tax under section 4041(d) or 4081. For

overpayment on line 11 and line 7 will first be applied

example, gallons of Bunker C residual fuel oil must be

to the unpaid amounts.

reported under both IRS Nos. 64 and 125.

CAUTION

Alcohol and cellulosic biofuel sold as but not used as

Line 10. If line 3 is more than line 9, enter the difference in

fuel (IRS No. 51). An excise tax is imposed if the alcohol

line 10. You do not have to pay if line 10 is under $1.00.

fuel mixture credit, alcohol credit, or cellulosic biofuel

You may pay the amount shown on line 10 by EFTPS,

producer credit was claimed and any person later (a) uses

check or money order, or, if filing electronically, electronic

a mixture, straight alcohol, or cellulosic biofuel for a purpose

funds withdrawal (direct debit). If you pay by EFTPS or

other than fuel, (b) separates the alcohol from the mixture,

direct debit, do not file Form 720-V, Payment Voucher.

or (c) mixes the straight alcohol.

If you do not deposit as required and, instead, pay

Use the following table to determine the tax for each

the taxes with Form 720, you may be subject to a

gallon of alcohol. The tax rate for cellulosic biofuel that is not

penalty.

alcohol is $1.01 per gallon ($.46 per gallon if the cellulosic

CAUTION

biofuel is ethanol and $.41 per gallon if the cellulosic biofuel

Payment of Taxes

is alcohol). Fill in the number of gallons and the appropriate

rate in the Rate column on the line for IRS No. 51. If more

Generally, semimonthly deposits of excise taxes are

than one rate applies, leave the Rate column blank and

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

attach a schedule showing the rates and number of gallons

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

taxed at each rate.

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

IF the alcohol is...

AND...

THEN the tax rate

However, no deposit is required for the situations listed

per gallon is...

below. The taxes are payable with the return.

•

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

•

at least 190 proof

is ethanol

$ .45

•

not exceed $2,500 for the quarter.

is methanol

.60

•

The gas guzzler tax is being paid on a one-time filing. See

benefited from the

.55

small ethanol

Gas guzzler tax (IRS No. 40) on page 6.

producer credit

•

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

for the floor stocks tax that generally requires a single

•

at least 150 proof but

is ethanol

$ .3333

•

deposit. See Floor Stocks Tax above.

less than 190 proof

is methanol

.45

•

benefited from the

.4333

How To Make Deposits

small ethanol

producer credit

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

mail your deposits directly to the IRS. Records of your

Biodiesel sold as but not used as fuel (IRS No. 117). An

deposits will be sent to the IRS for crediting to your

excise tax is imposed if the (a) biodiesel or renewable diesel

accounts.

mixture credit or (b) biodiesel or renewable diesel credit was

Electronic deposit requirement. You must make

claimed and any person later (a) uses a mixture or straight

electronic deposits of all depository taxes (such as deposits

biodiesel or renewable diesel for a purpose other than as

for employment tax, excise tax, and corporate income tax)

fuel, (b) separates the biodiesel or renewable diesel from

using the Electronic Federal Tax Payment System (EFTPS)

the mixture, or (c) mixes the straight biodiesel or renewable

in 2010 if:

diesel.

•

The total deposits of such taxes in 2008 exceeded

The tax is $1.00 per gallon of biodiesel, agri-biodiesel,

$200,000 or

and renewable diesel. An additional $.10 is added if the

•

You were required to use EFTPS in 2009 or any prior

agri-biodiesel benefited from the small agri-biodiesel

year.

producer credit. Fill in the number of gallons and the

If you are required to use EFTPS and use Form 8109,

appropriate rate in the Rate column on the line for IRS No.

Federal Tax Deposit Coupon, instead, you may be subject

117. If more than one rate applies, leave the Rate column

to a 10% penalty. If you are not required to use EFTPS, you

blank and attach a schedule showing the rates and number

may participate voluntarily. To get more information or to

of gallons taxed at each rate.

enroll in EFTPS, visit the EFTPS website at

Floor Stocks Tax

or call 1-800-555-4477. Also see Pub. 966, The Secure Way

to Pay Your Federal Taxes.

Ozone-depleting chemicals floor stocks tax (IRS No. 20).

Depositing on time. For EFTPS deposits to be on time,

Use Form 6627 to figure the liability for this tax. Enter the

you must initiate the transaction at least 1 day before the

amount from Form 6627, Part IV, line 4, column (d), on the

date the deposit is due (before 8:00 p.m. Eastern time).

line for IRS No. 20. Attach Form 6627 to the Form 720 that

is due July 31 of each year. Deposit the payment by June 30

Federal tax deposit coupons. If you are not making

at an authorized financial institution. See How To Make

deposits by EFTPS, use Form 8109 to make the deposits at

Deposits below.

an authorized financial institution. See the instructions in the

coupon book for additional information. If you do not have a

Part III

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

Line 4. Report on Form 720, line 4, the total claims from

You will automatically be enrolled in EFTPS when

Schedule C, line 16. See the instructions for Schedule

you apply for an EIN. You will receive a separate

TIP

C — Claims on page 10.

mailing containing instructions for activating your

Line 6. Include on line 6 the amount from line 11 of your

EFTPS enrollment after you receive your EIN. You will still

previous return that you applied to this return and the

have the option to use FTD coupons, but see Electronic

amount from Form 720X, line 5b.

deposit requirement above.

-8-

Instructions for Form 720 (Rev. 7-2010)

Instructions For Form 720 - Quarterly Federal Excise Tax Return - 2010 Page 8

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