Instructions For Form 720 - Quarterly Federal Excise Tax Return

When To Make Deposits

Additional deposit of taxes in September 2010

There are two methods for determining deposits: the regular

For the Period

method and the alternative method.

Type of Tax

Beginning on

Ending on Due Date

The regular method applies to all taxes in Part I of Form

Regular method taxes

720 except for communications and air transportation taxes

EFTPS

Sept. 16

Sept. 26

Sept. 29

if deposits are based on amounts billed or tickets sold,

Non-EFTPS

Sept. 16

Sept. 25

Sept. 28

rather than on amounts actually collected. See Alternative

Alternative method taxes (IRS

method below.

Nos. 22, 26, 27, and 28) (based

on amounts billed)

If you are depositing more than one tax under a method,

EFTPS

Sept. 1

Sept. 11

Sept. 29

combine all the taxes under the method and make one

Non-EFTPS

Sept. 1

Sept. 10

Sept. 28

deposit for the semimonthly period.

See Electronic deposit requirement on page 8.

Regular method. The deposit of tax for a semimonthly

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

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

For the remaining days in September, be sure to

semimonthly period and the 14th day of the following month

make your deposits by the regular due date.

for the second semimonthly period. If the 14th or the 29th

CAUTION

day falls on a Saturday, Sunday, or legal holiday, you must

Amount To Deposit

make the deposit by the immediately preceding day that is

not a Saturday, Sunday, or legal holiday.

Deposits of taxes for a semimonthly period must be at least

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

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

Deposits of communications and air transportation taxes

the safe harbor rule applies. See Safe Harbor Rule below.

may be based on taxes included in amounts billed or tickets

The net tax liability for a semimonthly period is the total

sold during a semimonthly period instead of on taxes

liability for the period minus any claims allowed on Schedule

actually collected during the period. Under the alternative

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

method, the tax included in amounts billed or tickets sold

may be figured by dividing the net tax liability for the month

during a semimonthly period is considered collected during

by 2, provided this method of computation is used for all

the first 7 days of the second following semimonthly period.

semimonthly periods in the calendar quarter.

The deposit of tax is due by the 3rd banking day after the

7th day of that period.

The net tax liability for a semimonthly period is not

reduced by any amounts from Form 720X.

Example. The tax included in amounts billed or tickets

sold for the period June 16 – 30, 2010, is considered

CAUTION

collected from July 16 – 22, 2010, and must be deposited by

Safe Harbor Rule

July 27, 2010.

The safe harbor rule applies separately to deposits under

To use the alternative method, you must keep separate

the regular method and the alternative method. Persons

accounts of the tax included in amounts billed or tickets sold

who filed Form 720 for the look-back quarter (the 2nd

during the month and report on Form 720 the tax included in

calendar quarter preceding the current quarter) are

amounts billed or tickets sold and not the amount of tax that

considered to meet the semimonthly deposit requirement if

is actually collected. For example, amounts billed in

the deposit for each semimonthly period in the current

December, January, and February are considered collected

quarter is at least

(16.67%) of the net tax liability reported

during January, February, and March and are reported on

for the look-back quarter.

Form 720 as the tax for the 1st quarter of the calendar year.

For the semimonthly period for which the additional

The separate account for each month must reflect:

deposit is required (September 1 – 11 and 16 – 26 for EFTPS,

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

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

sold during the month, and

additional deposit must be at least

(12.23%),

2. Other items of adjustment relating to tax for prior

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

months (within the statute of limitations on credits or

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

refunds).

semimonthly period must be at least

(16.67%) of the net

tax liability reported for the look-back quarter.

The separate account for any month cannot include an

Exceptions. The safe harbor rule does not apply to:

adjustment resulting from a refusal to pay or inability to

•

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

collect unless the refusal has been reported to the IRS. See

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

Communications and Air Transportation

deposit of taxes for each semimonthly period in the calendar

Taxes — Uncollected Tax Report on page 4.

quarter is at least

(16.67%) of the tax liability you would

The net tax liability that is considered collected during

have had for the look-back quarter if the increased rate of

the semimonthly period must be either:

tax had been in effect for that look-back quarter;

•

The net amount of tax reflected in the separate account

Any quarter if liability includes any tax not in effect

for the corresponding semimonthly period of the preceding

throughout the look-back quarter; or

•

month, or

For deposits under the alternative method, any quarter if

•

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

liability includes any tax not in effect throughout the

account for the preceding month.

look-back quarter and the month preceding the look-back

quarter.

Special rule for deposits of taxes in September 2010. If

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

Requirements to be met. For the safe harbor rule to

special rule does not apply to taxes not required to be

apply, you must:

•

deposited (see Payment of Taxes on page 8). See

Make each deposit timely at an authorized financial

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

institution, and

•

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

Pay any underpayment for the current quarter by the due

September.

date of the return.

-9-

Instructions for Form 720 (Rev. 7-2010)

Instructions For Form 720 - Quarterly Federal Excise Tax Return - 2010 Page 9

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