Instructions For Form 720 - Quarterly Federal Excise Tax Return

fuel in the terminal as reflected in the records of the

Type of Use Table

terminal operator.

The following table lists the nontaxable uses of fuels. You

•

The exchange transaction occurs before or at the

must enter the number from the table in the Type of use

same time as completion of removal across the rack by

column as required.

the receiving person.

•

The terminal operator in its records treats the receiving

No.

Type of Use

person as the person that removes the product across

the terminal rack for purposes of reporting the transaction

On a farm for farming purposes

on Form 720-TO, Terminal Operator Report.

•

Off-highway business (for business use other

The transaction is the subject of a written contract.

than in a highway vehicle registered or required

to be registered for highway use) (other than

Information reporting. Schedule T — Two-Party

use in mobile machinery)

Exchange Information Reporting, is used to report

gallons of taxable fuel:

Export (see line 14b of Schedule C)

•

Received in a two-party exchange within a terminal.

In a boat engaged in commercial fishing

These gallons must also be included on the appropriate

line on page 1 of Form 720, or

•

In certain intercity and local buses

Delivered in a two-party exchange contemporaneous

with a removal across the rack.

For diesel fuel or kerosene in a qualified local

bus

Enter all gallons of fuel received or delivered in a

In a bus transporting students and employees of

two-party exchange within a terminal for the applicable

schools (school buses)

fuel.

For diesel fuel and kerosene (other than

kerosene used in aviation) used other than as a

fuel in the propulsion engine of a train or

Schedule C—Claims

diesel-powered highway vehicle (but not

Complete all information requested for each line,

off-highway business use)

including month income tax year ends and period of

In foreign trade

claim. Enter the month as “MM”. Enter the period of claim

as “MM/DD/YYYY”. Your claim will be disallowed if you

Certain helicopter and fixed-wing air ambulance

do not follow the required procedures or do not provide

uses

all the required information. Also, you are certifying to the

Not applicable

applicable statement(s) on Schedule C when you make a

claim. See Pub. 510 for more information.

In a highway vehicle owned by the United

States that is not used on a highway

You must include in gross income (income tax

return) the amount from line 4 of Form 720 if you

Exclusive use by a nonprofit educational

took a deduction on the income tax return that

organization

CAUTION

included the amount of the taxes and that deduction

Exclusive use by a state, political subdivision of

reduced the income tax liability. See Publication 510 for

a state, or the District of Columbia

more information.

In an aircraft or vehicle owned by an aircraft

Do not use Schedule C:

museum

•

If you are not reporting a liability in Part I or Part II of

Form 720.

In military aircraft

•

To claim amounts that you took or will take as a credit

For use in the production of special fuels

on Form 4136, Credit for Federal Tax Paid on Fuels, or

as a refund on Form 8849, Claim for Refund of Excise

Taxes, and its separate schedules (see the Caution

Claim requirements for lines 1 through 5, line 11, line

below).

14b, and line 14c. The following requirements must be

•

To request an abatement or refund of interest under

met:

section 6404(e) (due to IRS errors or delays) or an

1. The amount of the claim must be at least $750

abatement or refund of a penalty or addition to tax under

(combining amounts on lines 1, 2, 3, 4, 5, 11, 14b, and

section 6404(f) (due to erroneous IRS written advice).

14c). This amount may be met by:

Instead, use Form 843, Claim for Refund and Request for

a. Making a claim for fuel used during any quarter of a

Abatement. Also use Form 843 to request refund of the

claimant’s income tax year or

penalty under section 6715 for misuse of dyed fuel.

•

b. Aggregating amounts from any quarters of the

To make adjustments to liability reported on Forms 720

filed for prior quarters, use Form 720X.

claimant’s income tax year for which no other claim has

been made.

If you make a claim for alcohol or biodiesel or

2. Claims must be filed during the first quarter

renewable diesel used to produce an alcohol fuel

following the last quarter of the claimant’s income tax

mixture or biodiesel or renewable diesel mixture,

CAUTION

year included in the claim. For example, a calendar year

a claim for refund or credit on Form 8849, Form 4136,

income taxpayer’s claim for the first quarter is due June

Form 6478, or Form 8864 can only be made after the

30 if filed on Form 8849. However, Form 720 must be

sum of the alcohol fuel mixture credit and biodiesel or

filed by April 30.

renewable diesel mixture credit is first applied to your

3. Only one claim may be filed for any quarter.

taxable fuel liability reported on Form 720 for any

particular quarter. See Notice 2005-4 and Notice 2005-62

4. The fuel must have been used for a nontaxable use

during the Period of claim.

for more information.

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Instructions For Form 720 - Quarterly Federal Excise Tax Return - 2006 Page 10

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