Instructions For Form 720 - Quarterly Federal Excise Tax Return

contain all the information as shown in the Model

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

Certificate A, Appendix B of Publication 510.

kerosene tax on removal at the terminal rack, report

these gallons on line (a) of IRS No. 35. If you are liable

The person who paid the first tax must:

•

for the kerosene tax on events other than removal at the

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

•

terminal rack, report these gallons of kerosene on line (b)

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

of IRS No. 35.

quarter for which the report relates; and

•

Multiply the total number of gallons subject to tax on

Write “EXCISE —FIRST TAXPAYER’S REPORT”

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

across the top of a separate copy of the report, and by

column.

the due date of Form 720, send the copy to: Internal

Revenue Service Center, Cincinnati, OH 45999-0555.

Also see Schedule T, Two-Party Exchange Information

Reporting on page 9 if applicable.

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

fuel tax on removal at the terminal rack, report these

Kerosene for use in aviation (IRS Nos. 69, 77, and

gallons on line (a) of IRS No. 60. If you are liable for the

111). Generally, kerosene is taxed at $.244 per gallon.

•

diesel fuel tax on events other than removal at the

For kerosene removed directly from a terminal into the

terminal rack, report these gallons on line (b) of IRS

fuel tank of an aircraft for use in noncommercial aviation,

No. 60. If you are liable for the diesel fuel tax because

the tax rate is $.219 per gallon. Report these gallons on

you have produced diesel fuel by blending biodiesel with

the line for IRS No. 69.

•

taxed diesel fuel outside of the bulk transfer/terminal

For kerosene removed directly from a terminal into the

system, report these gallons of biodiesel on line (c) of

fuel tank of an aircraft for use in commercial aviation

IRS No. 60. If you report gallons on line 60(c), do not

(other than foreign trade), the tax rate is generally $.044

report those gallons on line 60(b).

per gallon. Report these gallons on the line for

IRS No. 77.

Multiply the total number of gallons subject to tax on

•

For kerosene removed directly from a terminal into the

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

fuel tank of an aircraft for nontaxable uses or for use in

tax column.

foreign trade, the tax rate is generally $.001 per gallon.

Also see Schedule T, Two-Party Exchange Information

Report these gallons on the line for IRS No. 111.

Reporting on page 9 if applicable.

Liquefied petroleum gas (LPG) (IRS No. 61). Only

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

LPG (such as propane and butane) is reported on the

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

line for IRS No. 61. LPG is taxed at $.136 per gallon.

diesel-water fuel emulsion removal at the terminal rack or

Gasoline (IRS No. 62). If you are liable for the gasoline

other taxable event, report these gallons on the line for

tax on removal at the terminal rack, report these gallons

IRS No. 104.

on line (a) of IRS No. 62. If you are liable for the gasoline

Requirements. All of the following requirements must

tax on events other than removal at the terminal rack,

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

report these gallons on line (b) of IRS No. 62. If you are

diesel-water fuel emulsion must contain at least 14%

liable for the gasoline tax because you have blended

water, (b) the emulsion additive must be registered by a

alcohol with taxed gasoline outside of the bulk transfer/

United States manufacturer under section 211 of the

terminal system, report these gallons of alcohol on line

Clean Air Act with the EPA, and (c) the taxpayer must be

registered by the IRS. If these requirements are not met,

not report those gallons on line 62(b).

you must report the sale, removal, or use of diesel-water

Multiply the total number of gallons subject to tax on

fuel emulsions as diesel fuel.

lines (a), (b), and (c) by $.184. Combine the tax for lines

Dyed diesel fuel used in trains (IRS No. 71). If you are

(a), (b), and (c), and make one entry in the tax column.

liable for the tax on dyed diesel fuel used in trains, report

Also see Schedule T, Two-Party Exchange Information

the number of gallons subject to tax on the line for IRS

Reporting on page 9 if applicable.

No. 71.

Other fuels (IRS No. 79). Use the following table to

The tax on dyed diesel fuel used in trains applies

determine the tax for each gallon. Fill in the number of

at the rate listed on Form 720. This is in addition

gallons and the appropriate rate in the Rate column on

to all other taxes imposed on the sale or use of

CAUTION

the line for IRS No. 79. If more than one rate applies,

the fuel.

leave the Rate column blank and attach a schedule

showing the rates and number of gallons taxed at each

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

rate.

$.001 per gallon on removals, entries, and sales of

gasoline, diesel fuel, and kerosene described as exempt

Fuel

Tax Rate

transactions.

per Gallon

•

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

•

Liquefied natural gas

.119

IRS No. 107, Dyed kerosene, LUST tax.

•

Qualified —

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

Ethanol produced from coal . . . . . . . . . . . . . . . . . . . . . .

.1325

on nontaxable uses, including foreign trade. Report

Methanol produced from coal . . . . . . . . . . . . . . . . . . . . .

.1235

gallons of kerosene removed directly from a terminal into

Partially exempt —

the fuel tank of an aircraft for nontaxable uses or for use

Ethanol produced from natural gas . . . . . . . . . . . . . . . . .

.114

in foreign trade.

Methanol produced from natural gas . . . . . . . . . . . . . . . .

.0925

•

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

B-100 (100% biodiesel) . . . . . . . . . . . . . . . . . . . . . . . . . .

.244

Other fuels not shown . . . . . . . . . . . . . . . . . . . . . . . . . .

.184

Report gasoline blendstocks, kerosene used for a

feedstock purpose, and diesel fuel or kerosene used in

Alaska. Multiply the total number of gallons subject to tax

Compressed natural gas (IRS No. 101). Tax is

for each fuel by $.001 and make one entry in the tax

imposed on compressed natural gas (CNG) that is sold

column.

for use or used as fuel in a motor vehicle or motorboat.

-4-

Instructions For Form 720 - Quarterly Federal Excise Tax Return - 2006 Page 4

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