Instructions For Form 720 - Quarterly Federal Excise Tax Return (Page 4 of 20) in pdf

Attach Form 6627 to Form 720. The tax rates for these

Example. In January 2017, Frank Jones pays $266.20 to

taxes are shown on Form 6627.

a commercial airline for a flight in January from Washington

to Chicago with a stopover in Cleveland. The flight has two

Communications Taxes

segments. The price includes the $240 fare and $26.00

excise tax [($240 × 7.5%) + (2 × $4.10)] for which Frank is

liable. The airline collects the tax from Frank and submits it to

Communications Services (IRS No. 22)

the government.

The tax is 3% of amounts paid for local telephone service

Charter flights. If an aircraft is chartered, and the flight is

and teletypewriter exchange service.

not one where the tax on fuel used in a fractional ownership

program aircraft is imposed, the domestic segment tax for

Who Must File

each segment of taxable transportation is figured by

multiplying the tax by the number of passengers transported

The person receiving the payment for communications

on the aircraft.

services must collect and submit the tax and file the return.

Enter the amount of tax collected or considered collected for

Example. In March 2017, Tim Clark pays $1,132.40 to an

the quarter.

air charter service to carry seven employees from

Washington to Detroit with a stopover in Pittsburgh. The flight

Credits or Refunds

has two segments. The price includes the $1,000 charter

payment and $131.00 excise tax [($1,000 × 7.5%) + (2 ×

If tax is collected and paid over for nontaxable services from

$4.10 × 7 passengers)] for which Tim is liable. The charter

the communications tax, the collector or taxpayer may

service collects the tax from Tim and submits it to the

request a credit or refund as described below and in Notices

government.

2006-50 and 2007-11.

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

Collectors. The collector may request a credit or refund

the domestic segment tax does not apply.

only if it has repaid the tax to the person from whom the tax

was collected, or obtained the consent of that person to the

Transportation of Property by Air (IRS No. 28)

allowance of the credit or refund. These requirements also

The tax is 6.25% of amounts paid for transportation of

apply to nontaxable service refunds.

property by air. The tax does not apply if the surtax on fuel

Collectors using the regular method for deposits.

used in a fractional ownership program aircraft is imposed.

Collectors using the regular method for deposits must use

See Surtax on any liquid used in a fractional ownership

Form 720X to request a credit or refund.

program aircraft as fuel (IRS No. 13), later.

Collectors using the alternative method for deposits.

Collectors using the alternative method for deposits must

Use of International Air Travel Facilities

adjust their separate accounts for the credit or refund. For

more information, see Alternative method (IRS Nos. 22, 26,

(IRS No. 27)

27, and 28), later.

For calendar year 2017, the section 4261 tax on the amount

paid for international flights is increased to $18 per person for

Air Transportation Taxes

flights that begin or end in the United States.

Transportation of Persons by Air (IRS No. 26)

The tax is increased to $9 per person for domestic

segments that begin or end in Alaska or Hawaii (applies only

The taxes on transportation of persons by air are the

to departures).

percentage tax and the domestic segment tax. Add the

percentage tax and the domestic segment tax to get the total

Communications and Air Transportation

tax on transportation of persons by air.

Taxes—Uncollected Tax Report

Note. The percentage and domestic segment taxes do not

A separate report is required to be filed by collecting agents

apply on a flight if the surtax on fuel used in a fractional

of communications services (local and teletypewriter service)

ownership program aircraft is imposed. For more information,

and air transportation taxes if the person from whom the

see Surtax on any liquid used in a fractional ownership

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

program aircraft as fuel (IRS No. 13), later.

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

the collecting agent to collect the tax. The report must

Who Must File

contain the name and address of the taxpayer, the type of

facility provided or service rendered, the amount paid for the

The person receiving the payment for air transportation

facility or service (the amount on which the tax is based), and

services must do all of the following.

the date paid.

Collect the tax.

Submit the tax.

Regular method taxpayers. For regular method taxpayers,

File Form 720 to report the amount of the tax collected, or

the report must be filed by the due date of the Form 720 on

considered collected, for the quarter.

which the tax would have been reported.

Percentage tax. The percentage tax is 7.5% of amounts

Alternative method taxpayers. For alternative method

paid for taxable transportation of persons by air.

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

Form 720 that includes an adjustment to the separate

Domestic segment tax. For calendar year 2017, the tax on

account for the uncollected tax. See Alternative method (IRS

the amount paid for each domestic segment of taxable

Nos. 22, 26, 27, and 28), later.

transportation is increased to $4.10.

-4-

Instructions for Form 720 (Rev. 4-2017)

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

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