Instructions For Form 720 - 2017 (Page 12 of 20) in pdf

Safe Harbor Rule

lines 1 and 2:

1. Add the net tax liability for each tax for each

The safe harbor rule applies separately to deposits under the

semimonthly period, and

regular method and the alternative method. Persons who

filed Form 720 for the look-back quarter (the second calendar

2. Enter the total in the applicable box.

quarter preceding the current quarter) are considered to

Additional rules. Report communications and air

meet the semimonthly deposit requirement if the deposit for

transportation taxes based on:

each semimonthly period in the current quarter is at least

Actual collections on line 1, or

(16.67%) of the net tax liability reported for the look-back

Amounts billed or tickets sold on line 2. The amount of tax

quarter.

to report for a semimonthly period is the net amount that is

considered collected during that period.

For the semimonthly period for which the additional

Example. Under the alternative method, the amounts

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

billed for communications services from June 1–15, 2017,

additional deposit must be at least

(12.23%)), of the net

are considered collected during the period July 1–7, 2017,

tax liability reported for the look-back quarter. Also, the total

and are reported for the third quarter of 2017 on Schedule A

deposit for that semimonthly period must be at least

in box M, not the second quarter of 2016.

(16.67%) of the net tax liability reported for the look-back

quarter.

Reporting tax liability under the special September rule.

Exceptions. The safe harbor rule does not apply to the

An additional reporting is required under the special

following quarters.

September rule (for the period shown in the chart above) as

The first and second quarters beginning on or after the

follows:

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

deposit of taxes for each semimonthly period in the calendar

Regular method taxes

Enter the tax liability for the period beginning

quarter is at least

(16.67%) of the tax liability you would

September 16 and ending September 25/26

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

in box G, Special rule for September.

had been in effect for that look-back quarter.

Alternative method taxes

Enter the tax included in amounts billed or

Any quarter if liability includes any tax not in effect

tickets sold during the period beginning

throughout the look-back quarter.

September 1 and ending September 10/11

For deposits under the alternative method, any quarter if

in box S, Special rule for September box on

liability includes any tax not in effect throughout the look-back

the fourth quarter return.

quarter and the month preceding the look-back quarter.

Requirements to be met. For the safe harbor rule to apply,

For the remaining days in the September period, report

you must pay any underpayment for the current quarter by

the liability as follows:

the due date of the return and check the box on line 5 of

Form 720.

Regular method taxes

Enter the liability for the period beginning

The IRS may withdraw the right to make deposits of

September 26/27 and ending September 30

tax using the safe harbor rule from any person not

in box F.

complying with these rules.

Alternative method taxes

Enter the tax included in the amounts billed

CAUTION

or tickets sold for the period beginning

Online Payment Agreement

September 11/12 and ending September 15

in box M of the fourth quarter return. Enter

If you cannot pay the full amount of tax owed, you can apply

the tax included in amounts billed or tickets

for an installment agreement online. You can apply for an

sold during the period beginning September

installment agreement online if the total amount you owe in

16 and ending September 30 in box N of the

combined tax, penalties, and interest is $25,000 ($50,000 for

fourth quarter return.

individuals) or less, and you've filed all required returns. To

apply using the Online Payment Agreement Application, go

to IRS.gov, click on Tools, then click on Online Payment

Schedule T. TwoParty Exchange

Agreement.

Information Reporting

Schedule A. Excise Tax Liability

In a two-party exchange, the receiving person, not the

delivering person, is liable for the tax imposed on the removal

How to complete. Complete Schedule A to record net tax

of taxable fuel from the terminal at the terminal rack. A

liabilities for Form 720, Part I, taxes for each semimonthly

two-party exchange means a transaction (other than a sale)

period in a quarter even if your net liability is under $2,500.

where the delivering person and receiving person are both

The following table will help you determine which boxes to

taxable fuel registrants and all of the following occur.

complete on Schedule A.

The transaction includes a transfer from the delivering

person, who holds the inventory position for the taxable fuel

IF you are reporting

THEN you report

AND enter the net

in the terminal as reflected in the records of the terminal

under the...

on line...

tax liability in

operator.

boxes...

The exchange transaction occurs before or at the same

Regular method

A–G

time as completion of removal across the rack by the

Alternative method

M–S

receiving person.

The terminal operator in its records treats the receiving

person as the person that removes the product across the

If you are reporting more than one type of tax on

Instructions for Form 720 (Rev. 12017)

Instructions For Form 720 - 2017 Page 12

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