Instructions For Form 720 - 2017 (Page 4 of 20) in pdf

enter the firm’s name and the EIN of the firm. However, you

ownership program aircraft is imposed. For more information,

cannot use the PTIN of the tax preparation firm in place of

see Surtax on any liquid used in a fractional ownership

your PTIN. You can apply for a PTIN online or by filing Form

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

W-12, IRS Paid Preparer Tax Identification Number (PTIN)

Application and Renewal. For more information about

Who Must File

applying for a PTIN online, visit the IRS website at

The person receiving the payment for air transportation

services must do all of the following.

Part I

Collect the tax.

Submit the tax.

Environmental Taxes

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

considered collected, for the quarter.

Use Form 6627, Environmental Taxes, to figure the

environmental taxes on:

Percentage tax. The percentage tax is 7.5% of amounts

Oil spill liability, IRS Nos. 18 and 21;

paid for taxable transportation of persons by air.

Ozone-depleting chemicals (ODCs), IRS No. 98;

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

Imported products that used ODCs as materials in the

the amount paid for each domestic segment of taxable

manufacture or production of the product, IRS No. 19; and

transportation is increased to $4.10.

The floor stocks tax on ODCs, IRS No. 20 (reported on

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

Form 720, Part II).

a commercial airline for a flight in January from Washington

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

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

taxes are shown on Form 6627.

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

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

Communications Taxes

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

the government.

Communications Services (IRS No. 22)

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

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

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

program aircraft is imposed, the domestic segment tax for

and teletypewriter exchange service.

each segment of taxable transportation is figured by

multiplying the tax by the number of passengers transported

Who Must File

on the aircraft.

The person receiving the payment for communications

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

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

air charter service to carry seven employees from

Enter the amount of tax collected or considered collected for

Washington to Detroit with a stopover in Pittsburgh. The flight

the quarter.

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

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

Credits or Refunds

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

service collects the tax from Tim and submits it to the

If tax is collected and paid over for nontaxable services from

government.

the communications tax, the collector or taxpayer may

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

request a credit or refund as described below and in Notices

the domestic segment tax does not apply.

2006-50 and 2007-11.

Collectors. The collector may request a credit or refund

Transportation of Property by Air (IRS No. 28)

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

The tax is 6.25% of amounts paid for transportation of

allowance of the credit or refund. These requirements also

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

apply to nontaxable service refunds.

used in a fractional ownership program aircraft is imposed.

See Surtax on any liquid used in a fractional ownership

Collectors using the regular method for deposits.

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

Collectors using the regular method for deposits must use

Form 720X to request a credit or refund.

Use of International Air Travel Facilities

Collectors using the alternative method for deposits.

Collectors using the alternative method for deposits must

(IRS No. 27)

adjust their separate accounts for the credit or refund. For

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

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

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

27, and 28), later.

flights that begin or end in the United States.

Air Transportation Taxes

The tax is increased to $9 per person for domestic

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

Transportation of Persons by Air (IRS No. 26)

to departures).

The taxes on transportation of persons by air are the

Communications and Air Transportation

percentage tax and the domestic segment tax. Add the

Taxes—Uncollected Tax Report

percentage tax and the domestic segment tax to get the total

tax on transportation of persons by air.

A separate report is required to be filed by collecting agents

of communications services (local and teletypewriter service)

Note. The percentage and domestic segment taxes do not

and air transportation taxes if the person from whom the

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

Instructions for Form 720 (Rev. 12017)

Instructions For Form 720 - 2017 Page 4

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