Privacy Act and Paperwork Reduction Act Notice.

We ask for the information on these forms in order to carry out the Internal Revenue laws of the United States. We need it to figure and collect the right amount of tax. Certain chapters under Subtitle D of the Internal Revenue Code, Miscellaneous Excise Taxes, impose a tax on the sale and manufacture of various articles, a tax on facilities and services, environmental taxes, luxury tax, and floor stocks taxes. These forms are used to determine the amount of tax that you owe. Section 6011 requires you to provide the requested information. Section 6109 requires you to provide your taxpayer identification number (EIN). Routine uses of this information include giving it to the Department of Justice for civil and criminal litigation, and cities, states, and the District of Columbia for use in administering their tax laws. If you fail to provide this information in a timely manner, you may be liable for penalties and interest.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103.

The time needed to complete and file these forms and related schedules will vary depending on individual circumstances. The estimated average times are:

Form		Recordkeeping	Learning about the law or the form	Preparing and sending the form to the IRS
720		22 hr., 43 min.	2 hr., 11 min.	5 hr., 28 min.
Sch. A		1 hr., 55 min.	- -	2 min.
Sch. C	Part I	1 hr., 55 min.	6 min.	8 min.
	Part II	21 hr., 3 min.	- -	20 min.
	Part III	14 min.	6 min.	7 min.
6197		4 hr., 18 min.	12 min.	17 min.
6627		5 hr., 1 min.	6 min.	11 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making these forms and related schedules simpler, we would be happy to hear from you. You can write to the Tax Forms Committee, Western Area Distribution Center, Rancho Cordova, CA 95743-0001. DO NOT send the tax forms to this office. Instead, see Where To File on page 1.

General Instructions

A Change To Note

The waiver of the 10% penalty for failure to deposit using the Electronic Federal Tax Payment System (EFTPS) has been extended for deposits after June 30, 1999, and before January 1, 2000, provided your deposits during 1998 were $200,000 or less. See page 6.

Additional Information

You may find the following publications helpful when preparing Form 720 and the attachments:

• Pub. 510, Excise Taxes for 1999, contains definitions and examples that will help you prepare Form 720.
• Pub. 378, Fuel Tax Credits and Refunds, has more information on nontaxable uses of fuels.
• Pub. 509, Tax Calendars for 1999, has deposit and payment due dates for all Federal excise taxes.

Unresolved Tax Problems

The Taxpayer Advocate's Problem Resolution Program (PRP) is for taxpayers who have been unable to resolve their problems with the IRS. If you have a tax problem that you cannot clear up through normal channels, you can write to the local IRS District Director or call the Taxpayer Advocate at a toll-free assistance number, 1-877-777-4778. Persons who have access to TTY/TDD equipment may call 1-800-829-4059 to ask for help from the Taxpayer Advocate. This office cannot change the law or technical decisions, but it can help clear up problems that resulted from previous contacts.

Purpose of Form

Use Form 720 and attachments to report and pay the excise taxes listed on the form.

When To File

Except as otherwise provided in the instructions, you must file a return for each quarter of the calendar year as follows:

Quarter covered

If any due date for filing a return falls on a Saturday, Sunday, or legal holiday, you may file the return on the next business day.

Mail your return using the U.S. Postal Service or designated private delivery service. See Pub. 509 for more information.

If you are reporting two or more excise taxes and they are due on different dates, use the later filing date. File only one return each quarter.

Floor stocks tax. Report the floor stocks tax on ozone-depleting chemicals (ODCs), IRS No. 20, on the return for the 2nd quarter of each year. The tax payment is due by June 30. See page 5.

Where To File

Mail Form 720 to the Internal Revenue Service Center, Cincinnati, OH 45999-0009.

How To File

If you are not reporting a tax that you normally report, enter a zero on the appropriate line in Part I or II (Form 720). Also, if you have no tax to report, write None on lines 3 and 5, page 2, Part III, and sign the return.

If you have adjustments to Part I or II (Form 720) taxes, do not enter adjustments in the tax column. See the Schedule C instructions on page 8.

One-Time Filings

If you import for personal use a gas guzzling automobile or a passenger vehicle subject to the luxury tax, you may be eligible to make a one-time filing of Form 720 and Form 6197.

You may make a one-time filing to report the gas guzzler tax or the luxury tax if you meet all of the following conditions:

• You do not use the vehicle in the course of any trade or business;
• You do not import gas guzzling automobiles or luxury passenger vehicles in the course of your trade or business; and
• You are not required to file Form 720 reporting excise taxes for the calendar quarter, except for one-time filings.

To make a one-time filing:

1. File the return for the quarter in which you incur liability for the tax. See When To File on this page.
2. Pay the tax with the return. No deposits are required.
3. If you are an individual and do not have an employer identification number (EIN), enter your social security number (SSN) on Form 720 on the line for the EIN.
4. Check the one-time filing box above Part I on page 1 of Form 720.

Final Return

File a final return if you have been filing a Form 720 and you:

1. Go out of business, or
2. Will not owe excise taxes that are reportable on Form 720 in future quarters.

If you are only filing to report zero tax and you will no longer owe excise tax in future quarters, check the final return box above Part I on page 1 of Form 720. The IRS will then stop mailing Package 720 to you each quarter.

Recordkeeping

Keep copies of your tax return, records, and accounts of all transactions to show that the correct tax has been paid. Keep records to support all adjustments claimed and all exemptions at least 4 years from the latest of the following dates:

• When the tax became due,
• When you paid the tax,
• When you claimed an adjustment, or
• When you filed a claim for a refund.

Always keep your records available for IRS inspection.

Penalties and Interest

Avoid penalties and interest by filing returns and depositing and paying taxes when due. The law provides penalties for filing a return late; depositing taxes late; paying taxes late; willfully failing to collect and pay tax, keep records, or file a return; negligence; and fraud. These penalties are in addition to the interest charge on late payments. The penalty for filing a return late will not be imposed if you can show that the failure to file a timely return is due to reasonable cause. Those filing after the due date must attach an explanation to the return to show reasonable cause.

Trust fund recovery penalty. If communications and air transportation taxes are collected but not paid over to the United States Treasury or are willfully not collected, the trust fund recovery penalty may apply. The penalty is 100% of these taxes. The penalty may apply to you if these taxes cannot be immediately recovered from the business. The penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying over these taxes, and who acted willfully in not doing so.

A responsible person can be an officer or employee of a corporation, a partner or employee of a partnership, an employee of a sole proprietorship, an accountant, or a volunteer director/trustee. A responsible person may also include one who signs checks for the business or otherwise has authority to spend business funds. Willfully means voluntarily, consciously, and intentionally. A responsible person acts willfully if he or she knows the required actions are not being taken.

Specific Instructions

Name and Address

The first time you file Form 720, enter the required information. After that, the IRS will mail you a Package 720 with a preprinted label every quarter. Use the preprinted label on your form. Include the suite, room, or other unit number after the street address on the label. If you did not receive a label, type or print your name, address, and quarter ending date (month and year).

P.O. box. If the Post Office does not deliver mail to the street address and you have a P.O. box, show the box number instead of the street address.

Foreign address. Enter the city, province or state, and country. Follow the country's practice for entering the postal code. Please do not abbreviate the country name.

Employer Identification Number (EIN)

If the EIN on the label is wrong or you did not receive a label, enter the correct number. (If you are a one-time filer, you do not need an EIN. See One-Time Filings on page 1.) If you do not have an EIN, use Form SS-4, Application for Employer Identification Number, to apply for one. You can get this form at Social Security Administration offices or by calling 1-800-TAX-FORM (1-800-829-3676). You can ask for an EIN by calling the tele-TIN phone number for your service center listed in the instructions for Form SS-4.

Part I

Environmental Taxes

Use Form 6627, Environmental Taxes, to figure the environmental taxes on:

• ODCs, IRS No. 98;
• Imported products that used ODCs as materials in the manufacture or production of the product, IRS No. 19; and
• The floor stocks tax on ODCs, IRS No. 20.

Attach Form 6627 to Form 720 each quarter. The tax rates for these taxes are shown on Form 6627 and its instructions.

Communications and Air Transportation Taxes

Who Must File

The person receiving the payment for communications or air transportation services must collect and pay over the tax and file the return. Enter the amount of tax collected or considered collected for the quarter.

Communications Services (IRS No. 22)

The tax is 3% of amounts paid for local telephone service, toll telephone service, and teletypewriter exchange service.

Transportation of Persons by Air (IRS No. 26)

The tax on transportation of persons by air is made up of two parts:

• The percentage tax, and
• The domestic segment tax.

Percentage tax. For amounts paid for taxable transportation of persons by air, the percentage tax is:

• 8% for transportation beginning after September 30, 1998, and
• 7.5% for transportation beginning after September 30, 1999.

Domestic segment tax. For amounts paid for each domestic segment of taxable transportation of persons by air, the domestic segment tax is:

• $2.00 per segment for transportation after September 30, 1998, and
• $2.25 per segment for transportation beginning after September 30, 1999, and before January 1, 2000.

Rural airports. If a segment is to or from a rural airport, the percentage tax is 7.5% of amounts paid and the domestic segment tax does not apply.

Transportation of Property by Air (IRS No. 28)

The tax is 6.25% of amounts paid for transportation of property by air.

Use of International Air Travel Facilities (IRS No. 27)

For amounts paid before January 1, 2000, for international flights that begin or end in the United States, the tax is $12.20 per person. For a domestic segment that begins or ends in Alaska or Hawaii, a $6.10 per person tax applies to departures.

Fuel Taxes

First taxpayer's report. If you are reporting gallons of gasoline, diesel fuel, and kerosene that may again be subject to tax, you may need to file a first taxpayer's report. The report must contain all the information as shown in the Model Certificate C, Appendix C of Pub. 510.

The person who paid the first tax must:

• Give a copy of the first taxpayer's report to the buyer;
• File the first taxpayer's report with Form 720 for the quarter for which the report relates; and
• Write EXCISE - FIRST TAXPAYER'S REPORT across the top of a separate copy of the report, and by the due date of Form 720, send the copy to: Internal Revenue Service, Cincinnati, OH 45999-0555.

Diesel fuel (IRS No. 60). If you are liable for the diesel fuel tax on removal at the terminal rack, report these gallons on line (a) of IRS No. 60. If you are liable for the diesel fuel tax on events other than removal at the terminal rack, report these gallons on line (b) of IRS
No. 60.

Multiply the total number of gallons subject to tax on lines (a) and (b) by $.244 and make one entry in the tax column.

Dyed diesel fuel used in trains (IRS No. 71). Dyed diesel fuel used in a diesel-powered train is taxed at $.044 per gallon.

Dyed diesel fuel used in certain intercity or local buses (IRS No. 78). Dyed diesel fuel used in certain intercity or local buses is taxed at $.074 per gallon.

Kerosene (IRS No. 35). If you are liable for the kerosene tax on removal at the terminal rack, report these gallons on line (a) of IRS No. 35. If you are liable for the kerosene tax on events other than removal at the terminal rack, report these gallons on line (b) of IRS No. 35.

Multiply the total number of gallons subject to tax on lines (a) and (b) by $.244 and make one entry in the tax column.

Liquefied petroleum gas (LPG) (IRS No. 61). Only LPG (such as propane and butane) is reported on the line for IRS No. 61. LPG is taxed at $.136 per gallon.

Other fuels (IRS No. 79). Use the following table to determine the tax for each gallon. Fill in the number of gallons and the appropriate rate in the Rate column on the line for IRS No. 79. If more than one rate applies, leave the Rate column blank and attach a schedule showing the rates and number of gallons taxed at each rate.

Fuel	Tax Rate per Gallon
Liquefied natural gas	$.1190
Qualified - Ethanol	.1295
Methanol	.1235
Partially exempt - Ethanol produced from natural gas	.1140
Methanol produced from natural gas	.0925
Gasoline sold for gasohol production containing at least - 10% alcohol (methanol)	.13778
7.7% alcohol but less than 10% alcohol (methanol)	.14929
5.7% alcohol but less than 7.7% alcohol (methanol)	.15885
Gasohol containing at least - 10% alcohol (methanol)	.1240
7.7% alcohol but less than 10% alcohol (methanol)	.1378
5.7% alcohol but less than 7.7% alcohol (methanol)	.1498
Special motor fuels/alcohol mixture containing - Ethanol	.1300
Methanol	.1240
Diesel/alcohol mixture containing - Ethanol	.1900
Methanol	.1840
Diesel sold for diesel/alcohol mixture containing - Ethanol	.2111
Methanol	.2044
Aviation fuel/alcohol mixture containing - Ethanol	.0850
Methanol	.0790
Aviation fuel sold for aviation/alcohol mixture containing - Ethanol	.09444
Methanol	.08778
Other fuels not shown	.1840

Gasoline (IRS No. 62). If you are liable for the gasoline tax on removal at the terminal rack, report these gallons on line (a) of IRS No. 62. If you are liable for the gasoline tax on events other than removal at the terminal rack, report these gallons on line (b) of IRS No. 62. If you are liable for the additional tax on failure to blend or later separation, report these gallons on line (c) of IRS No. 62.

Multiply the total number of gallons subject to tax on lines (a) and (b) by $.184. Multiply the total number of gallons subject to tax on line (c) by the appropriate rate below. Combine the tax for lines (a), (b), and (c), and make one entry in the tax column.

Additional tax on failure to blend or later separation. Anyone who purchases gasoline for gasohol production at one of the reduced rates (IRS Nos. 58, 73, and 74) and fails to blend the gasoline with alcohol is subject to an additional tax. Anyone who purchases gasohol at one of the reduced rates (IRS Nos. 59, 75, and 76) and later separates the gasoline from the mixture is subject to an additional tax. The additional tax rates per gallon of gasoline are:

Type of Mixture	Rate of Tax
At least 10% alcohol	$ .03956
At least 7.7% alcohol but less than 10% alcohol	.02970
At least 5.7% alcohol but less than 7.7% alcohol	.02152

Report the number of gallons on line (c) of IRS No. 62 and enter the appropriate rate in the Rate column of that line. If more than one rate applies, leave the Rate column blank and attach a schedule showing the rates and number of gallons taxed at each rate.

Compressed natural gas (IRS No. 101). Tax is imposed on compressed natural gas (CNG) that is sold for use or used as fuel in a motor vehicle or motorboat. The rate of tax is $.4854 per thousand cubic feet (determined at standard temperature and pressure).

Retail Tax

Truck, trailer, and semitrailer chassis and bodies, and tractors (IRS No. 33). The tax is 12% (.12) of the sales price on the first retail sale of each unit. The sales price of a vehicle includes certain related parts and accessories sold on or in connection with the sale of the vehicle. It applies to trucks that have a gross vehicle weight (GVW) over 33,000 pounds. It also applies to trailer and semitrailer chassis and bodies for use with a trailer or semitrailer with a GVW over 26,000 pounds. Tractors mainly used for highway transportation with a trailer or semitrailer are taxable regardless of GVW.

Tire credit. The value of any tires sold on or in connection with the first retail sale is not excluded from the sales price subject to the 12% retail tax. However, a tax credit may be taken equal to the amount of tax on each tire. Claim the tax credit on Schedule C, line 11h.

Ship Passenger Tax

Transportation by water (IRS No. 29). A tax is imposed on the operator of commercial ships. The tax is $3 for each passenger on a commercial passenger ship that has berth or stateroom accommodations for at least 17 passengers if the trip is over 1 or more nights. A voyage extends over 1 or more nights if it is longer than 24 hours. The tax also applies to passengers on any commercial ship that transports passengers engaged in gambling aboard the ship beyond the territorial waters of the United States. Enter the number of passengers for the quarter on the line for IRS No. 29.

Other Excise Tax

Obligations not in registered form (IRS No. 31). For obligations issued during the quarter, enter the principal amount of the obligation multiplied by the number of calendar years (or portion thereof) during the period beginning on the issue date and ending on the maturity date on the line for IRS No. 31.

Luxury Tax

Passenger vehicles (IRS No. 92). The tax is imposed on the first retail sale of a passenger vehicle and is equal to 6% of the sales price to the extent the price exceeds $36,000. The first retail sale includes the use or lease of a vehicle. The tax is paid by the seller of the vehicle.

Add the tax on each sale during the quarter and enter the total on the line for IRS No. 92. See Pub. 510 for more information.

Also, see Pub. 510 for information on applying this tax to electric and clean-fuel burning vehicles.

Manufacturers Taxes

Do not include the excise tax on coal in the sales price when determining which tax rate to use.

Underground mined coal (IRS Nos. 36 and 37). The tax on underground mined coal is the lower of $1.10 per ton or 4.4% of the sales price. Enter on the line for IRS No. 36 the number of tons of underground mined coal sold at $25 or more per ton. Enter on the line for IRS No. 37 the total sales price for all sales of underground mined coal sold at a selling price of less than $25 per ton.

Surface mined coal (IRS Nos. 38 and 39). The tax on surface mined coal is the lower of $.55 per ton or 4.4% of the sales price. Enter on the line for IRS No. 38 the number of tons of surface mined coal sold at $12.50 or more per ton. Enter on the line for IRS No. 39 the total sales price for all sales of surface mined coal sold at a selling price of less than $12.50 per ton.

Highway-type tires (IRS No. 66). The tax applies only to highway-type tires and is as follows:

1. For tires weighing more than 40 pounds but not more than 70 pounds - $.15 a pound for each pound over 40 pounds.
2. For tires weighing more than 70 pounds but not more than 90 pounds - $4.50 PLUS $.30 a pound for each pound over 70 pounds.
3. For tires weighing more than 90 pounds - $10.50 PLUS $.50 a pound for each pound over 90 pounds.

Figure the tax for ach tire sold and enter the total for the quarter on the line for IRS No. 66.

Gas guzzler tax (IRS No. 40). Use Form 6197, Gas Guzzler Tax, to figure the liability for this tax and attach it each quarter to Form 720. The tax rates for the gas guzzler tax are shown on Form 6197.

Vaccine taxes (IRS No. 97). A tax is imposed on the sale or use of a vaccine manufactured, produced, or entered into the United States at $.75 per dose if it:

• Contains diptheria toxoid, tetanus toxoid, pertussis bacteria, extracted or partial cell bacteria, specific pertussis antigens, or polio virus;
• Is against measles, mumps, rubella, hepatitus B, chicken pox, or rotavirus gastroenteritis; or
• Is any HIB (haemophilus influenza type B) vaccine.

If any taxable vaccine is combined with one or more additional taxable vaccines, then the tax is imposed on each vaccine included in the combination.

Example. MMR contains three taxable vaccines: measles, mumps, and rubella. The tax per dose on MMR is $2.25 (3 x $.75).

Add the tax for each taxable vaccine and enter the total tax on the line for IRS No. 97.

Foreign Insurance Taxes

Policies issued by foreign insurers (IRS No. 30). Enter the amount of premiums paid during the quarter on policies issued by foreign insurers. Multiply the premiums paid by the rates listed on Form 720 and enter the total for the three types of insurance on the line for IRS No. 30.

Treaty-based return positions under section 6114. Foreign insurers and reinsurers who take the position that a treaty of the United States overrules, or otherwise modifies, an Internal Revenue law of the United States, must disclose such position. This disclosure must be made once a year on a statement which must report the payments of premiums that are exempt from the excise tax on policies issued by foreign insurers for the previous calendar year. This statement is filed with the 1st quarter Form 720, which is due before May 1 of each year.

You may be able to use Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), as a disclosure statement.

How to file. At the top of Form 720, write Section 6114 Treaty. Provided you have no other transactions reportable on Form 720:

1. Check the one-time filing box on page 1. If this is your final return, check the final return box.
2. Write None on lines 1, 3, and 5.
3. Sign the return.

You need an EIN to file Form 720. If you do not have an EIN, use Form SS-4 to apply for one. See Employer Identification Number (EIN) on page 2.

Where to file. Mail the Form 720 with the attached statement to: Internal Revenue Service Center, P.O. Box 21086, Philadelphia, PA 19114.

Exception. If you are reporting liabilities in Parts I or II (Form 720), follow the instructions above for How to file, except mail the Form 720 to: Internal Revenue Service Center, Cincinnati, OH 45999-0009.

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