Amount To Deposit

Deposits of taxes for a semimonthly period must be at least 95% of the amount of net tax liability for that period, unless the safe harbor rule applies. See Safe Harbor Rule below.

The net tax liability for a semimonthly period is the total liability for the period minus any claims on Schedule C for the period. Net tax liability for a semimonthly period may be figured by dividing the net tax liability for the month by 2, provided this method of computation is used for all semimonthly periods in the calendar quarter.

The net tax liability for a semimonthly period is not reduced by any amounts from Form 720X.

Safe Harbor Rule

The safe harbor rule applies separately to deposits under the regular method and the alternative method. Persons who filed Form 720 for the look-back quarter (the 2nd calendar quarter preceding the current quarter) are considered to meet the semimonthly deposit requirement if the deposit for each semimonthly period in the current quarter is at least 1/6 (16.67%) of the net tax liability reported for the look-back quarter.

For the semimonthly period for which the additional deposit is required, the additional deposit must be at least 11/90(12.23%), 10/(11.12%) for non-EFTPS, of the net tax liability reported for the look-back quarter. Also, the total deposit for that semimonthly period must be at least 1/6 (16.67%) of the net tax liability reported for the look-back quarter.

Exceptions.   The safe harbor rule does not apply to:

• The 1st and 2nd quarters beginning on or after the effective date of an increase in the rate of tax unless the deposit of taxes for each semimonthly period in the calendar quarter is at least 1/6 (16.67%) of the tax liability you would have had for the look-back quarter if the increased rate of tax had been in effect for that look-back quarter;
• Any quarter if liability includes any tax not in effect throughout the look-back quarter; or
• For deposits under the alternative method, any quarter if liability includes any tax not in effect throughout the look-back quarter and the month preceding the look-back quarter.

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

• Make each deposit timely at an authorized financial institution and
• Pay any underpayment for the current quarter by the due date of the return.

The IRS may withdraw the right to make deposits of tax using the safe harbor rule from any person not complying with these rules.

Schedule A - Excise Tax Liability

How to complete.   Complete Schedule A to record net tax liabilities for Part I taxes for each semimonthly period in a quarter even if your net liability is under $2,500.

The following table will help you determine which boxes to complete on Schedule A.

IF you are reporting under the...	THEN you report on line...	AND enter the net tax liability in boxes...
Regular method	1	A-F
Alternative method	2	M-R

If you are reporting more than one type of tax on lines 1 and 2:

1. Add the net tax liability for each tax for each semimonthly period and
2. Enter the total in the applicable box.

Additional rules.   Report communications and air transportation taxes based on:

• Actual collections on line 1.
• Amounts billed or tickets sold on line 2. The amount of tax to report for a semimonthly period is the net amount that is considered collected during that period.

Example.   The amounts billed for communications services from June 1-15, 2002, are considered collected during the period July 1-7, 2002, and are reported for the 3rd quarter of 2002 on Schedule A in box M, not the 2nd quarter of 2002.

Reporting tax liability under the special September rule.   An additional reporting is required under the special September rule (for the period shown in the chart on page 7) as follows:

Regular method taxes	Enter the tax liability for the period beginning September 16 and ending September 25/26 in the (line 1) Special rule for September box.
Alternative method taxes	Enter the tax included in amounts billed or tickets sold during the period beginning September 1 and ending September 10/11 in the (line 2) Special rule for September box on the 4th quarter return.

For the remaining days in the September period, report the liability as follows:

Regular method taxes	Enter the liability for the period beginning September 26/27 and ending September 30 in box F.
Alternative method taxes	Enter the tax included in the amounts billed or tickets sold for the period beginning September 11/12 and ending September 15 in box M of the 4th quarter return. Enter the tax included in amounts billed or tickets sold during the period beginning September 16 and ending September 30 in box N of the 4th quarter return.

Schedule C - Claims

Complete all information requested for each line, including month income tax year ends and period of claim or for line 10, earliest and latest date of sale included in the claim. Your claim will be disallowed if you do not follow the required procedures or do not provide all the required information. Also, you are certifying to the applicable statement(s) on Schedule C when you make a claim. See Pub. 378 and Pub. 510 for more information.

You must include in your gross income the amount from line 4 of Form 720 if you took a deduction on your income tax return that included the amount of the taxes and that deduction reduced your income tax liability. See Pub. 378 for more information.

Do not use Schedule C:

• If you are not reporting a liability in Part I or Part II of Form 720.
• To claim amounts that you took or will take as a credit on Form 4136, Credit for Federal Tax Paid on Fuels, or as a refund on Form 8849, Claim for Refund of Excise Taxes, and its separate schedules.
• To request an abatement or refund of interest under section 6404(e) (due to IRS errors or delays) or an abatement or refund of a penalty or addition to tax under section 6404(f) (due to erroneous IRS written advice). Instead, use Form 843, Claim for Refund and Request for Abatement. Also use Form 843 to request refund of the penalty under section 6715 for misuse of dyed fuel.
• To make adjustments to liability reported on Forms 720 filed for prior quarters, use Form 720X.

Type of Use Table

The following table lists the nontaxable uses of fuels. You must enter the number from the table in the Type of use column as required for lines 1-5 and 10.

No.	Type of Use
1	On a farm for farming purposes
2	Off-highway business (for business use other than in a highway vehicle registered or required to be registered for highway use)
3	Export
4	In a boat engaged in commercial fishing
5	In certain intercity and local buses
6	For diesel fuel in a qualified local bus
7	In a bus transporting students and employees of schools (school buses)
8	For diesel fuel and kerosene used other than as a fuel in the propulsion engine of a train or diesel-powered highway vehicle (but not off-highway business use)
9	In foreign trade
10	Certain helicopter and fixed-wing air ambulance uses
11	For aviation fuel used other than as a fuel in the propulsion engine of an aircraft
12	In a highway vehicle owned by the United States that is not used on a highway
13	Exclusive use by a nonprofit educational organization
14	Exclusive use by a state, political subdivision of a state, or the District of Columbia
15	In an aircraft or vehicle owned by an aircraft museum
16	In military aircraft
17	For use in the production of special fuels

Claim requirements for lines 1 through 5 and line 8.   The following requirements must be met:

1. The amount of the claim must be at least $750 (combining amounts on lines 1, 2, 3, 4, 5, and 8). This amount may be met by:
   1. Making a claim for fuel used during any quarter of a claimant's income tax year or
   2. Aggregating amounts from any quarters of the claimant's income tax year for which no other claim has been made.
2. Claims must be filed during the first quarter following the last quarter of the claimant's income tax year included in the claim. For example, a calendar year income taxpayer's claim for the first quarter is due June 30 if filed on Form 8849. However, Form 720 must be filed by April 30.
3. Only one claim may be filed for any quarter.
4. The fuel must have been used for a nontaxable use during the Period of claim.
5. The ultimate purchaser is the only person eligible to make the claim.

If requirements 1-3 above are not met, see Annual Claims on page 10.

Line 1. Nontaxable Use of Gasoline and Gasohol

Allowable uses.   The gasoline or gasohol must have been used during the period of claim for type of use 2, 3, 4, 5, 7, or 12. Type of use 2 does not include any personal use or use in a motorboat.

Line 2. Nontaxable Use of Aviation Gasoline

Allowable uses.   For line 2b, the aviation gasoline must have been used during the period of claim for type of use 3, 9, 10, or 16.

Line 3. Nontaxable Use of Undyed Diesel Fuel

Line 3 cannot be used to make a claim for diesel fuel used on a farm for farming purposes or for exclusive use by a state or local government. Only registered ultimate vendors may make these claims. See the instructions for line 6 on page 10.

Allowable uses.   For line 3a, the diesel fuel must have been used during the period of claim for type of use 2, 3, 6, 7, 8, or 12. Type of use 2 does not include any personal use or use in a motorboat. Type of use 8 includes use as heating oil and use in a motorboat.

Line 4. Nontaxable Use of Undyed Kerosene

Line 4 cannot be used to make a claim for kerosene used on a farm for farming purposes, for exclusive use by a state or local government, or for sales from a blocked pump. Only registered ultimate vendors may make these claims. See the instructions for line 7 on page 10.

Allowable uses.   For line 4, the kerosene must have been used during the period of claim for type of use 2, 3, 7, 8, or 12. Type of use 2 does not include any personal use or use in a motorboat. Type of use 8 includes use as heating oil and use in a motorboat.

Line 5. Nontaxable Use of Aviation Fuel

Allowable uses.   For line 5b (aviation fuel taxed at a rate of 21.9 cents a gallon) or line 5c (aviation fuel taxed at a rate of 4.4 cents a gallon), the aviation fuel must have been used during the period of claim for type of use 1, 3, 9, 10, 11, or 16.

Line 6. Sales By Registered Ultimate Vendors of Undyed Diesel Fuel

To make an ultimate vendor claim on line 6, you are required to have a UV registration number. If you do not have a registration number, you cannot make a claim at this time. Use Form 637, Application for Registration (For Certain Excise Tax Activities), to apply for one.

Claimant.   The registered ultimate vendor of the diesel fuel is the only person eligible to make this claim. Write your UV registration number on the entry line for that number.

Allowable sales.   The fuel must have been sold during the Period of claim for:

• Use on a farm for farming purposes or
• Use by a state or local government (including essential government use by an Indian tribal government).

Claim requirements.   The following requirements must be met:

1. The claim must be for diesel fuel sold during a period that is at least 1 week.
2. The amount of the claim must be at least $200. To meet this minimum requirement, amounts from line 6 and line 7 may be combined.
3. Claims must be filed by the last day of the first quarter following the earliest quarter of the claimant's income tax year included in the claim. For example, a calendar year income taxpayer's claim for the first quarter is due June 30 if filed on Form 8849. However, Form 720 must be filed by April 30.

Information to be submitted.   For claims on line 6, attach a separate sheet with the name and TIN of each farmer, custom harvester, or governmental unit to whom the diesel fuel was sold and the number of gallons sold to each.

If requirements 1-3 above are not met, see Annual Claims below.

Line 7. Sales By Registered Ultimate Vendors of Undyed Kerosene

To make an ultimate vendor claim on line 7, you are required to have a UV registration number (or UP registration number, in the case of sales from a blocked pump). If you do not have a registration number, you cannot make a claim at this time. Use Form 637, Application for Registration (For Certain Excise Tax Activities), to apply for one.

Claimant.   The registered ultimate vendor of the kerosene is the only person eligible to make this claim. Write your UV registration number on the entry line for that number if you are making a claim on line 7a or 7b. For a claim on line 7c, write your UP registration number on the entry line.

Allowable sales.   The fuel must have been sold during the Period of claim:

• For use on a farm for farming purposes,
• For use by a state or local government (including essential government use by an Indian tribal government), or
• From a blocked pump.

Claim requirements.   The following requirements must be met:

1. The claim must be for kerosene sold during a period that is at least 1 week.
2. The amount of the claim must be at least $100.
3. Claims must be filed by the last day of the first quarter following the earliest quarter of the claimant's income tax year included in the claim. For example, a calendar year income taxpayer's claim for the first quarter is due June 30 if filed on Form 8849. However, Form 720 must be filed by April 30.

Information to be submitted.   For claims on lines 7a and 7b, attach a separate sheet with the name and TIN of each farmer, custom harvester, or governmental unit to whom the kerosene was sold and the number of gallons sold to each.

If requirements 1-3 above are not met, see Annual Claims below.

Line 9. Gasohol Blending

Claimant.   The person who produced the gasohol is the only person eligible to make this claim.

Allowable use.   Gasoline that was taxed at the full rate must have been used to produce gasohol during the Period of claim for sale or use in the blender's trade or business.

Claim requirements.   The following requirements must be met:

1. The claim must be for gasohol sold or used during a period that is at least 1 week.
2. The amount of the claim must be at least $200.
3. Claims must be filed by the last day of the first quarter following the earliest quarter of the claimant's income tax year included in the claim. For example, a calendar year income taxpayer's claim for January and February is due June 30 if filed on Form 8849. However, Form 720 must be filed by April 30.

If requirements 1-3 above are not met, see Annual Claims.

Annual Claims

If a claim on lines 1-9 was not made for any gallons, an annual claim may be made. Generally, an annual claim is made on Form 4136 for the income tax year during which the fuel was used by the ultimate purchaser, sold by the registered ultimate vendor, or used to produce gasohol. See Form 4136 for more information.

Line 10. Gasoline

Claimant.   The person who paid the tax to the government is the only person eligible to make this claim.

Allowable sales.   The fuel must have been sold for type of use 3, 4, 9, 13, 14, 16, or 17.

Claim requirement.   Generally, the claim must be filed within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever is later.

Line 11. Other Claims

Use lines 11b-11h for claims relating to taxes listed in the table below. See Pub. 510 for information on allowable claims relating to these taxes. If you need additional space, attach other sheet(s). You must include the following information for each claim.

• A detailed description of the claim.
• Any additional information required by the regulations.
• The amount of the claim.
• How you figured the claim amount.
• Any other information you believe will support the claim.

Claim requirement.   Generally, the claim must be filed within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever is later.

Tax	CRN
Ozone-depleting chemicals (ODCs)	398
Truck, trailer, and semitrailer chassis and bodies, and tractors	383
Passenger vehicles (luxury tax)	392
Highway-type tires	366
Gas guzzler automobiles	340
Vaccines	397
Sport fishing equipment	341
Electric outboard motors and sonar devices	342
Bows	344
Arrow components	370

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. Miscellaneous excise taxes are imposed under Subtitle D of the Internal Revenue Code. 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 (TIN). 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. We may also disclose this information to Federal and state agencies to enforce Federal nontax criminal laws and to combat terrorism. 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	24 hr., 51 min.	2 hr., 17 min.	6 hr., 23 min.
Sch. A	1 hr., 54 min.	- -	1 min.
Sch. C	23 hr., 55 min.	30 min.	54 min.
720X	6 hr., 13 min.	18 min.	24 min.
6197	4 hr., 18 min.	12 min.	16 min.
6627	5 hr., 1 min.	6 min.	10 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.

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