| Instructions for Form 720 |
2003 Tax Year |
Specific Instructions
This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
The first time you file Form 720, type or print your name, address (including the suite, room, or other unit number), and
the quarter ending date
(month and year). After that, the IRS will mail you a Package 720 with a preaddressed Form 720 every quarter. If your address
changes, make the
corrections on Form 720 and check the address change box above Part I of Form 720.
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. Do not abbreviate the
country name.
Employer Identification Number (EIN)
If the EIN on the preaddressed Form 720 is wrong or you did not receive a preaddressed Form 720, enter the correct number.
(If you are a one-time
filer, you may not need an EIN. See One-Time Filing 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 by calling 1-800-TAX-FORM (1-800-829-3676) or by visiting
the IRS website at
www.irs.gov. 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.
Form 720 must be signed by a person authorized by the entity to sign this return.
If you want to allow an employee of your business or another person to discuss your Form 720 with the IRS, check the “Yes” box in the
Third Party Designee section of Form 720. Also, enter that person's name, phone number, and any five digits that person chooses as his or
her personal identification number (PIN). The designation must specify an individual and may not refer to your payroll office
or a tax preparation
firm.
By checking the “Yes” box, you are authorizing the IRS to call the designee to answer any questions that may arise during the processing of
your return. You are also authorizing the designee to:
- Give the IRS any information that is missing from your return,
- Call the IRS for information about the processing of your return or the status of your refund or payment(s), and
- Respond to certain IRS notices that you have shared with the designee about math errors and return preparation. The notices
will not be sent
to the designee.
You are not authorizing the designee to receive any refund check, bind you to anything (including additional tax liability),
or otherwise represent
you before the IRS. If you want to expand the designee's authorization, see Pub. 947, Practice Before the IRS and Power of Attorney.
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. The tax rates for these taxes are shown on Form 6627.
Communications and Air Transportation Taxes
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 the percentage tax and the domestic segment tax. Add the percentage tax and
the domestic segment tax to get the total tax on transportation of persons by air.
Percentage tax.
The percentage tax is 7.5% for amounts paid for taxable transportation of persons by air.
Domestic segment tax.
For amounts paid for each domestic segment of taxable transportation of persons by air, the domestic segment tax is
$3.00 per segment for
transportation that begins in 2003.
Rural airports.
If a segment is to or from a rural airport, 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 during 2003, the tax on international flights is:
- $13.40 per person for flights that begin or end in the United States or
- $6.70 per person for domestic segments that begin or end in Alaska or Hawaii (applies only to departures).
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 A, 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 Center, 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.
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.
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 Gasohol |
Rate of Tax |
| 10% gasohol |
|
$ |
.03734 |
| 7.7% gasohol |
|
|
.02804 |
| 5.7% gasohol |
|
|
.02031 |
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.
Gasoline removed or entered for the production of gasohol (IRS Nos. 58, 73, and 74).
Only gasoline removed or entered for the production of gasohol containing ethanol is reported on the lines for IRS
Nos. 58, 73, and 74. For gasohol
that does not contain ethanol, use the line for IRS No. 79.
Gasohol (IRS Nos. 59, 75, and 76).
Only gasohol containing ethanol is reported on the line for IRS Nos. 59, 75, and 76. For gasohol that does not contain
ethanol, use the line for
IRS No. 79.
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 |
$ |
.119 |
| Qualified— |
|
|
| Ethanol |
|
.1315 |
| Methanol |
|
.1235 |
| Partially exempt— |
|
|
| Ethanol produced from natural gas |
|
.114 |
| Methanol produced from natural gas |
|
.0925 |
| Gasoline removed or entered for the production of— |
|
|
| 10% gasohol (methanol) |
|
.13777 |
| 7.7% gasohol (methanol) |
|
.14929 |
| 5.7% gasohol (methanol) |
|
.15885 |
| Types of gasohol— |
|
|
| 10% gasohol (methanol) |
|
.124 |
| 7.7% gasohol (methanol) |
|
.1378 |
| 5.7% gasohol (methanol) |
|
.1498 |
| Special motor fuels/alcohol mixture containing— |
|
|
| Ethanol |
|
.132 |
| Methanol |
|
.124 |
| Diesel fuel/alcohol mixture containing— |
|
|
| Ethanol |
|
.192 |
| Methanol |
|
.184 |
| Diesel fuel sold for diesel/alcohol mixture containing— |
|
|
| Ethanol |
|
.21333 |
| Methanol |
|
.2044 |
| Aviation fuel/alcohol mixture containing— |
|
|
| Ethanol |
|
.087 |
| Methanol |
|
.079 |
| Aviation fuel sold for aviation/alcohol mixture containing— |
|
|
| Ethanol |
|
.09666 |
| Methanol |
|
.08777 |
| Other fuels not shown |
|
.184 |
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).
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 tax applies to:
- Truck chassis and bodies except truck chassis and bodies suitable for use with a vehicle with a gross vehicle weight (GVW)
of 33,000 pounds
or less,
- Trailer and semitrailer chassis and bodies except trailer and semitrailer chassis and bodies suitable for use with a vehicle
with a GVW of
26,000 pounds or less, and
- Tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer regardless of GVW.
The sales price of a unit includes the sales price of certain related parts and accessories sold on or in connection
with the sale of the unit.
Figure the tax for each unit sold and enter the total for the quarter on the line for IRS No. 33.
Section 4051(d) tire credit.
A tax credit may be taken equal to the amount of tax that has been imposed on each tire that is sold on or in connection
with the first retail sale
of a taxable vehicle reported on IRS No. 33. Claim the section 4051(d) tire credit on Schedule C,
line 11a.
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 lasts 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.
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.
The tax on sales of luxury passenger vehicles (IRS No. 92) expired after December 31, 2002. However, the tax continues to
apply to payments
taxpayers receive for long-term leases of luxury passenger vehicles entered into before January 1, 2003. Until the end of
the lease, taxpayers must
continue to pay the tax on each lease payment and report the tax each quarter on Form 720. Rules similar to those under section
4217(e)(2) apply.
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% (.044) 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% (.044) 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 $12.50 per ton.
Highway-type tires (IRS No. 66).
The tax applies only to the following highway-type tires:
- For tires weighing more than 40 pounds but not more than 70 pounds—$.15 a pound for each pound over 40 pounds.
- 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.
- For tires weighing more than 90 pounds—$10.50 plus $.50 a pound for each pound over 90 pounds.
Figure the tax for each 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;
- Is any HIB (haemophilus influenza type B) vaccine; or
- Is any conjugate vaccine against streptococcus pneumoniae.
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.
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.
Who must file.
The person who pays the premium to the foreign insurer (or to any nonresident person such as a foreign broker) must
pay the tax and file the
return. Otherwise, any person who issued or sold the policy, or who is insured under the policy, is required to pay the tax
and file the return.
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:
- Check the one-time filing box on page 1 of Form 720. If this is your final return, check the final return box.
- Write “None” on lines 1and 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 3.
Where to file.
Mail the Form 720 with the attached statement to: Internal Revenue Service Center, P.O. Box 21086, Philadelphia, PA
19114. Also, see the
Caution under Private Delivery Services on page 2.
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.
Sport fishing equipment (IRS No. 41).
The tax on sport fishing equipment is 10% (.10) of the sales price. The tax is paid by the manufacturer, producer,
or importer. Taxable articles
include fishing rods and poles (and component parts), reels, fly fishing lines (and other lines not over 130 pounds test),
fishing spears, spear guns,
spear tips, terminal tackle, fishing supplies and accessories, and any parts or accessories sold on or in connection with
these articles. See Pub. 510
for a complete list of taxable articles. Add the tax on each sale during the quarter and enter the total on the line for IRS
No. 41.
Electric outboard motors and sonar devices (IRS No. 42).
The tax on an outboard motor or a sonar device for finding fish is 3% (.03) of the sales price. The tax is paid by
the manufacturer, producer, or
importer. The tax is limited to $30 for each sonar device. Sonar devices for finding fish do not include graph recorders,
digital types, meter
readouts, or combination graph recorders or combination meter readouts. Add the tax on each sale during the quarter and enter
the total on the line
for IRS No. 42.
Bows (IRS No. 44).
The tax on bows is 11% (.11) of the sales price. The tax is paid by the manufacturer, producer, or importer. It applies
to bows having a draw
weight of 10 pounds or more. The tax is also imposed on the sale of any part or accessory suitable for inclusion in or attachment
to a taxable bow and
any quiver suitable for use with arrows described below. Add the tax on each sale during the quarter and enter the total on
the line for IRS No. 44.
Arrow components (IRS No. 102).
The tax on any shaft, point, nock, or vane is 12.4% (.124) of the sales price for which the component is sold. The
tax is paid by the manufacturer,
producer, or importer of any component used in the manufacture of any arrow that after assembly measures 18 inches or more
in overall length or is
less than 18 inches long but is suitable for use with a bow that has a draw weight of 10 pounds or more. Add the tax on each
sale during the quarter
and enter the total on the line for IRS No. 102.
Alcohol sold as but not used as fuel (IRS No. 51).
An excise tax is imposed if the credit was claimed on Form 6478, Credit for Alcohol Used as Fuel, and any person later:
- Uses a mixture or straight alcohol for a purpose other than fuel,
- Separates the alcohol from the mixture, or
- Mixes the straight alcohol.
Use the following table to determine the tax for each gallon of alcohol. Fill in the number of gallons and the appropriate
rate in the
Rate column on the line for IRS No. 51. 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.
| IF the alcohol is... |
AND... |
THEN the tax rate per gallon is... |
| at least 190 proof |
• is ethanol |
$ |
.52 |
|
| |
• is methanol |
|
.60 |
|
| |
• benefited from the
small ethanol
producer credit
|
|
.62 |
|
| at least 150 proof but |
• is ethanol |
$ |
.3852 |
|
| less than 190 proof |
• is methanol |
|
.45 |
|
| |
• benefited from the
small ethanol
producer credit
|
|
.4852 |
|
Ozone-depleting chemicals floor stocks tax (IRS No. 20).
Use Form 6627 to figure the liability for this tax. Enter the amount from Form 6627, Part III, line 4, column (d)
on the line for IRS No. 20.
Attach Form 6627 to Form 720 that is due July 31 of each year. Deposit the payment by June 30 at an authorized financial institution.
See How To
Make Deposits on page 7.
Line 4.
Report on line 4 of Form 720 the total claims from line 12 of Schedule C. See the instructions on
page 8.
Lines 6 and 7.
Include on line 6 the amount from line 11 of your previous return that you applied to this return and the amount from
line 7. Use line 7 to report
the amount from line 5b of Form 720X.
Note:
Include on line 6 of your next return the amount from line 11 you want to have applied to that return.
If you owe other Federal tax, interest, or penalty, the overpayment on line 11 and line 7 will first be applied to the unpaid
amounts.
Line 10.
New Form 720-V, Payment Voucher, must be filed with Form 720 if you have a balance due on line 10. Form 720-V is located on the inside
back cover of Package 720 or included as part of Form 720.
Do not use Form 720-V to make deposits.
Generally, semimonthly deposits of excise taxes are required. A semimonthly period is the first 15 days of a month (the first
semimonthly period) or the 16th through the last day of a month (the second semimonthly period).
However, no deposit is required for the situations listed below; the taxes are payable with the return.
- The net liability for taxes listed in Part I (Form 720) does not exceed $2,500 for the quarter.
- The gas guzzler tax is being paid on a one-time filing. See One-Time Filing on page 1.
- The liability is for taxes listed in Part II (Form 720), except for the floor stocks tax, that generally requires a single
deposit. See
Floor Stocks Tax on page 6.
- The tax liability is for the removal of a batch of gasohol from an approved refinery by bulk transfer, if the refiner elects
to treat itself
for that removal as not registered under section 4101. See Regulations section 48.4081-3.
To avoid a penalty, make your deposits timely and do not mail your deposits directly to the IRS. Records of your deposits
will be sent to the IRS
for crediting to your accounts.
Electronic deposit requirement.
You must make electronic deposits of all depository taxes (such as deposits for employment tax, excise tax, and corporate
income tax) using the
Electronic Federal Tax Payment System (EFTPS) in 2003 if:
- The total deposits of such taxes in 2001 exceeded $200,000 or
- You were required to use EFTPS in 2002.
If you are required to use EFTPS and use Form 8109 instead, you may be subject to a 10% penalty. If you are not required
to use EFTPS, you may
participate voluntarily. To get more information or to enroll in EFTPS, call 1-800-555-4477 or 1-800-945-8400; or visit the
EFTPS website at
www.eftps.gov.
Depositing on time.
For EFTPS deposits to be on time, you must initiate the transaction at least one business day before the date the
deposit is due.
Federal Tax Deposit Coupons.
If you are not making deposits by EFTPS, use Form 8109, Federal Tax Deposit Coupon, to make the deposits at an authorized financial
institution. See the instructions in the coupon book for additional information. If you do not have a coupon book, call 1-800-829-4933.
There are two methods for determining deposits: regular method and alternative method.
The regular method applies to all taxes in Part I of Form 720 except for communications and air
transportation taxes if deposits are based on amounts billed or tickets sold, rather than on amounts actually collected. See
Alternative
method below.
If you are depositing more than one tax under a method, combine all the taxes under the method and make one deposit for the
semimonthly period.
Regular method.
The deposit of tax for a semimonthly period is due by the 14th day following that period. Generally, this is the 29th
day of a month for the first
semimonthly period and the 14th day of the following month for the second semimonthly period. If the 14th or the 29th day
falls on a Saturday, Sunday,
or legal holiday, you must make the deposit by the immediately preceding day that is not a Saturday, Sunday, or legal holiday.
Alternative method (IRS Nos. 22, 26, 27, and 28).
Deposits of communications and air transportation taxes may be based on taxes included in amounts billed or tickets
sold during a semimonthly
period instead of on taxes actually collected during the period. Under the alternative method, the tax included in amounts
billed or tickets sold
during a semimonthly period is considered collected during the first 7 days of the second following semimonthly period. The
deposit of tax is due by
the 3rd banking day after the 7th day of that period.
Example.
The tax included in amounts billed or tickets sold for the period June 16-30, 2003, is considered collected from July
16-22, 2003, and must be
deposited by July 25, 2003.
To use the alternative method, you must keep a separate account of the tax included in amounts billed or tickets sold
during the month and report
on Form 720 the tax included in amounts billed or tickets sold and not the amount of tax that is actually collected. For example,
amounts billed in
December, January, and February are considered collected during January, February, and March and are reported on Form 720
as the tax for the 1st
quarter of the calendar year.
The net amount of tax that is considered collected during the semimonthly period must be either:
- The net amount of tax reflected in the separate account for the corresponding semimonthly period of the preceding month or
- One-half of the net amount of tax reflected in the separate account for the preceding month.
Special rule for deposits of taxes in September 2003.
If you are required to make deposits, see the chart below. The special rule does not apply to taxes not required to
be deposited (see Payment
of Taxes above). See Regulations section 40.6302(c)-2 for rules to figure the net tax liability for the deposits due in September.
Additional deposit of taxes in September 2003
| |
For thePeriod |
|
| Type of Tax |
Beginning on |
|
Ending on |
Due Date |
| Regular method taxes |
|
|
|
|
| EFTPS
1 |
Sept. 16 |
|
Sept. 26 |
Sept. 29 |
| Non-EFTPS |
Sept. 16 |
|
Sept. 25 |
Sept. 29 |
| Alternative method taxes (IRS Nos. 22, 26, 27, and 28) (based on amounts billed) |
|
|
|
|
| EFTPS
1 |
Sept. 1 |
|
Sept. 11 |
Sept. 29 |
| Non-EFTPS |
Sept. 1 |
|
Sept. 10 |
Sept. 29 |
| 1See Electronic deposit requirement above.
|
For the remaining days in September, be sure to make your deposits by the regular due date.
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 on page 8.
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.
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 ⅙ (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%),
10/90(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 ⅙ (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 ⅙ (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:
- Add the net tax liability for each tax for each semimonthly period and
- 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, 2003, are considered collected during the period July
1-7, 2003, and are reported
for the 3rd quarter of 2003 on Schedule A in box M, not the 2nd quarter of 2003.
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. |
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 gross income (income tax return) the amount from line 4 of Form 720 if you took a deduction on the income
tax return that
included the amount of the taxes and that deduction reduced the 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.
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.
Claim requirements for lines 1 through 5 and line 8.
The following requirements must be met:
- 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:
- Making a claim for fuel used during any quarter of a claimant's income tax year or
- Aggregating amounts from any quarters of the claimant's income tax year for which no other claim has been made.
- 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.
- Only one claim may be filed for any quarter.
- The fuel must have been used for a nontaxable use during the Period of claim.
- 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 below.
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:
- The claim must be for diesel fuel sold during a period that is at least 1 week.
- 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.
- 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:
- The claim must be for kerosene sold during a period that is at least 1 week.
- The amount of the claim must be at least $100.
- 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.
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:
- The claim must be for gasohol sold or used during a period that is at least 1 week.
- The amount of the claim must be at least $200.
- 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.
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.
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.
Use lines 11b-11h for claims relating to taxes listed in the table on page 11. 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.
Prev | First | Next Instructions Index | 2003 Tax Help Archives | Tax Help Archives | Home
|
