Form 720 is the IRS’s Quarterly Federal Excise Tax Return. Businesses use it to report and pay federal excise taxes on specific goods and services such as fuel, air transportation, communications, certain manufactured goods, indoor tanning, and health plan coverage. Unlike income or payroll tax, excise tax attaches to particular transactions, and if your business touches any of them, you owe a Form 720 every quarter with deposit obligations that can hit as often as twice a month.
Who Has to File
You file Form 720 if your business incurs or collects any of the federal excise taxes listed on the form during a calendar quarter. That reaches across industries: fuel producers and distributors, airlines and charter operators, communications providers, manufacturers of specific goods, health plan sponsors, tanning salons, and others.1Internal Revenue Service. Instructions for Form 720
One rule catches people off guard. Once you file your first Form 720, you have to keep filing every quarter, even quarters when you owe nothing. A zero-liability quarter still gets a return with zeros on the right lines. The only way out of the cycle is to check the “Final” box when you close the business or stop the taxable activity for good.1Internal Revenue Service. Instructions for Form 720
What Gets Reported on Form 720
The form has two parts. Part I covers environmental taxes, communications and air transportation taxes, and fuel taxes. Part II covers manufacturers’ taxes, retail taxes on heavy vehicles, indoor tanning, foreign insurance, and the PCORI fee for health plans. Each taxable activity has its own IRS number, and you enter liability on the lines that match what your business does.2Internal Revenue Service. Form 720 – Quarterly Federal Excise Tax Return
Fuel, Air Travel, and Communications
Fuel taxes cover gasoline, diesel, kerosene, and various alternative fuels on a per-gallon basis, with rates that depend on fuel type and intended use. Air transportation of passengers carries a 7.5% tax on the ticket price plus a per-segment fee of $5.30 for domestic flights in 2026, with separate per-passenger fees for international departures and arrivals; air freight is taxed at 6.25% of the amount charged.3Internal Revenue Service. Instructions for Form 720 Local telephone and similar communications services carry a 3% federal excise tax that the provider collects from the customer.4Office of the Law Revision Counsel. 26 USC 4251 – Imposition of Tax
Environmental taxes on petroleum, taxable chemicals, ozone-depleting chemicals, and imported chemical substances also go in Part I, with the detail broken out on Form 6627 and attached to the return.5Internal Revenue Service. IRS Form 6627 – Environmental Taxes
Manufactured Goods, Heavy Vehicles, and Services
Manufacturers’ excise taxes apply at the point of sale from the manufacturer: 10% on sport fishing equipment, 11% on bows and related archery items, and $0.63 per shaft on arrow shafts.6Internal Revenue Service. Sport Fishing and Archery Excise Tax The retail excise tax on the first retail sale of heavy trucks, trailers, and tractors is 12% of the sales price, and it only applies above specific weight thresholds: trucks over 33,000 pounds gross vehicle weight, trailers over 26,000 pounds, and tractors over 19,500 pounds (or over 33,000 pounds gross combined weight with a trailer).7Office of the Law Revision Counsel. 26 USC 4051 – Imposition of Tax on Heavy Trucks and Trailers Sold at Retail
A 10% excise tax applies to amounts paid for indoor tanning services, collected by the provider from the customer.8eCFR. 26 CFR 49.5000B-1 – Indoor Tanning Services Foreign insurance policies carry excise tax at rates that vary by coverage type.9eCFR. 26 CFR Part 46 – Excise Tax on Policies Issued by Foreign Insurers
Health insurers and sponsors of self-insured health plans owe the Patient-Centered Outcomes Research Institute (PCORI) fee, which is reported once a year on the second-quarter Form 720 due July 31. For plan years ending after September 30, 2025, and before October 1, 2026, the rate is $3.84 per covered life.10Internal Revenue Service. Patient-Centered Outcomes Research Trust Fund Fee – Questions and Answers
Quarterly Filing Deadlines
Form 720 follows the calendar quarter, and each return is due by the last day of the month after the quarter ends:1Internal Revenue Service. Instructions for Form 720
- First quarter (January through March): April 30
- Second quarter (April through June): July 31
- Third quarter (July through September): October 31
- Fourth quarter (October through December): January 31 of the following year
When a due date falls on a weekend or federal holiday, the deadline shifts to the next business day.
Semi-Monthly Deposits
Filing is quarterly, but paying usually is not. Most excise tax filers deposit tax twice a month. Each month splits into two periods, the 1st through the 15th and the 16th through the last day, and the deposit for each period is due by the 14th day after that period ends. In practice, you deposit around the 29th for the first half of the month and around the 14th of the next month for the second half.11Internal Revenue Service. Announcement 2001-98 – Changes to the Requirements for Excise Tax Returns, Payments, and Deposits
Each deposit must cover at least 95% of the actual net tax liability for that semi-monthly period, with any shortfall reconciled on the quarterly return.11Internal Revenue Service. Announcement 2001-98 – Changes to the Requirements for Excise Tax Returns, Payments, and Deposits
September is different. Instead of two semi-monthly periods, the second half of September is split into two shorter windows, creating a third deposit period for the month. The exact dates shift year to year, so check that year’s Form 720 instructions before the end of the third quarter.12Internal Revenue Service. Instructions for Form 720
Small filers get a break. If your total net liability for Part I taxes is $2,500 or less for the whole quarter, you can skip the semi-monthly deposits and pay the full amount with your quarterly return.11Internal Revenue Service. Announcement 2001-98 – Changes to the Requirements for Excise Tax Returns, Payments, and Deposits
How to File and Pay
Accurate filing starts with tracking every taxable transaction during the quarter: gallons of fuel sold, tickets sold, units manufactured, services provided. Each activity maps to an IRS number in Part I or Part II, and you apply the rate or per-unit amount to compute liability. The totals from both parts carry into Part III for the overall tax due. If you made semi-monthly deposits, you also complete Schedule A to show how liability breaks down by deposit period. Schedule C is where you claim allowable credits or refunds, most often for fuel-related overpayments.1Internal Revenue Service. Instructions for Form 720
You can file Form 720 on paper by mailing it to the appropriate IRS service center or electronically through an IRS-approved e-file program. Deposits and final payments should go through the Electronic Federal Tax Payment System (EFTPS). If you mail a paper return with a check or money order, include Form 720-V, the payment voucher, so the IRS credits the payment to the right account.13Internal Revenue Service. About Form 720
If you discover an error in a previously filed quarter, report corrections on Form 720-X, the Amended Quarterly Federal Excise Tax Return.14Internal Revenue Service. About Form 720-X, Amended Quarterly Federal Excise Tax Return
Register Before You Start Certain Activities
Some excise tax activities, especially those involving fuel, require you to register with the IRS before you can operate tax-free or claim certain credits. You register by filing Form 637, Application for Registration (For Certain Excise Tax Activities), and identifying your activity using the designated activity letters. Approval comes in the form of a Letter of Registration, and the IRS may inspect your premises during the review.15Internal Revenue Service. Form 637 – Application for Registration (For Certain Excise Tax Activities)
Skipping registration is expensive. Failing to register when required draws a $10,000 penalty per failure plus $1,000 for every day the failure continues, so file Form 637 before you begin the activity, not after.16Internal Revenue Service. ExSTARS Penalties
Penalties for Filing or Paying Late
The IRS applies the same penalty framework to excise tax returns as to other filings. File Form 720 late without reasonable cause and the penalty is 5% of the unpaid tax for each month or partial month the return is overdue, capped at 25%.17Office of the Law Revision Counsel. 26 USC 6651 – Failure to File Tax Return or to Pay Tax
File on time but pay late and the penalty is 0.5% of the unpaid balance per month, also capped at 25%. When both penalties apply in the same month, the late-filing penalty is reduced by the late-payment penalty, so the combined rate is 5% per month rather than 5.5%.17Office of the Law Revision Counsel. 26 USC 6651 – Failure to File Tax Return or to Pay Tax
If you receive a notice of intent to levy and still don’t pay within 10 days, the late-payment penalty doubles to 1% per month, and interest compounds daily on top.17Office of the Law Revision Counsel. 26 USC 6651 – Failure to File Tax Return or to Pay Tax18Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026 Small balances grow quickly when left alone, and the registration penalty under Section 6719 sits entirely outside this framework, so a business operating without a required Form 637 registration can rack up exposure even while its quarterly returns are current.