Form 720 – Fuel Excise Tax

Fuel Excise Tax

The federal government charges excise taxes on various motor fuel usage. The IRS charges the excise tax rate per gallon on all types of fuels, and tax rates differ for gasoline and diesel fuel. Also, very little amount of tax (0.1 cents per gallon) is charged on the top of fuel excise taxes to fund the expenses associated with fuel regulations. Specific excise tax rates are applicable for special motor fuels in this form 720 fuel excise taxes. The federal motor fuels excise tax collections are credited to two different federal spending accounts, the Highway Trust Fund (HTF) and the Leakage Underground Storage Tank (LUST) Trust Fund.

The Federal Fuel Excise Taxes are imposed on the following fuels,

• Gasoline, including aviation gasoline and gasoline blendstocks.
• Diesel fuel, including dyed diesel fuel.
• Diesel-water fuel emulsion.
• Kerosene, including dyed kerosene and kerosene used in aviation.
• Other Fuels (including alternative fuels).
• Compressed natural gas (CNG).
• Fuels that are used in commercial transportation on inland waterways.
• Any liquid used in a fractional ownership program aircraft as fuel.

Registration requirements of Form 720 Fuel Excise Taxes

Proper fuel excise tax registration is required for all fuel-related activities. You should see form 637 to know who should register to pay the fuel excise taxes and additional information about the fuel excise tax registration.

The persons who are associated with any activities related to fuel should register for the form 720 fuel excise taxes,

• Blender.
• Enterer.
• Pipeline Operator.
• Position Holder.
• Refiner.
• Terminal Operator.
• Vessel Operator.
• Producer or importer of Alcohol, Biodiesel, Agri-biodiesel, and Renewable diesel.
• Producer of Cellulosic or Second-Generation Biofuel.

You are not required to register if you are,

• Feedstock User.
• Industrial User.
• Ultimate Vendor
• Diesel-Water Fuel Emulsion Producer.
• Credit Card Issuer.
• Alternative Fuel Claimant.

The ultimate vendors, credit card issuers, and alternative fuel claimants are not entitled to registration to buy or sell fuel. But they should register if they need to file for form 8849 refund claims on their excise tax of their fuel sales and usages.

Note: You are entitled to 100% of your tax refunds on your paid form 720 fuel excise taxes on the sale or usage of fuels if you use the fuel for any of the tax-exempt purposes or if it qualifies for any fuel tax credits, refunds or payments.

Part I of Form 720 excise tax consist of a long list of products. There are almost 24 categories and transactions involving various fuel types that are entitled to federal excise tax form 720 under the fuel excise tax.

• A Removal of diesel at the terminal rack.
• Taxable events that are other than removal at the terminal rack.
• Sale or removal of biodiesel mixture other than removal at the terminal rack.
• Removal of diesel-water fuel emulsion at the terminal rack or other taxable events.
• Sale of dyed diesel fuel (LUST tax).

Semi-monthly deposits of Excise Tax Dues

An excise taxpayer is required to make semi-monthly deposits of the taxes through the Electronic Funds Transfer (EFT) after determining the excise tax liability. The tax for a semi-monthly period is due by the 14th day of the following month of the semi-monthly tax period. Taxpayers with a net liability for taxes on Form 720, Part 1, of $2,500 or less are not required to make semi-monthly deposits. Instead, the taxes are payable with the taxpayer’s federal income tax return. The EFT should be initiated at least a day before the deposit due date to ensure timely payments. There is also a limited same-day payment option. For example, if the semi-monthly deposit due tax falls on a public holiday or weekend, the due date would automatically roll over to the next working day.

Due dates to file Form 720 federal excise taxes

Form 720 federal excise taxes are paid every quarter; the due dates for every quarter are as follows,

Quarter	Due Date
January to March – 1st quarter	April 30
April to June – 2nd quarter	July 31
July to September – 3rd quarter	October 31
October to December – 4th quarter	January 31

E-file Form 720 Quarterly Federal Excise Tax at TaxExcise.com!

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