If federal fuel excise tax is part of your business, Form 720 is the envelope it travels in. It is the quarterly federal excise tax return, and for a fuel business it can be a routine filing or a quarterly scramble, depending entirely on how clean your gallon records are. This covers what the form is and how to keep it boring.
What Form 720 is
Form 720 is the IRS Quarterly Federal Excise Tax Return. It is how businesses report and pay the federal excise taxes they are responsible for, and fuel taxes are a major part of it. If you are liable for collecting or paying federal fuel excise tax, this is the form that carries it to the IRS four times a year.
Who files it
Any business liable for, or responsible for collecting, a federal excise tax on the form has to file. For fuel, that reaches businesses that manufacture, sell, or deal in taxable fuel. Whether you specifically owe, and on which gallons, depends on your spot in the supply chain and the tax point, the above-the-rack or below-the-rack question. Your accountant can confirm where you land.
What it covers
The fuel lines span gasoline, diesel, kerosene, aviation gasoline, LPG, CNG, and other liquid fuels, each on its own line with its own rate. The headline rates have not moved since 1993: 18.4 cents per gallon on gasoline and 24.4 cents on diesel, each including the 0.1 cent LUST (leaking underground storage tank) fee. Confirm current rates in IRS Publication 510 before filing, since Congress occasionally suspends or adjusts them. Dyed diesel is the notable exception: properly dyed off-road fuel is generally exempt from the highway excise tax and carries only the small LUST fee. That product-by-product structure is why accurate gallon tracking by fuel type matters. Mix up products and the return is wrong.
When it is due
Form 720 is quarterly, due the last day of the month after the quarter closes: April 30 for Q1, July 31 for Q2, and so on. The return is only half the schedule, though: most fuel excise filers also have to deposit the tax semimonthly through EFTPS during the quarter, on top of the quarterly filing. Missing deposits draws penalties even when the quarterly filing is on time, so the trouble usually comes from treating Form 720 as a once-a-quarter event. The defense is gallons-by-product numbers that are always current, which is why FastDragon tracks fuel from the bill of lading forward: the figures are there whenever a deposit or return comes due.
How it relates to IFTA
Form 720 is the federal return filed with the IRS. IFTA is the separate, state-level system for interstate carriers. They go to different authorities and cover different taxes, and a fuel business may file both. Keeping them straight starts with keeping clean gallon records that feed each one.
Quick answers
What are semimonthly excise tax deposits?
For most fuel excise filers, the tax is deposited twice a month through EFTPS, covering the 1st through the 15th and the 16th through month-end, with each deposit due about two weeks after the period closes. The IRS offers a safe-harbor method based on the prior quarter's liability. The Form 720 instructions carry the exact dates and rules.
Can fuel tax credits be claimed on Form 720?
Yes. Schedule C of Form 720 is where filers claim credits for nontaxable uses, such as fuel that was exported or used off-highway. A business that does not file Form 720 can claim the same credits on Form 4136 with its income tax return, or request a quicker refund during the year on Form 8849.
Do gas stations have to file Form 720?
Usually not for the fuel tax itself. Federal fuel excise tax is generally imposed upstream at the terminal rack, so a retail station pays it inside the price of the fuel it buys. A station can still owe Form 720 for other excise lines, and a jobber's answer depends on whether it ever holds fuel above the rack.
What is Form 720-X?
Form 720-X is the amended return for fixing a quarter you already filed, whether you over-reported or under-reported. Catching a gallon error in your own records and amending is far cheaper than having an IRS exam find it, which is one more argument for reconciling fuel volumes before each filing rather than after.