How Do I Pay and Report Excise Taxes for a Business?

Federal Excise Taxes
Federal Excise Taxes. Steve Debenport/Getty Images

What is an Excise Tax?

An excise tax is a tax on use or consumption of certain products. Excise taxes (sometimes called "duties") are sometimes included in the price of a product, such as motor fuels, cigarettes, and alcohol. Excise taxes may also be imposed on some activities, like gambling. Excise taxes may be imposed by the federal government or by a state.

What products must I pay excise taxes on?

Businesses must pay excise taxes on:

  • Environmental products, such as domestic petroleum oil spills and ozone-depleting chemicals.
  • Communications and air transportation taxes
  • Fuels used in business
  • Purchase of trucks, trailers, semi-trailers (at a percentage of the sales price)
  • Ship passenger tax (per passenger)
  • Manufacturers Taxes on coal, taxable tires, gas guzzlers, etc.
  • Foreign insurance taxes
  • Sport fishing equipment, fishing rods, poles, outboard motors, etc.
  • Floor stocks tax on ozone-depleting chemicals

What Form Do I Use to Report and Pay Federal Excise Taxes?

For a complete list of products and services subject to federal excise taxes, see IRS Form 720.

How Do I File Form 720?

Quarterly Federal Excise Tax Return, is used to report and on excise taxes collected by the business for a variety of products and services. Use Schedule A to show the amount of your total liability for excise taxes for the quarter.

When are Federal Excise Taxes Due?

You must file Form 720 quarterly, one month after end of the quarter:

  • Quarter end March - file by April 30
  • Quarter end June - July 31
  • Quarter end Sept. - Oct 31
  • Quarter end December - January 31

If the due date is a weekend or holiday, the form is due the next business day. 

You can e-file Form 720 or send it in by mail. Read the instructions for Form 720, for more information.


Excise Taxes as a Trust Fund Tax

Excise taxes are a trust fund tax, meaning that they are collected by the business and held in trust, then paid to the IRS at specific times. If the full amount of the tax is not submitted when due, a trust fund recovery penalty may be imposed.

A payment voucher is included with Form 720. Include it when you send your payment. Send the form and payment to:
Department of the Treasury
Internal Revenue Service
Cincinnati, OH 45999-0009

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