You have to file Form 720 if your business engages in any activity that carries a federal excise tax listed on the form — selling certain fuels, collecting the federal tax on air transportation, manufacturing or importing designated goods, providing indoor tanning services, sponsoring a self-insured health plan subject to the PCORI fee, and a handful of other activities. Size and profitability don’t matter. The obligation attaches to the activity, not the company. And if you were liable in a prior quarter and never filed a final return, you’re still on the filing calendar even for a quarter with zero liability.
Activities That Trigger a Form 720 Filing
The excise taxes reported on Form 720 fall into a handful of categories. If any of them describes what your business does, you file.
Fuel
Federal fuel taxes are generally imposed when taxable fuel is removed from a refinery or terminal, enters the United States, or is sold to an unregistered buyer. The rates under Section 4081 are 18.3 cents per gallon on non-aviation gasoline, 19.3 cents on aviation gasoline, 24.3 cents on diesel and kerosene, 4.3 cents on kerosene for commercial aviation, and 21.8 cents on kerosene for non-commercial aviation. Each rate carries an additional 0.1 cent per gallon for the Leaking Underground Storage Tank Trust Fund. Refiners, terminal operators, blenders, enterers, and certain position holders all report on Form 720, including transactions that move through the distribution chain tax-free.
Environmental Taxes
Three environmental excise taxes flow through Form 720. A per-barrel petroleum tax under Section 4611 applies to crude oil arriving at a U.S. refinery and to petroleum products entering the country for consumption or warehousing; the refiner or importer is liable. The Superfund chemical excise tax applies to manufacturers, producers, and importers who sell or use designated taxable chemicals or taxable substances. The Inflation Reduction Act of 2022 reinstated this tax, and the IRS has continued expanding the list of covered substances, with 21 new chemicals added effective January 1, 2026. And an ozone-depleting chemicals tax under Section 4681 falls on manufacturers, producers, and importers of those chemicals, plus importers of products made with them. Environmental taxes are reported on Form 6627 and carried to Form 720.
Air Transportation and Communications
The federal excise tax on air transportation has three pieces under Section 4261: 7.5 percent of the amount paid for taxable transportation of any person by air, a per-segment domestic tax of $5.30 for 2026, and a flat international arrival or departure charge of $23.40 per person for 2026. Airlines and other providers collect these from passengers and remit them on Form 720. A 3 percent communications excise tax applies to local telephone service, toll telephone service, and teletypewriter exchange service; the service provider collects it from the customer and reports it.
Manufacturers Taxes
Certain goods carry an excise tax on the manufacturer, producer, or importer at first sale. Sport fishing equipment is taxed at 10 percent (rods and poles capped at $10 per item; tackle boxes at 3 percent). Bows with a peak draw weight of 30 pounds or more, along with quivers, broadheads, points, and bow accessories, are taxed at 11 percent. Arrow shafts are taxed at $0.63 per shaft for 2026, inflation-adjusted from a 39-cent base. Heavy highway vehicles — truck chassis and bodies, trailer chassis and bodies, and highway tractors — are taxed at 12 percent of the retail sale price, with weight-based exclusions for lighter vehicles; that tax is scheduled to expire October 1, 2028. Vaccines for diseases listed in Section 4132, including influenza, measles, and hepatitis, carry a per-dose tax.
Other Activities That Are Easy to Miss
Several less obvious activities put a business on the Form 720 calendar:
- Indoor tanning services carry a 10 percent excise tax, collected from the customer by the salon and remitted quarterly.
- Policies issued by foreign insurers carry excise taxes of 4 cents per dollar on casualty insurance and indemnity bonds, and 1 cent per dollar on life, sickness and accident, annuity, and reinsurance contracts covering those policies.
- Issuers of health insurance policies and sponsors of self-insured health plans pay the PCORI fee per covered life. For plan years ending October 2025 through September 2026, the fee is $3.84 per covered life; for plan years ending January through September 2025, it’s $3.47. Both go on the Form 720 filed for the second quarter, due July 31, 2026.
Register Before You File If the Activity Requires It
Some excise activities require IRS registration before you can legally participate or claim tax-free treatment. Form 637 (Application for Registration) covers activities under Sections 4101, 4222, 4662, and 4682, including operating as a fuel blender, buying taxable articles tax-free for resale or export, and conducting tax-free exchanges of taxable chemicals. Each business unit with its own Employer Identification Number files a separate Form 637, and the IRS may inspect your premises without advance notice as part of the approval process. Filing Form 720 without the registration you were supposed to have first can create problems well beyond the form itself.
Quarterly Deadlines
Form 720 is due the last day of the month after each calendar quarter closes:
- 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
Electronic filing is optional; the IRS still accepts paper returns. Deposits, when required, are a different story: they must move electronically through the Electronic Federal Tax Payment System (EFTPS), and payments have to be scheduled by 8:00 p.m. ET the day before the due date to count as timely.
Whether You Deposit During the Quarter or Pay with the Return
If your net excise tax liability for the quarter is $2,500 or less, you can simply pay the full amount when you file. Once your quarterly liability crosses $2,500, you have to make semi-monthly deposits.
Semi-monthly periods split each month at the 15th: the 1st through the 15th, and the 16th through the end of the month. Deposits are due by the 14th day after each period ends, which in practice means the 29th of the current month for the first half and the 14th of the following month for the second half. If a due date falls on a weekend or holiday, the deposit is due the preceding business day. Each deposit must cover at least 95 percent of the liability incurred during that semi-monthly period. A separate safe harbor lets you base deposits on the liability reported for the second preceding calendar quarter, and an alternative deposit method exists for air transportation and communications taxes so that deposits track when customers actually pay.
Penalties for Missing a Deadline
The failure-to-file penalty is 5 percent of the unpaid tax for each month or partial month the return is late, capped at 25 percent. The failure-to-deposit penalty is tiered by how late the deposit is:
- 1 to 5 calendar days late: 2 percent of the unpaid deposit
- 6 to 15 calendar days late: 5 percent
- More than 15 calendar days late: 10 percent
- More than 10 days after a first IRS notice demanding payment: 15 percent
The tiers don’t stack. A deposit that’s 15 days late is charged at the 10 percent rate, not 2 plus 5 plus 10. But each missed semi-monthly deposit in a quarter can generate its own penalty, so a single quarter can produce several at once.
Recordkeeping
Keep records supporting your Form 720 filings for at least three years from the date you filed the return or two years from the date you paid the tax, whichever is later. If you don’t file a return, or you file a fraudulent one, that clock never starts, so keep those records indefinitely. Excise tax audits typically turn on volumes and classifications — gallons of fuel, pounds of chemicals, number of covered lives, per-segment counts — so your internal tracking needs to reproduce the numbers you put on the form.