Part II

Sport fishing equipment (IRS No. 41). The tax on sport fishing equipment is 10% (.10) of the sales price. The tax is paid by the manufacturer, producer, or importer. Taxable articles include fishing rods and poles (and component parts), reels, fly fishing lines (and other lines not over 130 pounds test), fishing spears, spear guns, spear tips, terminal tackle, fishing supplies and accessories, and any parts or accessories sold on or in connection with these articles. See Pub. 510 for a complete list of taxable articles. Add the tax on each sale during the quarter and enter the total on the line for IRS No. 41.

Electric outboard motors and sonar devices (IRS No. 42). The tax on an outboard motor or a sonar device for finding fish is 3% (.03) of the sales price. The tax is paid by the manufacturer, producer, or importer. The tax is limited to $30 for each sonar device. Sonar devices for finding fish do not include graph recorders, digital types, meter readouts, or combination graph recorders or combination meter readouts. Add the tax on each sale during the quarter and enter the total on the line for IRS No. 42.

Bows (IRS No. 44). The tax on bows is 11% (.11) of the sales price. The tax is paid by the manufacturer, producer, or importer. It applies to bows having a draw weight of 10 pounds or more. The tax is also imposed on the sale of any part or accessory suitable for inclusion in or attachment to a taxable bow and any quiver suitable for use with arrows described below. Add the tax on each sale during the quarter and enter the total on the line for IRS No. 44.

Arrow components (IRS No. 102). The tax on any shaft, point, nock, or vane is 12.4% (.124) of the sales price for which the component is sold. The tax is paid by the manufacturer, producer, or importer of any component used in the manufacture of any arrow that after assembly measures 18 inches or more in overall length or is less than 18 inches long but is suitable for use with a bow that has a draw weight of 10 pounds or more. Add the tax on each sale during the quarter and enter the total on the line for IRS No. 102.

Inland waterways fuel use tax (IRS No. 64). Enter the number of gallons subject to tax. The tax is $.244 per gallon.

Alcohol sold as but not used as fuel (IRS No. 51). An excise tax is imposed if the credit was claimed on Form 6478, Credit for Alcohol Used as Fuel, and any person later:

1. Uses a mixture or straight alcohol for a purpose other than fuel,
2. Separates the alcohol from the mixture, or
3. Mixes the straight alcohol.

Use the following table to determine the tax for each gallon of alcohol.

IF the alcohol is...	AND...	THEN the tax rate per gallon is...
at least 190 proof	· is ethanol	$.54
	· is methanol	.60
	· benefited from the small ethanol producer credit	.64
at least 150 proof but less than 190 proof	· is ethanol	$.40
	· is methanol	.45
	· benefited from the small ethanol producer credit	.50

Floor Stocks Tax

Ozone-depleting chemicals floor stocks tax (IRS No. 20). Use Form 6627 to figure the liability for this tax. Enter the amount from Form 6627, Part III, line 4, column (d) on the line for IRS No. 20. Attach Form 6627 to Form 720 for the 2nd quarter of each year. Deposit the payment by June 30 at an authorized depositary. See How To Make Deposits below.

Part III

Report on line 4 of Form 720 the total adjustments and claims from line 13 of Schedule C. See the instructions on page 8.

You may have any overpayment refunded or applied to your next return. Enter on line 7 of your next return the amount from line 10 you want to have applied to that return.

If you owe other Federal tax, interest, or penalty, the overpayment on line 10 will first be applied to the unpaid amounts.

Payment of Taxes

Generally, semimonthly deposits of excise taxes are required. A semimonthly period is the first 15 days of a month (the first semimonthly period) or the 16th through the last day of a month (the second semimonthly period).

However, no deposit is required for the situations listed below; the taxes are payable with the return.

• The net liability for taxes listed in Part I (Form 720) does not exceed $2,000 for the quarter.
• The gas guzzler tax and/or the luxury tax is being paid on a one-time filing. See One-Time Filings on page 1.
• The liability is for taxes listed in Part II (Form 720), except for the floor stocks tax, which generally require a single deposit. See Floor Stocks Tax above.
• The tax liability is for the removal of a batch of gasohol from an approved refinery by bulk transfer, if the refiner elects to treat itself for that removal as not registered under section 4101. See Regulations section 48.4081-3.

How To Make Deposits

To avoid a penalty, make your deposits timely and do not mail your deposits directly to the IRS. Records of your deposits will be sent to the IRS for crediting to your accounts.

Generally, if any due date for making a deposit falls on a Saturday, Sunday, or legal holiday, you may make the deposit on the next business day.

Electronic deposit requirement. You must make electronic deposits of all depository tax liabilities that occur after 1999 if the total of all your Federal tax deposits (such as deposits for employment tax, excise tax, and corporate income tax) in 1998 exceeded $200,000. If you are already depositing electronically but your deposits did not exceed $200,000, you may continue to do so or you may deposit with coupons, discussed below.

The Electronic Federal Tax Payment System (EFTPS) must be used to make electronic deposits. If you are required to make deposits by electronic funds transfer and fail to do so, you may be subject to a 10% penalty.

Taxpayers who are not required to make electronic deposits may voluntarily participate in EFTPS. To enroll in EFTPS, call 1-800-555-4477 or 1-800-945-8400. For general information about EFTPS, call 1-800-829-1040.

Depositing on time. For deposits made by EFTPS to be on time, you must initiate the transaction at least one business day before the date the deposit is due.

Federal Tax Deposit Coupons. If you are not required to use EFTPS, then deposit Federal excise taxes with a Form 8109, Federal Tax Deposit Coupon, at an authorized depositary or the Federal Reserve bank serving the area in which you are located. See the instructions in the coupon book for additional information. If you do not have a coupon book, contact your IRS district office.

When To Make Deposits

Taxes that are required to be deposited are grouped into classes as follows:

• 9-day-rule taxes,
• 30-day-rule taxes,
• alternative method taxes, and
• 14-day-rule taxes.

If you are depositing more than one tax in a class, combine all the taxes in the class and make one deposit for the semimonthly period.

9-day rule. The deposit of tax for a semimonthly period is due by the 9th day following that period. Generally, this is the 24th day of a month and the 9th day of the following month. The 9-day rule applies to all taxes in Part I of Form 720 except for:

• Gasoline, diesel fuel, and kerosene tax (IRS Nos. 14, 35, 58, 59, 60, 62, 73, 74, 75, and 76), if deposits by qualified persons are made using EFTPS.See 14-day rule.
• ODCs tax (IRS Nos. 19 and 98). See 30-day rule.
• Communications and air transportation taxes (IRS Nos. 22, 26, 27, and 28), if deposits are based on amounts billed or tickets sold, rather than on amounts actually collected. See Alternative method on this page.
• One-time filers of luxury and gas guzzler tax. See One-Time Filings on page 1.

30-day rule (IRS Nos. 19 and 98). The deposit of tax for a semimonthly period is due by the last day of the second following semimonthly period. Generally, this is the 15th day of the following month and the last day of the following month.

Alternative method (IRS Nos. 22, 26, 27, and 28). Deposits of communications and air transportation taxes may be based on amounts billed or tickets sold during a semimonthly period instead of on taxes actually collected during the period. Under the alternative method, the tax included in amounts billed or tickets sold during a semimonthly period is considered collected during the first 7 days of the second following semimonthly period. The deposit of tax is due by the 3rd banking day after the 7th day of that period.

Example. The tax included in amounts billed or tickets sold for the period December 16-31, 1999, is considered collected from January 16-22, 2000, and must be deposited by January 27, 2000.

To use the alternative method, you must keep a separate account of the tax included in amounts billed or tickets sold during the month and report on Form 720 the tax included in amounts billed or tickets sold and not the amount of tax that is actually collected. For example, amounts billed in December, January, and February are considered collected during January, February, and March and are reported on Form 720 as the tax for the 1st quarter of the calendar year.

14-day rule (IRS Nos. 14, 35, 58, 59, 60, 62, 73, 74, 75, and 76). Deposits of the gasoline, diesel fuel, and kerosene tax for a semimonthly period by an independent refiner or any person whose average daily production of crude oil for the preceding calendar quarter did not exceed 1,000 barrels may be made by the 14th day following the semimonthly period. The deposits must be made using EFTPS. If the 14th day is a Saturday, Sunday, or legal holiday, the due date is the immediately preceding day that is not a Saturday, Sunday, or legal holiday. The 14-day rule does not apply to dyed diesel fuel used in trains (IRS No. 71) or to dyed diesel fuel used in certain intercity or local buses (IRS No. 78).

Special rules for deposits of taxes in September 2000. If you are required to make deposits, an additional deposit is due in September as shown in the chart below. The special rule does not apply to taxes not required to be deposited (see Payment of Taxes on page 6). See Regulations sections 40.6302(c)-1 through 40.6302(c)-4 for rules for figuring the net tax liability for the deposit due in September.

Additional deposit of taxes in September 2000

Type of Tax (IRS No.)	For the Beginning on	Period Ending on	Due Date
All Part I taxes 1
EFTPS 2	Sept. 16	Sept. 26	Sept. 29
Non-EFTPS	Sept. 16	Sept. 25	Sept. 28
ODCs (98 and 19)
EFTPS 2	Aug. 16	Sept. 11	Sept. 29
Non-EFTPS	Aug. 16	Sept. 10	Sept. 28
Alternative method taxes (22, 26, 27, and 28)(based on amounts billed)
EFTPS 2	Sept. 1	Sept. 11	Sept. 29
Non-EFTPS	Sept. 1	Sept. 10	Sept. 28

¹ Except ODCs and alternative method taxes, which are listed separately.

²See Electronic deposit requirement on page 6.

For the remaining days in September, be sure to make your deposits by the regular due date.

Amount To Deposit

Deposits of taxes for a semimonthly period must be at least the net tax liability for that period, unless one of the safe harbor rules applies. The safe harbor rules apply separately to deposits under the 9-day rule, 30-day rule, the alternative method, and the 14-day rule.

The net tax liability for a semimonthly period is the total liability for the period plus or minus any adjustments for the period. Net tax liability for a semimonthly period may be figured by dividing the net tax liability for the month by 2, provided this method of computation is used for all semimonthly periods in the calendar quarter.

Under the alternative method, the deposit of tax for any semimonthly period must not be less than the net amount of tax that is considered collected during the semimonthly period. The net amount of tax that is considered collected during the semimonthly period must be either:

1. The net amount of tax reflected in the separate account for the corresponding semimonthly period of the previous month, or
2. One-half of the net amount of tax reflected in the separate account for the preceding month.

Safe Harbor Rules

There are two safe harbor rules:

• The look-back quarter liability and
• The current liability.

The look-back quarter liability safe harbor rule. The look-back quarter safe harbor rule applies to persons who filed a Form 720 for the look-back quarter (the 2nd calendar quarter preceding the current quarter). Persons who filed for the look-back quarter are considered to meet the semimonthly deposit requirement if the deposit for each semimonthly period in the current quarter is at least 1/6 (16.67%) of the net tax liability reported for the look-back quarter.

For the semimonthly period for which the additional deposit is required, the additional deposit must be at least 12.23% (11.12% non-EFTPS) of the net tax liability reported for the look-back quarter. Also, the total deposit for that semimonthly period must be at least 1/6 (16.67%) of the net tax liability reported for the look-back quarter.

Exceptions. The look-back rule does not apply to:

• The 1st and 2nd quarters beginning on or after the effective date of an increase in the rate of tax unless the deposit of taxes for each semimonthly period in the calendar quarter is at least 1/6 (16.67%) of the tax liability you would have had for the look-back quarter if the increased rate of tax had been in effect for that look-back quarter; or
• Deposits of any tax if the tax was not in effect throughout the look-back quarter. If this exception applies to you, be sure to see the instructions on How to complete under Schedule A on page 8 to report your net tax liability.

The current liability safe harbor rule. The current liability safe harbor rule applies to all filers of Form 720. Filers are considered to meet the semimonthly deposit requirement if the deposit for the semimonthly period is at least 95% of the net tax liability for the semimonthly period.

For the semimonthly period for which the additional deposit is required, the additional deposit must be at least 69.67% (63.34% non-EFTPS) of the net tax liability for the semimonthly period. Also, the total deposit for that semimonthly period must be at least 95% of the net liability for the semimonthly period. Requirements to be met. For the safe harbor rules to apply, you must:

1. Make each deposit timely at an authorized Government depositary; and
2. Pay any underpayment for the current quarter by the due date of the return. However, if the due date of the return is extended because you report taxes with different return due dates, you must deposit on the earlier due date any underpayment for taxes ordinarily reported on the earlier date.

The IRS may withdraw the right to make deposits of tax using safe harbor rules from any person not complying with these rules.

Schedule A - Excise Tax Liability

How to complete. Complete Schedule A to record net tax liabilities for Part I taxes for each semimonthly period in a quarter even if your net liability is under $2,000.

The following table will help you determine which boxes to complete on Schedule A.

IF you are reporting under the...	THEN you report on line...	AND enter the net tax liability in boxes...
9-day rule	1	A-F
30-day rule	2	G-L
Alternative method	3	M-R
14-day rule	4	S-X

If you are reporting more than one type of tax on lines 1, 2, 3, or 4:

1. Add the net liability for each tax for each semimonthly period, and
2. Enter the total in the applicable box.

If you are using the look-back rule for some taxes and you cannot use it for another tax in the same class, attach an additional sheet to Schedule A showing the net tax liability for each semimonthly period in the quarter for the other tax.

Additional rules. Report communications and air transportation taxes based on:

• Actual collections on line 1.
• Billings or tickets sold on line 3. The amount of tax to report for a semimonthly period is the amount that is considered collected during that period.

Example. The amounts billed for communications services from December 1-15, 1999, are considered collected during the period January 1-7, 2000, and are reported for the 1st quarter of 2000 on Schedule A in box M, not the 4th quarter of 1999.

Report your gasoline, diesel fuel, and kerosene tax liability on line 1, if you do not use the 14-day rule.

Reporting tax liability under the special September rule. An additional reporting is required under the special September rule (for the period shown in the chart on page 7) as follows:

9-day-rule taxes	Enter the tax liability for the period beginning September 16 and ending September 25/26 in the (line 1) Special rule for September box.
30-day-rule taxes	Enter the tax liability for ODCs for the period beginning August 16 and ending September 10/11 in the (line 2) Special rule for September box.
Alternative method taxes	Enter the tax included in amounts billed or tickets sold during the period beginning September 1 and ending September 10/11 in the (line 3) Special rule for September box on the 4th quarter return.
14-day-rule taxes	Enter the tax liability for the period beginning September 16 and ending September 25/26 in the (line 4) Special rule for September box.

For the remaining days in the September period, report the liability as follows:

9-day-rule taxes	Enter the liability for the period beginning September 26/27 and ending September 30 in box F.
30-day-rule taxes	Enter the liability for the period beginning September 11/12 and ending September 15 in box K. Leave box J blank. Enter the liability for the period beginning September 16 and ending September 30 in box L.
Alternative method taxes	Enter the tax included in the amounts billed or tickets sold for the period beginning September 11/12 and ending September 15 in box M of the 4th quarter return. Enter the tax included in amounts billed or tickets sold during the period beginning September 16 and ending September 30 in box N of the 4th quarter return.
14-day-rule taxes	Enter the liability for the period beginning September 26/27 and ending September 30 in box X.

Schedule C - Adjustments and Claims

To make claims or adjustments to prior quarters, complete Schedule C. Enter on line 4 of Form 720 the total from line 13, Part III, of Schedule C. You cannot claim any amounts on Schedule C that you took or will take as a credit on Form 4136, Credit for Federal Tax Paid on Fuels, or as a refund on Form 8849, Claim for Refund of Excise Taxes, and its separate schedules.

If you are not required to file Form 720 but you are due a refund of excise tax, you must use Form 8849 to make your claim.

You must include in your gross income the amount of the credit from line 4 of Form 720 if you took a deduction on your income tax return that included the amount of the taxes and that deduction reduced your income tax liability. See Pub. 378 for more information.

Use Form 843, Claim for Refund and Request for Abatement, to request an abatement or refund of interest under section 6404(e) (due to IRS errors or delays) or an abatement of a penalty or addition to tax as a result of erroneous IRS written advice.

Part I - Adjustments to Previously Filed
Forms 720

Use this part to make adjustments to correct errors involving Forms 720 you have filed for prior quarters. Generally, adjustments that reduce your tax liability for a prior quarter must be made within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever is later.

On line 1, enter the total of any adjustments claimed. A statement must be attached for each adjustment claimed. The attached statement must include the following information:

• An explanation of why you are claiming a reduction in tax or reporting additional tax.
• The computation of the amount you are claiming.
• A statement that you have the required supporting evidence.

Extracted from the Instructions to Form 720 (Rev. Jan. 1991), page 3, Line 4, Adjustments; suggested use by CC:DOM:P&SI (rh) and edited for current revision.

Part II - Claims

Complete all information requested for each line, including month income tax year ends and period of claim (or for line 10, earliest and latest date of sale) included in the claim. Your claim will be disallowed if you do not follow the required procedures or do not provide all the required information. See Pub. 378 for definitions of terms used in these instructions.

To make an ultimate vendor claim on lines 6 and 7, you are required to have a UV registration number (or UP registration number, in the case of kerosene sales from a blocked pump). If you do not have a registration number, you cannot make a claim at this time. Get Form 637, Application for Registration (For Certain Excise Tax Activities), for information on how to apply for one.

Claim requirements for lines 2 through 5 and line 8. The following requirements must be met:

1. The amount of the claim must be at least $750 (combining amounts on lines 2, 3, 4, 5, and 8). This amount may be met by:
   1. Making a claim for fuel used during any quarter of a claimant's income tax year or
   2. Aggregating any amounts from quarters of the claimant's income tax year for which no other claim has been made.
2. Generally, the claim must be filed during the first quarter following the last quarter included in the claim. However, claims made on Form 720 must be filed early. For example, a calendar year income taxpayer's claim for the first quarter would be due June 30 (if filed on Form 8849). However, a claim made on Form 720 would be due April 30 or May 31, depending on the claimant's Form 720 filing requirement.
3. Only one claim may be filed for any quarter.
4. The fuel must have been used for the nontaxable purpose during the Period of claim.
5. The ultimate purchaser is the only person eligible to make the claim.

If requirements 1-5 above are not met, see Annual Claims on page 10.

Additional requirements for line 4.

• Line 4 cannot be used to make a claim for fuel used on a farm for farming purposes, for the exclusive use of a state or local government, or for kerosene sold from a blocked pump. Only registered ultimate vendors may make these claims. See the instructions for lines 6 and 7 below.
• For kerosene uses on line 4, write K in the space to the left of the rate column. Kerosene claims must be reported separately. If more space is needed, attach a continuation sheet with the additional claims. Follow the same format as shown on line 4. Be sure to write your name and EIN on each sheet you attach.

Definitions. The following terms are used on Form 720 for lines 2 though 5 and line 8:

Off-highway business use means a business use other than in a highway vehicle registered or required to be registered for highway use. Also, you cannot claim a credit for use of the fuel in a motorboat.

Liquefied petroleum gas (LPG) includes propane or butane.

Line 6 - Sales By Registered Ultimate Vendors of Undyed Diesel Fuel

Claimant. The registered ultimate vendor of the diesel fuel is the only person eligible to make this claim. Write your UV registration number on the entry line for that number.

Allowable sales. The fuel must have been sold during the Period of claim for:

• Use on a farm for farming purposes or
• Use by a state or local government (including essential government use by an Indian tribal government).

Claim requirements for line 6. The following requirements must be met:

1. The claim must be for diesel fuel sold during a period that is not less than 1 week.
2. The amount of the claim must be at least $200. To meet this minimum requirement, amounts from line 6 and line 7 may be combined.
3. Generally, the claim must be filed by the last day of the first quarter following the earliest quarter of the claimant's income tax year included in the claim. For example, a calendar year income taxpayer's claim for the first quarter would be due June 30 (if filed on Form 8849). However, a claim made on Form 720 would be due April 30 or May 31, depending on the claimant's Form 720 filing requirement.

If requirements 1-3 above are not met, see Annual Claims on page 10.

Information to be submitted. Attach a separate sheet with the name and TIN of each farmer, custom harvester, or governmental unit to whom the diesel fuel was sold and the number of gallons sold to each.

Line 7 - Sales By Registered Ultimate Vendors of Undyed Kerosene

Claimant. The registered ultimate vendor of the kerosene is the only person eligible to make this claim. Write your UV registration number on the entry line for that number if you are making a claim on line 7a or 7b. For line 7c, write your UP registration number on the entry line.

Allowable sales. The fuel must have been sold during the Period of claim:

• For use on a farm for farming purposes,
• For use by a state or local government (including essential government use by an Indian tribal government), or
• From a blocked pump.

Claim requirements for line 7. The following requirements must be met:

1. The claim must be for kerosene sold during a period that is not less than 1 week.
2. The amount of the claim must be at least $100.
3. Generally, the claim must be filed by the last day of the first quarter following the earliest quarter of the claimant's income tax year included in the claim. For example, a calendar year income taxpayer's claim for the first quarter would be due June 30 (if filed on Form 8849). However, a claim made on Form 720 would be due April 30 or May 31, depending on the claimant's Form 720 filing requirement.

If requirements 1-3 above are not met, see Annual Claims below.

Information to be submitted. For claims on lines 7a and 7b (Schedule C), attach a separate sheet with the name and TIN of each farmer, custom harvester, or governmental unit to whom the kerosene was sold and the number of gallons sold to each.

Line 9 - Gasohol Blending

Claimant. The person who produced the gasohol is the only person eligible to make this claim.

Allowable use. Gasoline that was taxed at the full rate must have been used to produce gasohol during the Period of claim for sale or use in the blender's trade or business.

Claim requirements. The following requirements must be met:

1. The claim must be for gasohol sold or used during a period that is not less than 1 week.
2. The amount of the claim must be at least $200.
3. Generally, the claim must be filed by the last day of the first quarter following the earliest quarter of the claimant's income tax year included in the claim. For example, a calendar year income taxpayer's claim for January and February must be filed by June 30 (if filed on Form 8849). However, a claim made on Form 720 must be filed by April 30 or May 31, depending on the claimant's Form 720 filing requirement.

If requirements 1-3 above are not met, see Annual Claims.

Annual Claims

If a claim on lines 2-9 was not made for any gallons, an annual claim may be made. Generally, an annual claim is made on Form 4136 for the income tax year during which the fuel was used by the ultimate purchaser or sold by the registered ultimate vendor. See Form 4136 and its instructions for more information.

Line 10 - Gasoline (Sold for the uses described.)

Claimant. The person who paid the tax to the government is the only person eligible to make this claim.

Allowable sales. The fuel must have been sold for one or more of the uses described for line 10.

Claim requirement. The claim must be filed within 3 years from the time the return was filed by the person who paid the tax to the government or 2 years from the time the tax was paid, whichever is later.

Line 11 - Other Claims

Use the blank line(s) for any claim not described. If you need additional space, attach other sheet(s) with your name and EIN on each sheet. You must include:

• Any additional information required by the regulations,
• A detailed description of the transaction,
• How you figured the claim amount, and
• Any other information you believe will support the claim.

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