Blog Details

Federal Excise Tax reporting on gasoline and diesel is quite different under IRS Form 720. As the excise tax return for fuels due on a quarterly basis, it is imperative that companies within the transportation, logistics, and energy industries understand the rules surrounding it. Gasoline excise tax and diesel fuel tax exist in different rates and categories and can therefore affect how companies calculate their liabilities.

With respect to gasoline, generally, the fuel excise tax is assessed per gallon sold or used within the U.S. The IRS gasoline tax rate is clear, with the main thing for businesses to watch for being exceptions such as fuel for aviation purposes or fuel used in certain non-highway vehicles. Report these amounts correctly on Form 720 to avoid costly IRS penalties that will cost businesses a fortune. The ability to distinguish between taxable gallons on one side and tax-exempt gasoline sales on the other is also crucial for the purposes of reporting.

Diesel usually attracts higher excise tax when compared to gasoline since it operates the heavy-duty vehicles used for freight transport and construction equipment. The diesel excise tax rates also take into consideration environmental and infrastructure funding. Because diesel is mainly used in commercial trucking, companies involved have to ensure proper record-keeping of the amount of taxable diesel gallons, as well as apply the right reporting codes on Form 720. Otherwise, they may easily find themselves becoming the subject of an audit, as well as incurring penalties by the IRS for misreporting fuel taxes.

The most significant difference between gasoline and diesel for Form 720 is that they vary rather widely on rates and usage categories. Gasoline through tax brackets is commonly used in passenger vehicles, while taxes on diesel are collected for the very reasons of its excessive usage for commercial transportation and increased wear and tear on infrastructure such as highways and bridges. Businesses should always keep view of IRS notices so that they can adhere to the rules governing excise tax. With e-file Form 720 solutions, the application process is sped, and the woes associated with errors are reduced so that quarterly reporting would accurately speak to both gasoline and diesel's excise tax obligations.

Disclaimer: The information provided in this blog post is for general informational purposes only. While we strive to keep the content accurate and up to date, we do not guarantee its completeness, reliability, or accuracy. Any actions you take based on this information are strictly at your own risk. We are not responsible for any losses, damages, or inconveniences that may arise from the use of this blog. For professional advice, please consult a qualified expert.