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IRS Form 720 is known as the Quarterly Federal Excise Tax Return. Simplicity is accuracy, and accuracy is compliance. Unfortunately, many businesses unknowingly commit errors in the filing process that incur a penalty, delayed processing, or IRS audits. Whether handling excise taxes for fuel, air transportation, environment, or even down to indoor tanning services, a person would save on cost and time knowing what not to do.

Missing the Form 720 due date, usually the last day of the month after the end of a quarter, is one of the most common oversights. And though interest and penalties are incurred, they may not be direct. For example, businesses should avoid late filing and/or late payment by filing timely, ensuring that payments are made through the Electronic Federal Tax Payment System (EFTPS), and avoiding penalties. Create reminders for filing deadlines, and the use of e-file Form 720 makes it easy.

Another major tripwire is filing with the wrong EIN (Employer Identification Number), incomplete taxpayer detail, or an error in the tax categories reported. Errors often occur because Form 720 has multiple parts covering different excise tax categories; hence, one error will lead to differences. Double-checking tax calculations, reviewing IRS instructions, and seeking assistance from a professional tax adviser will ensure accuracy.

Another common mistake is relying on paper filing. For faster approval, fewer errors, and immediate confirmation, the IRS wants businesses to e-file Form 720. Nor do many businesses keep accurate records of excise tax payments, tax credits, and associated documentation. Organized record-keeping simplifies future filings and strengthens compliance in IRS audits.