Understanding Aviation Fuel Tax Under Form 720
What Is Aviation Fuel Tax?
These taxes will be accounted for using the Form 720, that is, the Quarterly Federal Excise Tax Return form, and the relevant IRS Number issued by the IRS will have to be picked from the list of IRS Numbers provided by the IRS.
Who Pays the Aviation Fuel Tax?
The person responsible for paying aviation fuel tax depends on the type of fuel transaction and applicable IRS rules.
1)Position holders are responsible for tax on certain taxable fuel removals, including many kerosene aviation fuel transactions.
2)Registered commercial aviation operators (Form 637 "Y" Registrants) may be liable for the reduced tax rate on qualifying commercial aviation kerosene transactions.
3)Fractional ownership program managers are responsible for the surtax on fuel used in fractional ownership program aircraft.
4)Ultimate purchasers may have claim rights for certain nontaxable aviation fuel uses if they meet IRS requirements.
Refer to the IRS page on Kerosene used for aviation to get more details
How Is Aviation Fuel Related to Form 720?
The Form 720 is the form through which excise tax for aviation fuel needs to be reported. Reporting of aviation fuel taxes can be done using an IRS number depending upon the type of fuel and the tax rate applicable.
Reporting of excise taxes for aviation fuel in the right IRS number ensures compliance with the IRS guidelines.
Aviation Fuel Tax Categories Under Form 720
Note - Fuel used in a fractional ownership program aircraft may also be subject to an additional surtax reported under IRS No. 13 at $0.141 per gallon, depending on the applicable requirements.
How to File Aviation Fuel Tax With Form 720?
Aviation fuel tax can be reported through the following methods:
Manual Filing - Please download the latest version of Form720, enter all the relevant information regarding your business, and enter all relevant aviation tax information as well. Do the math manually, and then mail both the payment check and the completed Form720 to the IRS mailing address.
Online Filing - Taxpayers can use an IRS-authorized e-file provider such as QuickFile720 to prepare, calculate, and electronically submit Form 720. Online filing helps reduce manual errors and simplifies IRS reporting requirements.
Filing electronically helps in saving time while ensuring that there is precision in tax filings. IRS also recommends that taxpayers use this electronic method due to its simplicity.
Read our Fuel Excise Tax Online filing guide for detailed guidance.
How to Calculate Aviation Fuel Tax?
Aviation fuel tax is calculated based on the taxable gallons of fuel and applicable IRS tax rate.
Formula - Aviation Fuel Tax = Taxable Gallons × Tax Rate
Example: Kerosene Used in Aviation (IRS No. 69)
Taxable fuel = 10,000 gallons
Tax rate = $0.219 per gallon
Tax amount = 10,000 × $0.219 = $2,190
The calculated amount is reported on Form 720 using the applicable IRS Number.
Why Is Filing Aviation Fuel Tax Important?
It is necessary to report your aviation fuel tax properly in order to comply with the federal excise tax rules. Failure to do so or file late or not pay the amount of tax owed can lead to penalties and interest from the IRS.
Potential consequences may include:
Failure to file penalty for late filing of Form 720.
Failure to pay penalty for taxes owed.
Penalties and interest for the amounts due.
Other actions by the IRS depending on the situation.
Conclusion
The aviation fuel tax is subject to proper classification of fuel used, applicable aviation use and proper IRS Number in Form 720. The proper differentiation of aviation gasoline, kerosene used for aviation and commercial aviation kerosene can aid businesses in their tax reporting.
In light of the evolving fuel tax categories and reporting, it is advisable for businesses to utilize a trusted filing portal like QuickFile720 to make compliance easier
File your Aviation Fuel Excise Tax Online with QuickFile720!