Other Excise Taxes: Form 720 Filing Guide

Other Excise Taxes at a Glance

These taxes have different liability and calculation rules, so the correct IRS number should be identified before preparing Form 720.

What Are Other Excise Taxes?

The Other Excise Tax section of Form 720 is used for specific federal excise taxes that the IRS classifies separately from the major Form 720 tax categories.

These taxes currently include certain:

• Registration-required obligations issued in a form that does not satisfy the registered-form requirements
• Remittance transfers funded using certain physical payment methods

Both are reported in Part I of Form 720, but their underlying tax rules are different.

Who May Be Responsible for Other Excise Taxes?

Responsibility depends on the tax.

For IRS No. 31, the tax generally applies to a person who issues a registration-required obligation that is not in registered form.

For IRS No. 155, a remittance transfer provider is generally responsible for collecting the applicable tax from the sender and reporting the tax.

A business should first identify the transaction before determining whether Form 720 reporting is required.

Obligations Not in Registered Form — IRS No. 31

A federal excise tax applies when a person issues a registration-required obligation that is not in registered form.

This tax is reported on Form 720 under IRS No. 31.

The rules focus on whether an obligation is required to be in registered form and whether the issued obligation satisfies those requirements.

Not every debt instrument is subject to this tax.

What Is a Registration-Required Obligation?

A registration-required obligation generally includes an obligation that must meet federal registered-form requirements.

However, certain obligations are excluded from the definition.

An obligation generally is not treated as a registration-required obligation when it meets an applicable exception, such as an obligation that:

• Is issued by a natural person
• Is not of a type offered to the public
• Has a maturity at issue of not more than 1 year
• Is a tax-exempt bond
• Is issued under a qualifying arrangement designed for sale only to foreign persons

Additional requirements can apply to obligations intended for foreign persons.

Because these exceptions can determine whether the tax applies at all, the nature of the obligation should be reviewed before calculating IRS No. 31.

Who Is Liable for IRS No. 31?

The tax is generally imposed on the person who issues a registration-required obligation that is not in registered form.

The issuer should determine whether:

• The instrument is an obligation for federal tax purposes
• The obligation is registration-required
• An exception applies
• The obligation was issued in registered form
• IRS No. 31 reporting is required

The tax should not be applied simply because an instrument is described as a bond or debt instrument.

How Is IRS No. 31 Calculated?

The tax on obligations not in registered form is generally:

The applicable period begins on the issue date and ends on the maturity date.

For Form 720 reporting, the IRS instructs filers to determine the principal amount of obligations issued during the quarter and apply the number of calendar years, including portions of calendar years, from issuance through maturity.

Example

If a taxable registration-required obligation has:

• Principal amount: $100,000
• Applicable period: 3 calendar years or portions
• Tax rate: 1%

The calculation would generally be:

The actual tax depends on the facts of the obligation and whether it is subject to the registered-form requirements.

Information Needed for IRS No. 31

Before preparing Form 720, gather information such as:

Accurate issue and maturity dates are important because the tax calculation uses the applicable number of calendar years or portions of calendar years.

Common IRS No. 31 Filing Mistakes

• Treating every debt instrument as taxable: Not every bond, note, or debt instrument is a registration-required obligation.
• Applying a one-year minimum rule: An obligation with a maturity at issue of not more than 1 year is generally excluded from the definition of a registration-required obligation.
• Using the wrong principal amount: The tax calculation depends on the principal amount of the taxable obligation.
• Using incorrect issue or maturity dates: These dates affect the number of calendar years or portions used in the calculation.
• Missing an applicable exception: Certain obligations may fall outside the registration-required obligation rules.
• Reporting under the wrong IRS number: Obligations not in registered form are reported under IRS No. 31.

Excise Tax on Remittance Transfers — IRS No. 155

A federal 1% excise tax applies to certain remittance transfers.

The tax is reported on Form 720 under IRS No. 155.

The tax generally applies when a qualifying sender funds a remittance transfer using certain physical payment methods.

The remittance transfer provider is responsible for collecting the tax from the sender and reporting the applicable tax.

What Remittance Transfers May Be Taxable?

The 1% tax generally applies to certain remittance transfers when the sender uses:

• Cash
• Money order
• Cashier's check
• Similar physical payment instrument

Whether a particular transaction is subject to the tax depends on the applicable federal remittance transfer rules and the method used to fund the transfer.

Businesses should identify the payment method and transaction before determining the tax.

Who Is Responsible for IRS No. 155?

The remittance transfer provider is generally responsible for collecting the applicable remittance transfer tax from the sender.

The provider must also meet the applicable federal reporting and payment requirements.

Businesses providing remittance transfer services should maintain records that identify taxable transactions and the amounts used to calculate the tax.

How Is Remittance Transfer Tax Calculated?

The federal excise tax is generally 1% of the amount of the taxable remittance transfer. The basic calculation is:

Example

If a taxable remittance transfer is $1,000:

The provider would generally collect the applicable $10 excise tax from the sender.

Only transactions that meet the federal requirements for the remittance transfer tax should be included in the calculation.

Information Needed for IRS No. 155

Useful information can include:

Businesses should maintain sufficient records to distinguish taxable remittance transfers from transactions that are not subject to the tax.

Deposits for Other Excise Taxes

Taxes reported in Part I of Form 720 may be subject to federal excise tax deposit requirements.

The remittance transfer tax generally requires semimonthly deposits.

Deposit requirements are separate from the quarterly Form 720 filing deadline.

Businesses should therefore distinguish between:

• When the tax liability arises
• When a federal excise tax deposit is due
• When the quarterly Form 720 return is due

The applicable deposit rules should be reviewed when preparing the return.

Schedule A and Other Excise Taxes

Schedule A of Form 720 is used to report net tax liability for applicable Part I taxes by semimonthly period.

When Schedule A applies, the tax liability should be assigned to the correct semimonthly period based on the applicable tax rules.

The total Schedule A liability should be consistent with the applicable Part I tax liability reported on Form 720.

When Are Other Excise Taxes Reported?

Form 720 generally follows a quarterly filing schedule.

If the filing deadline falls on a Saturday, Sunday, or legal holiday, the return is generally due on the next business day.

Deposit requirements, when applicable, are separate from these quarterly filing deadlines.

How to Prepare for Other Excise Tax Filing

Before preparing Form 720, first determine which Other Excise Tax applies.

For IRS No. 31, review:

• Type of obligation
• Principal amount
• Issue date
• Maturity date
• Registered-form status
• Applicable exceptions

For IRS No. 155, review:

• Remittance transfer transactions
• Transfer amounts
• Payment methods
• Tax collected
• Applicable deposit records

Also gather:

• Business name
• EIN
• Filing quarter
• Applicable IRS number
• Supporting records
• Federal excise tax deposit information

Once your information is ready, Excise720 can be used to prepare and electronically file Form 720 for applicable Other Excise Taxes.

Common Other Excise Tax Filing Mistakes

• Selecting the wrong IRS number: IRS No. 31 and IRS No. 155 apply to different types of transactions.
• Assuming every obligation is taxable: Only applicable registration-required obligations that are not in registered form are subject to IRS No. 31.
• Incorrectly calculating the obligation period: IRS No. 31 uses calendar years or portions of calendar years between issuance and maturity.
• Ignoring short-term obligation rules: Certain obligations with a maturity at issue of not more than 1 year are excluded from the registration-required obligation definition.
• Applying remittance tax to every transfer: IRS No. 155 applies only to remittance transfers that meet the applicable federal requirements.
• Using the wrong remittance amount: The 1% tax should be calculated using the applicable taxable transfer amount.
• Missing deposit requirements: Applicable Part I taxes can have deposit requirements separate from the Form 720 filing deadline.
• Keeping insufficient records: Supporting records should establish how the reported tax was determined.

Other Excise Tax Filing Checklist

Before filing, confirm that you have:

1. Identified the correct Other Excise Tax.
2. Selected the correct IRS number.
3. Determined who is liable for or responsible for collecting the tax.
4. Verified the taxable transaction.
5. Used the correct calculation method.
6. Reviewed applicable exceptions.
7. Verified issue and maturity information for IRS No. 31.
8. Verified taxable remittance amounts for IRS No. 155.
9. Reviewed applicable deposit requirements.
10. Completed Schedule A when required.
11. Maintained supporting records.
12. Reported the liability in the correct section of Form 720.

Other Excise Tax Filing Pricing

Frequently Asked Questions