Schedule C (Form 720): Excise Tax Claims & Credits Guide

Schedule C Claims at a Glance

Eligibility depends on the specific fuel, article, claimant, use, sale, and IRS requirements.

What Is Schedule C (Form 720)?

Schedule C is the Claims section of Form 720.

It allows eligible taxpayers who are reporting a liability in Part I or Part II of Form 720 to claim certain allowable federal excise tax credits.

A Schedule C claim can reduce the amount of tax reported on Form 720.

Schedule C is commonly associated with fuel tax claims, but it can also be used for certain claims involving other federal excise taxes.

Every claim must meet the applicable IRS requirements.

Who May Be Eligible to File Schedule C?

Eligibility depends on the particular claim.

Potential claimants can include certain:

• Ultimate purchasers
• Registered ultimate vendors
• Fuel users
• Fuel exporters
• Credit card issuers
• Manufacturers
• Producers
• Importers
• Other taxpayers eligible for specific excise tax claims

Being a Form 720 filer does not automatically make a business eligible for a Schedule C claim.

The claimant must meet the requirements for the particular credit being claimed.

When Can Schedule C Be Used?

Schedule C can only be completed when the taxpayer is reporting a liability in Part I or Part II of Form 720.

A taxpayer may use Schedule C when an eligible claim applies to the filing period and all applicable IRS requirements are satisfied.

The amount allowed on Schedule C is carried to Form 720 and used when determining the return's balance due or overpayment.

When Should Schedule C Not Be Used?

Schedule C should not be used for every excise tax refund or adjustment.

Do not use Schedule C:

• If you are not reporting a liability in Part I or Part II of Form 720
• For an amount being claimed or already claimed on another applicable claim form
• To adjust tax liability reported on a Form 720 from a prior quarter
• For certain claims that the IRS requires to be made on another form

For example, adjustments to previously filed Form 720 liabilities generally require Form 720-X rather than Schedule C.

Certain refund claims may instead be made using Form 8849, Claim for Refund of Excise Taxes, and applicable schedules.

The correct form depends on the type of claim and the claimant's circumstances.

Fuel Claims on Schedule C

A significant portion of Schedule C is used for qualifying fuel tax claims.

Depending on the circumstances, claims may involve:

• Gasoline
• Aviation gasoline
• Undyed diesel fuel
• Undyed kerosene
• Kerosene used in aviation
• Certain other qualifying fuel transactions

A claim can depend on how the fuel was sold or used and who is entitled to make the claim.

The IRS uses specific claim lines and Credit Reference Numbers (CRNs) to identify different types of claims.

Nontaxable Use of Fuel

Certain fuel used for a qualifying nontaxable purpose may be eligible for a credit when all IRS requirements are met.

Eligibility depends on the type of fuel and how it was used.

Qualifying situations can include certain uses involving:

• Farming
• State or local governments
• Nonprofit educational organizations
• Aviation
• Export
• Other IRS-defined nontaxable uses

Not every nontaxable use applies to every type of fuel.

The claimant must identify:

• The correct fuel
• Type of use
• Applicable claim line
• CRN

Registered Ultimate Vendor Claims

Certain registered ultimate vendors may be eligible to make Schedule C claims for qualifying fuel sales.

Depending on the fuel and purchaser, qualifying sales can include certain sales for the exclusive use of:

• State or local governments
• Nonprofit educational organizations
• Other eligible purchasers or uses specifically allowed by federal excise tax rules

Registration requirements can apply.

The vendor may also need a valid certificate from the buyer and records supporting the qualifying sale.

Only the person entitled to the credit or refund should make the claim.

Exported Fuel Claims

Certain tax-paid fuels that are exported may qualify for an excise tax claim.

The requirements depend on the fuel and transaction.

A taxpayer making an eligible export claim should maintain appropriate proof that the fuel was actually exported.

Supporting documentation can include applicable:

• Shipping records
• Carrier records
• Customs records
• Consignee records

The records should be sufficient to support the export if the IRS reviews the claim.

Other Excise Tax Claims

Schedule C is not limited to fuel.

Certain claims may also be available for specific excise taxes involving products or articles.

Depending on the circumstances, these can include claims related to:

• Ozone-depleting chemicals
• Taxable chemicals
• Imported chemical substances
• Imported products containing or manufactured with ozone-depleting chemicals
• Heavy trucks, trailers, semitrailers and tractors
• Taxable tires
• Gas guzzler automobiles
• Vaccines
• Sport fishing equipment
• Fishing rods and poles
• Fishing tackle boxes
• Electric outboard motors
• Archery equipment
• Arrow shafts

Eligibility for these claims depends on the applicable excise tax rules and how the article was sold, used, exported, or otherwise qualifies for a claim.

What Is a Credit Reference Number (CRN)?

A Credit Reference Number, commonly called a CRN, identifies a particular type of excise tax claim.

Schedule C uses different CRNs for different fuels, uses, sales, and other excise tax claims.

The correct CRN is important because it tells the IRS what type of credit is being claimed.

A taxpayer should select the CRN that corresponds to the specific transaction and claim.

Do not select a CRN only because it appears related to the product. The underlying eligibility requirements must also be satisfied.

How Is a Schedule C Claim Calculated?

There is no single calculation for every Schedule C claim.

For many fuel claims, the basic calculation is:

Other claims may be calculated using:

• Quantity of taxable articles
• Tax previously paid
• Eligible transaction amount
• Another method required for that particular excise tax

Claim rates and requirements can differ depending on the fuel or tax.

Because some claim rates and rules can change, taxpayers should use the applicable IRS instructions when preparing the claim rather than relying on an outdated rate.

What Information Is Needed for Schedule C?

Schedule C requires information supporting the specific claim. Depending on the claim, you may need:

Some claims require additional statements or attachments.

The information required depends on the type of claim.

Supporting Records for Schedule C Claims

Businesses should maintain records that establish both eligibility for the claim and the amount claimed.

For fuel claims, records may include:

• Purchase invoices
• Number of gallons purchased
• Number of gallons used or sold
• Dates of purchase or sale
• Seller information
• Buyer information
• Evidence of the qualifying use
• Required certificates
• Registration information
• Export documentation

For nonfuel claims, taxpayers should maintain records supporting:

• The taxable article
• Original tax
• Qualifying transaction
• Calculation of the claim

Good records are important because a claim may be disallowed when required information or procedures are not provided.

Schedule C and Form 720

Schedule C is filed as part of Form 720 when the taxpayer has both:

• A liability reported in Part I or Part II of Form 720, and
• An eligible Schedule C claim.

The Schedule C claim is taken into account in Part III of Form 720 when determining the final amount due or overpayment.

This is why Schedule C should not be treated as a separate general refund form.

If you are filing Form 720 and have an eligible claim, Excise720 can help you prepare the applicable Schedule C information along with your Form 720 filing.

Schedule C vs. Form 8849

Schedule C and Form 8849 can both be used for certain federal excise tax claims, but they are not interchangeable in every situation.

Schedule C is used with Form 720 when the taxpayer is reporting a liability in Part I or Part II and qualifies for an applicable claim.

Form 8849 is used to claim refunds of certain excise taxes under the applicable Form 8849 schedules.

A taxpayer should not claim the same amount more than once. The correct claim method depends on the type of tax, transaction, claimant, and applicable IRS requirements.

Schedule C vs. Form 720-X

Schedule C is also different from Form 720-X, Amended Quarterly Federal Excise Tax Return.

Schedule C is used for eligible claims associated with a Form 720 filing.

Form 720-X is generally used to make adjustments to liabilities reported on previously filed Forms 720. Do not use Schedule C simply to correct a tax liability from an earlier Form 720.

When Is Schedule C Filed?

Schedule C is filed with Form 720.

Form 720 generally follows this quarterly filing schedule:

If a due date falls on a Saturday, Sunday, or legal holiday, the filing deadline generally moves to the next business day.

Individual claims may also have additional timing requirements. Businesses should verify that the claim is timely under the rules that apply to that particular credit.

How to Prepare for a Schedule C Claim

Before preparing Schedule C, determine:

1. Whether you are reporting a Form 720 Part I or Part II liability
2. Whether the transaction qualifies for a claim
3. Who is legally entitled to make the claim
4. Which Schedule C line applies
5. Which CRN applies
6. Whether registration is required
7. Whether a certificate is required
8. The eligible gallons or articles
9. The applicable claim calculation
10. Whether additional documentation must be attached

Do not submit a claim solely because excise tax was previously paid. The transaction must satisfy the requirements for the particular credit.

Once your information is ready, you can prepare your eligible Schedule C claim together with Form 720 using Excise720.

Common Schedule C Filing Mistakes

• Using Schedule C without a Form 720 liability: Schedule C is only available when reporting a liability in Part I or Part II.
• Selecting the wrong CRN: Different claims use different Credit Reference Numbers.
• Claiming the same amount twice: An amount should not also be claimed through another applicable refund or credit form.
• Using Schedule C to correct an earlier return: Prior-quarter Form 720 liability adjustments generally require Form 720-X.
• Missing required documentation: Some claims require certificates, registration information, statements, or proof of export.
• Using an outdated claim rate: Certain claim rates can change.
• Claiming ineligible gallons or transactions: Eligibility depends on the specific fuel, use, sale, claimant, and applicable IRS rules.
• Incomplete records: Businesses should maintain documentation supporting both eligibility and the amount claimed.

Schedule C Filing Checklist

Before filing, confirm that you have:

1. A liability reported in Form 720 Part I or Part II.
2. Identified an eligible excise tax claim.
3. Confirmed who is entitled to make the claim.
4. Selected the correct Schedule C line.
5. Selected the correct CRN.
6. Determined the eligible gallons, articles, or transaction amount.
7. Used the applicable claim calculation.
8. Entered the correct claim period.
9. Included registration information when required.
10. Obtained required certificates when applicable.
11. Maintained proof of export when applicable.
12. Prepared any required supporting statements.
13. Verified that the same amount has not been claimed elsewhere.
14. Maintained records supporting the claim.

Schedule C (Form 720) Claims Filing Pricing

Frequently Asked Questions