What is IRS Form 720?
Updated on April 03, 2026
by Clark Stott
Clark Stott has been with Expat Tax Online since 2015. Being a dual national based in the UK, Clark has unique experience helping US citizens (and Accidental Americans) become tax compliant via the Streamlined Tax Amnesty program. Clark likes to help Americans in the UK keep their tax situations as simple as possible to avoid harsh IRS treatment.
Table of Contents
Form 720: What US expats need to know about excise taxes
Form 720 is used to report certain federal excise taxes and primarily applies to businesses involved in specific activities such as fuel, transportation, or environmental products. If you’re an employee or freelancer with no excise-related business, you likely don’t need to file it.
That said, there are a few edge cases where expats do get pulled into this. So it’s worth taking a closer look before you ignore it completely.
What is Form 720 and why does it exist?
Form 720 is a quarterly tax return used to report federal excise taxes to the Internal Revenue Service.
Unlike income tax, which applies broadly, excise taxes are tied to specific goods, services, or activities.
To simplify, think of it this way:
- Income tax – based on what you earn
- Excise tax – based on what you do or sell
This form exists because certain industries are taxed differently. Fuel, airline travel, and environmental products are common examples.
Note: Even if you live abroad, the US can still tax these activities if they fall within its tax jurisdiction. That’s where things can get confusing for expats.
Do you need to file Form 720?
In most cases, no. Form 720 mainly applies to businesses involved in fuel, transportation, or certain regulated goods. If your work doesn’t touch these areas, you likely don’t need to file.
That said, the easiest way to assess your situation is to look at real-life scenarios:
|
Situation |
Does Form 720 apply? |
Why |
|
You run a business selling fuel or energy products |
Yes |
Fuel-related activities are subject to federal excise tax |
|
You operate air transportation services |
Yes |
Air transportation is taxed under excise rules |
|
You manufacture or import certain goods (e.g., chemicals) |
Possibly |
Some products trigger environmental or other excise taxes |
|
No |
No excise-related activity involved |
|
|
You own a regular small business (consulting, ecommerce, etc.) |
No |
Service-based businesses typically don’t trigger excise tax |
Key Takeaway: Businesses dealing with regulated goods or transportation should take a closer look. Service-based work or employment income, this form usually doesn’t apply.
Need help filing Form 720?
We’re happy to assist you.
What types of taxes are reported on Form 720?
Form 720 reports federal excise taxes on specific goods, services, and activities such as fuel, air transportation, environmental products, and certain communications services.
That said, you don’t need to understand every category. In practice, you’ll only deal with the categories relevant to your business.
Common excise tax categories:
|
Category |
Example |
Who it applies to |
|
Fuel taxes |
Gasoline, diesel |
Producers, importers |
|
Transportation taxes |
Air travel, cargo |
Airlines, operators |
|
Environmental taxes |
Ozone-depleting chemicals |
Manufacturers |
|
Communication taxes |
Certain phone services |
Service providers |
Most Americans living abroad won’t fall into any of these categories.
However, if you’re running a business that crosses borders, especially in logistics or product distribution, this becomes more relevant.
How to file Form 720
You complete the form, calculate your excise tax liability, and file it quarterly, either electronically or by mail.
If you do need to file, the process is fairly structured.
Here’s how it usually works:
How to file Form 720 (step-by-step):
- Identify applicable excise taxes
- Calculate the tax owed based on IRS rates
- Complete Form 720 (only relevant sections)
- File the form quarterly with the IRS
- Make any required deposits (if applicable)
Note: Mistakes here usually come from misclassification, not the calculations. That’s where most issues arise.
When is Form 720 due?
Form 720 is due quarterly, with deadlines at the end of the month following each quarter.
The schedule is consistent throughout the year, so once you know the pattern, it’s fairly easy to keep track of upcoming deadlines.
|
Quarter |
Period covered |
Deadline |
|
Q1 |
January-March |
April 30 |
|
Q2 |
April-June |
July 31 |
|
Q3 |
July-September |
October 31 |
|
Q4 |
October-December |
January 31 |
The filing dates themselves are usually straightforward. What often causes confusion is that some businesses may also need to make deposits during the quarter.
These semi-monthly deposit requirements do not apply to all filers. They generally apply only if your excise tax liability exceeds IRS deposit thresholds for certain taxes. If your liability stays below those thresholds, you can typically pay when you file Form 720.
Note: If a deadline falls on a weekend or holiday, it typically moves to the next business day.
What happens if you don’t file?
If you’re required to file and don’t, penalties can apply.
These may include:
- Late filing penalties
- Late payment penalties
- Interest on unpaid taxes
That said, the bigger issue is usually non-compliance over time. Excise taxes are often tied to ongoing business activity, so missing one filing can lead to a chain of missed obligations.
How this affects Americans living abroad
In most cases, this form won’t apply unless your business involves excise-taxed activities. However, if you deal with regulated goods or services, you may still need to file even while living overseas.
If your business is US-based or falls under US excise tax rules, the requirement can still apply regardless of where you live or where your customers are.
That said, most expats work as employees or run service-based businesses. This rarely applies.
A simple way to think about it: if your work doesn’t involve regulated products or industries, you’re likely outside the scope.
Common misconceptions about Form 720
A few points that often cause confusion:
“All businesses need to file it.”
Not quite. This form applies only to businesses engaged in specific excise-taxed activities, not to general business operations.
“Living abroad removes the requirement.”
Living overseas doesn’t automatically exempt you. If your business falls under US excise tax rules, the obligation can still apply.
“It’s the same as income tax.”
It’s a separate system, with different triggers and rules for specific goods and services.
FAQs
Do freelancers abroad need to file Form 720?
Usually no. Most freelancers do not deal with goods, services, or activities that trigger federal excise taxes. However, if your business falls into one of the excise-tax categories listed by the IRS, the form may apply.
Is Form 720 the same as the self-employment tax?
Can Americans abroad ignore Form 720?
Do I file Form 720 with my regular tax return?
What should I do if I’m not sure whether Form 720 applies to me?
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