Guide · Compliance

By File720Online Editorial Team · April 17, 2026

7 Common Form 720 Filing Mistakes (And How to Avoid Them)

Form 720 errors can trigger IRS penalties, delay acceptance, and require costly amended filings. Here are the seven mistakes we see most often — and how to get it right.

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Quick Answer

The most impactful Form 720 mistakes are: wrong EIN, omitting applicable schedules, using outdated tax rates, missing semi-monthly deposits, and filing late. All are preventable with the right preparation.

Mistake 1: Using the Wrong EIN

Every Form 720 requires an Employer Identification Number (EIN). The EIN on your excise tax return must match the entity that is legally liable for the tax — not just any EIN associated with your business.

This becomes a problem when businesses have multiple legal entities, recently underwent a merger or acquisition, or when a new owner files under the previous owner's EIN. The IRS will reject or flag returns where the EIN does not match their records.

How to avoid it: Verify your EIN on your IRS EIN assignment letter (CP 575) before filing. If your entity structure changed, confirm which EIN should be used for excise tax purposes.

Mistake 2: Omitting Applicable Schedules

Form 720 has multiple schedules covering different excise tax categories. Schedule I covers fuel taxes, environmental taxes, and communications taxes. Schedule II covers air transportation, indoor tanning, and other categories. Schedule C covers tax credits.

Businesses sometimes file only the schedule they are most familiar with and overlook other applicable categories. For example, a fuel distributor who also provides communications services may correctly file fuel tax schedules but forget to include the communications excise tax.

How to avoid it: Review all excise tax categories your business may be liable for at the start of each quarter. Use IRS Publication 510 as a reference checklist.

Mistake 3: Using Outdated Tax Rates

Excise tax rates on Form 720 are set by statute, but they change periodically. Using a prior year's form or an old rate table results in calculating the wrong tax amount — potentially triggering underpayment penalties or requiring an amended return.

For example, the Leaking Underground Storage Tank (LUST) tax, Superfund chemical taxes, and fuel excise tax rates have all been adjusted by legislation in recent years. The IRS revises Form 720 periodically to reflect current rates.

How to avoid it:Always use the current version of Form 720 from IRS.gov. File720Online automatically applies current rates so you don't have to manually look them up.

Mistake 4: Missing Semi-Monthly Deposit Requirements

Businesses with large excise tax liabilities — generally more than $2,500 per quarter — are required to make semi-monthly deposits (twice per month). These deposits are due on the 14th and last day of each month.

Many first-time filers are unaware of the deposit requirement and simply pay when filing the quarterly return. If you were required to make deposits, failing to do so triggers a separate penalty — even if you pay the full balance with the quarterly return.

How to avoid it: Determine your deposit obligation based on prior-quarter liability. If you exceeded $2,500 in excise tax during the prior quarter, set up EFTPS deposits for the current quarter.

Mistake 5: Missing Applicable Credits on Schedule C

Schedule C allows businesses to claim credits for excise taxes paid on fuel that was later sold for nontaxable purposes, exported, or used in certain exempt activities. These credits can significantly reduce your net excise tax liability.

Many filers simply leave Schedule C blank because they don't realize they qualify. For example, if you sell diesel fuel and some of it was purchased by a nonprofit or government entity for off-road use, you may be entitled to a credit.

How to avoid it: Review Schedule C instructions and consult IRS Form 4136 to identify all credit claims applicable to your business before completing Form 720.

Mistake 6: Filing the Wrong Quarter

Form 720 must identify the correct tax period. Filing Q1 data on a Q2 return, or mislabeling the period end date, creates mismatches in IRS records and may result in the return being rejected or applied to the wrong period.

How to avoid it: Double-check the quarter end date before submitting. Q1 ends March 31, Q2 ends June 30, Q3 ends September 30, Q4 ends December 31.

Mistake 7: Filing Late or Not at All

The most costly mistake is simply not filing by the quarterly deadline. Unlike income tax returns, the IRS does not grant extensions for Form 720. The failure-to-file penalty is 5% of unpaid tax per month (up to 25%), compounded by interest charges.

Some businesses mistakenly believe that if they had no excise tax activity in a quarter, they don't need to file. However, if you are registered as an excise taxpayer, you may be required to file a zero return.

How to avoid it: Set calendar reminders for all four quarterly deadlines. E-filing takes only minutes with File720Online — there is no reason to miss the deadline.

First-Time Filing Checklist

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Form 720 Due Dates

Quarterly deadlines and deposit rules

How to Amend Form 720

Correcting a return after submission

Frequently Asked Questions

What is the most common Form 720 filing mistake?

Using the wrong EIN is the most frequent error. Form 720 requires the EIN of the business that is liable for the excise tax, which may differ from the EIN used for income tax returns if the business has multiple entities or recently changed its structure.

What happens if I omit a schedule from Form 720?

Omitting a required schedule means the excise tax for that category is not reported or paid. The IRS may assess a failure-to-file penalty (5% of unpaid tax per month) and send a notice requesting the missing information. You will need to file an amended return to correct the omission.

Can I correct a Form 720 filing mistake after submission?

Yes. File an amended Form 720 for the same quarter to correct errors. Check the "Amended return" box at the top of the form and report only the lines that need correction. E-filing an amendment through File720Online is straightforward — the system pre-populates the original data.

What if I use the wrong excise tax rate on Form 720?

Using an outdated or incorrect tax rate results in underpayment or overpayment. Underpayment triggers IRS notices and penalties. Overpayment can be recovered by filing Form 8849 (Claim for Refund of Excise Taxes). Always verify current rates in IRS Publication 510 before filing.

What is the penalty for filing Form 720 late?

The IRS penalty for late filing is 5% of unpaid excise tax per month (up to 25%), plus 0.5% per month for failure to pay, plus interest at the federal short-term rate plus 3%. There is no extension available for Form 720.

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Disclaimer: The information provided in this article is for general informational purposes only and should not be relied upon as legal, tax, or professional advice. Tax laws and regulations are subject to change, and their application can vary based on individual circumstances. Consult a qualified tax professional or attorney for advice specific to your situation. File720Online is an IRS-authorized e-file provider and does not provide legal or tax advice.