Compliance · Deposits

By File720Online Editorial Team · April 17, 2026

Form 720 Semi-Monthly Deposit Rules Explained

If your excise tax liability exceeds $2,500 per quarter, you are required to make semi-monthly deposits — separate from filing the quarterly return. Here is everything you need to know about when, how much, and how to pay.

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Quick Answer

Businesses with more than $2,500 in quarterly excise tax liability must make semi-monthly deposits via EFTPS on the 14th and last day of each month. Deposits are separate from — and required in addition to — the quarterly Form 720 filing.

What Are Semi-Monthly Excise Tax Deposits?

Semi-monthly deposits are advance payments of your quarterly excise tax liability made twice per month throughout the quarter. They are required because the IRS wants large excise taxpayers to remit tax as they collect it — not wait until the end of the quarter.

Think of deposits as installments: you pay throughout the quarter based on actual tax collected, then reconcile on the quarterly Form 720. If your deposits exceed your final liability, you get a credit or refund. If your deposits fall short, you pay the balance when filing.

Deposits are made via EFTPS (Electronic Federal Tax Payment System) — the IRS's secure electronic payment system. Paper checks are not acceptable for excise tax deposits.

Who Must Make Semi-Monthly Deposits?

You must make semi-monthly deposits if your net tax liability exceeded $2,500 in the prior quarter. For most excise taxes on Form 720, this is the trigger threshold.

Monthly Payor (No deposit required)

Your quarterly excise tax liability was $2,500 or less. You can pay the full amount when you file Form 720 by the quarterly deadline.

Semi-Monthly Depositor (Deposits required)

Your quarterly excise tax liability exceeded $2,500. You must make semi-monthly deposits throughout the quarter via EFTPS.

Your deposit status is determined by your prior quarter liability. If this is your first quarter filing, you can pay with the return unless you expect to owe more than $2,500 — in that case, begin deposits immediately.

Sample Q1 Deposit Schedule

Deposits cover two semi-monthly periods. Below is an example for Q1 (January–March):

Tax Period Covered	Deposit Due By	Notes
Jan 1–15	January 31	Last day of January
Jan 16–31	February 14	14th of February
Feb 1–15	February 28/29	Last day of February
Feb 16–28/29	March 14	14th of March
Mar 1–15	March 31	Last day of March
Mar 16–31	April 14	14th of April

If a due date falls on a weekend or federal holiday, the deposit is due the next business day.

How Much Must You Deposit?

Each semi-monthly deposit must equal at least 95% of the net tax liability for that semi-monthly period. The safe harbor rule allows deposits to be slightly less than actual liability without penalty, as long as the shortfall is made up by the next deposit.

To calculate your deposit amount: multiply taxable units (gallons, dollars of revenue, etc.) by the applicable excise tax rate for each category. Sum all categories to get the total liability for the period, then deposit at least 95% of that total.

Keep detailed records of your deposit calculations. If the IRS questions a deposit amount, you will need documentation of the taxable units and rates used.

Form 720 Due Dates

All quarterly filing deadlines

Payment Methods Explained

EFTPS, check, and other options

Common Filing Mistakes

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Frequently Asked Questions

Who is required to make semi-monthly excise tax deposits?

Businesses that had more than $2,500 in excise tax liability during the prior quarter are generally required to make semi-monthly deposits in the current quarter. This threshold applies to most Form 720 taxes. The IRS calls these "depositors" — as opposed to "monthly payors" who can simply pay with the quarterly return.

When are semi-monthly deposits due?

Semi-monthly deposits cover two periods per month: the 1st through the 15th (deposit due by the 14th of the following period) and the 16th through the last day of the month (deposit due by the last day of the following period). In practice, deposits made for the first half of a month are due on the 14th of that same month, and deposits for the second half are due on the last day of the month.

How do I make excise tax deposits?

Excise tax deposits must be made through EFTPS (Electronic Federal Tax Payment System). You must enroll in EFTPS before you can make deposits. Enrollment is free at eftps.gov. Once enrolled, you can schedule payments online, by phone, or through tax software. Allow at least 5 business days for initial EFTPS enrollment.

What is the penalty for missing a semi-monthly deposit?

The penalty for a late or missing deposit depends on how late it is: 2% if 1–5 days late, 5% if 6–15 days late, 10% if more than 15 days late, and 15% if not deposited after receiving an IRS notice. These penalties are in addition to any failure-to-file or failure-to-pay penalties on the quarterly return.

Do I still need to file Form 720 even if I made all deposits?

Yes. Semi-monthly deposits are pre-payments of your quarterly excise tax liability. You must still file Form 720 by the quarterly deadline to report your total tax liability and reconcile the deposits made. The form shows total tax owed, credits, deposits already made, and any balance due or overpayment.

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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.