Compliance · Deposits

By File720Online Editorial Team · April 17, 2026

Form 720 Semi-Monthly Deposit Rules Explained

If your net Form 720 Part I liability exceeds $2,500 for the 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 net Form 720 Part I liability for the quarter must make semi-monthly deposits via EFTPS by the 29th (for the 1st–15th period) and by the 14th of the following month (for the 16th–end-of-month period). 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 liability for the taxes listed in Form 720, Part I exceeds $2,500 for the quarter. The test looks at the quarter you are in, not the quarter before it.

At or below the threshold (no deposits)

Your net Part I liability for the quarter is $2,500 or less. No deposits are required — the tax is payable with the return when you file Form 720 by the quarterly deadline.

Above the threshold (deposits required)

Your net Part I liability for the quarter exceeds $2,500. You must make semi-monthly deposits throughout that quarter via EFTPS.

Because the test is the current quarter, you need to track liability as it accrues rather than wait for the quarter to close. Part II taxes generally do not require deposits — the floor stocks tax is the exception.

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

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Payment Methods Explained

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Frequently Asked Questions

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

The test is the current quarter, not the prior one. If your net liability for the taxes listed in Form 720 Part I exceeds $2,500 for the quarter, you must make semi-monthly deposits for that quarter. At $2,500 or less the tax is simply payable with the return. The threshold applies to Part I taxes; Part II taxes generally do not require deposits, the floor stocks tax being the exception

When are semi-monthly deposits due?

Semi-monthly deposits cover two periods per month: the 1st through the 15th, and the 16th through the last day of the month. Deposits are due by the 29th day of the month for the 1st–15th period, and by the 14th day of the following month for the 16th–end-of-month period. If a deposit due date falls on a weekend or legal holiday, the deposit is due the preceding business day.

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.