The Internal Revenue Service (IRS) has many different types of taxes, much to the dismay of taxpayers. Excise taxes may not be as well known as other taxes because they are known as an indirect tax, one that's taxed on an intermediary and often included in the price of a product. For instance, the price of cigarettes is largely made up of excise taxes and varies from state to state. These types of taxes are only required by those that engage in certain business activities or deal with certain goods. This article describes the different excise taxes that you may have to pay and the forms related to these taxes. For more related information and resources, you can visit FindLaw's section on Business Taxes.
Who Must Pay an Excise Tax
While this article focuses on federal excise taxes, please keep in mind that these taxes can also be implemented by state and local governments as well. You may have to file an excise tax form and pay the associated taxes if you manufacture or sell certain products, or use certain types of facilities, equipment, or products. Excises taxes may also apply to you if you operate certain kinds of businesses or receive payment for certain services. As you can see, this is a fairly a vague list. The best way to determine if you are liable for excise taxes is to look at the IRS's Publication 510, which provides a comprehensive view.
Forms that Relate to Excise Taxes
The IRS has different forms for different types of industries and activities with respect to the collection and payment of excise taxes. Below are the different types of forms that relate to federal excise taxes:
- Form 720: There are several broad categories of taxes that must be reported on Form 720, Quarterly Federal Excise Tax Return. These categories include: fuel, environmental, communications, and air transportation taxes, a tax on the first (retail) sale of heavy trucks, tractors, and trailers, and manufacturer taxes on the use or sale of various different articles.
- Form 2290: The federal government imposes an excise tax on certain vehicles that have a taxable gross weight of 55,000 pounds or more that are used on public highways. Examples of such vehicles include buses, trucks, and truck tractors. This tax is reported on Form 2290, Heavy Highway Vehicle Use Tax Return.
- Form 730: You may be liable for a federal excise tax if you engage in the business of conducting a wagering pool or lottery. You can also be required to pay this tax if you are in the business of accepting wagers. To figure out the tax on wagers you receive, you need to use Form 730, Monthly Tax Return for Wagers.
- Form 11-C: In order to engage in wagering activities, you must register the activity and pay the federal occupational tax on wagering by completing Form 11-C, Occupational Tax and Registration Return for Wagering.
As previously stated, state and local governments can impose excise taxes as well -- notably tobacco products, gasoline, alcoholic beverages, and recreational marijuana (in states where it is legal) -- so it's important to check the laws of your state to find out if excise taxes apply to your business.
Getting Legal Help
Taxes can be a tricky area of the law and an attorney can help you figure out which excise taxes apply to your business. You can also contact a business organizations attorney if you have more general questions or concerns about starting, running, or closing a business.