What’s new in Form 720 Instructions? - Sep 2024 Update

In this blog, you will gain a clear understanding of the specific instructions outlined on the 720 Instructions September 2024 Update. We will focus exclusively on the newly revised updates that were released in September.

The updated edition of the Form 720 instructions includes two significant changes. The first update relates to Section 4501 Excise Tax on Repurchase of Corporate Stock, while the second addresses Notice 2024-37: Guidance on Sustainable Aviation Fuel (SAF). This blog will guide you through these important revisions, ensuring you are well-informed about the latest requirements and guidelines.

The final regulations for the section 4501 excise tax on repurchase of corporate stock, enacted as part of the Inflation Reduction Act of 2022 (the Act), are detailed in Treasury Decision (T.D.) 10002. These regulations came into effect on June 28, 2024. The section 4501 tax applies to stock repurchases occurring after 2022.

The first due date for reporting and paying the excise tax was October 31, 2024. This specific due date pertains to stock repurchases made during the full 12-month calendar tax year of 2023.

For corporations with more than one tax year ending after 2022 but on or before June 28, 2024, the reporting requirements differ slightly. In such cases, a single Form 720 must be filed. However, two separate Forms 7208, Excise Tax on Repurchase of Corporate Stock, should be attached to the filing, with each Form 7208 corresponding to one of the tax years in question.

For tax years ending on or after June 28, 2024, the due date for reporting the tax will be the due date of Form 720 for the first full quarter following the tax year end. The excise tax amount is initially reported on Form 7208, and then the total tax is entered on the line designated for IRS No. 150, Repurchase of Corporate Stock.

In December 2023, sections 5 and 6 of Notice 2024-06 clarified an important point regarding the calculation of emissions reductions under section 40B(e)(2). The guidance stated that the Greenhouse gases, Regulated Emissions, and Energy use in Transportation (GREET) model methodology available at that time did not meet the requirements necessary to determine the emissions reduction percentage under section 40B(e)(2). 

Recognizing this shortfall, the government committed to developing a new model to ensure compliance with the requirements.

Subsequent guidance on Sustainable Aviation Fuel (SAF) was released in Notice 2024-37. A key update included in this notice was the introduction of the 40BSAF-GREET 2024 model, officially released on April 30, 2024. This model, referred to as the Greenhouse gases, 

WRAP:

By the end of this blog, you will have a solid understanding of the new updates on Form 720 Instructions. Staying informed about the latest updates released by the IRS is crucial for taxpayers, as it ensures a smoother and more efficient tax filing experience.

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