IRS Form 720 Late Filing Penalty

Form 720, the Quarterly Federal Excise Tax Return, is used by businesses to report and pay excise taxes on specific goods and services. Properly completing Form 720 is essential for businesses that handle these taxable goods and services to remain compliant with IRS regulations and avoid potential penalties. 

Understanding the requirements and filing procedures for Form 720 ensures accurate reporting and timely payment of excise taxes.

When is Form 720 due?

Form 720, the Quarterly Federal Excise Tax Return, is due at the end of the month following the end of each quarter. To stay compliant with IRS regulations, it is important to file Form 720 and pay any taxes owed by the due date for each quarter. The following table outlines the due dates for each quarter:

It is always advisable to pay any excise taxes owed before the due date to ensure compliance and avoid any potential penalties or interest charges.

IRS Form 720 Late Filing Penalty:

Failing to pay the tax due on Form 720 by the specified deadlines can result in significant penalties. 

According to the Internal Revenue Code Section 6651, the penalty for late payment is calculated as 5% of the unpaid tax amount for each month or part of a month that the payment is late, up to a maximum of 25% of the unpaid amount. This means that the longer you delay the payment, the more the penalty will increase, potentially leading to a situation where the penalty amount exceeds the original tax owed.

Additionally, interest accrues on both the unpaid tax and the penalty amount from the due date until the tax is fully paid. This compounding effect can significantly increase the total amount due, causing financial strain for businesses or individuals who have not budgeted for these extra costs. 

Therefore, it is crucial to adhere to the due dates and make tax payments on time. Doing so not only ensures compliance with IRS regulations but also prevents unnecessary financial burdens that could impact cash flow and overall financial stability.

How to avoid Form 720 penalty?

To avoid Form 720 penalties, follow these key steps:

1. Opt for e-Filing Over Manual Filing: Filing Form 720 electronically reduces errors and speeds up IRS acknowledgments, minimizing the risk of late payments. Using an IRS-approved 720 Online Portal like eFile720 ensures a smooth and accurate filing process.

2. Stick to Due Dates and Set Reminders: Ensure you file on time by setting reminders for each quarterly deadline. Staying organized with due dates helps avoid penalty fees and interest on unpaid taxes.

By choosing e-filing and adhering to deadlines, you can effectively avoid penalties and maintain IRS compliance.

WRAP:

By reading this blog, you will gain a clear understanding of the penalties imposed for late filing of Form 720, its due dates, and effective ways to avoid the penalties.

File Form 720 Online with efile720 seamlessly without downloading any excise tax software!