 into the revenue service IRS tax news basic things all businesses should know about excise tax oh come on everyone knows the basics of an excise tax there's the thing that makes the cost of your alcohol and tobacco ridiculously high talk about a regressive tax I tell you what you know what you could do with your excise tax you could take it exit stage right with it whatever that means anyways first an attempt at a joke it's not the president in our life I never heard of half of these guys and the ones I do know are way past the prime it's the life in our president most of these guys never had a prime or lack thereof this guy here is dead cross him off then what's that Phil well maybe I should have taken the time to vote whatever Phil I couldn't vote last time round I couldn't do it you couldn't do it I was too effing busy vice versa oh come on man come on man give the devil is due the big guy generally takes 10% IRS tax tip 2022-116 August 1st 2022 excise tax is an indirect tax on specific goods services and activities so they're gonna be taxing specific things it's kind of interesting to think about why they might apply a tax to specific goods and services you might be thinking well why would they tax this specific good in service and not all goods and services isn't that kind of like a discriminatory practice towards certain goods and services so there's various different reasons for example federal excise tax is usually imposed on the sale of things like fuel if you think about something like fuel for example note that the use of the fuel usually means that people are gonna be driving on the roads and the roads are like a public good so the idea there might be that if you have more people buying more fuel they're gonna be using the road more and therefore they should be paying more for the public good than someone that doesn't use the road at all would be one of the kind of arguments that public good argument might be able to be applied to things like airline tickets heavy trucks and highway tractors which again are using the infrastructure more so than other people and therefore getting a benefit profiting from you know that infrastructure of the roads and so on indoor tanning tires tobacco and other goods and services so when you get into things like tobacco and things like alcohol for example those are probably more likely to be incurring more and more taxes because the idea would be that you're gonna try to discourage things like tobacco and alcohol the person there's kind of arguments on both sides of that kind of argument because it seems like a logical argument if you increase the taxes then the demand for alcohol and tobacco will go down but at the same time other people might argue well you're kind of taxing people that are usually at the lower income side of things because people that consume tobacco and alcohol are disproportionate to lower income and therefore it might be a progressive a regressive type of tax falling more heavily on the lower income there's also arguments to be made saying well if someone is addicted to something then when you raise the price of it it may not actually result in them consuming less because they're addicted to it so that's that's kind of the point of the whole process but in the case you could see why those taxes get imposed for different kind of reasons so so so now we got to think about how is it going to function how do we pay for these what's the structure what's the process so businesses that are subject to excise tax and generally must file form 720 quarterly federal excise tax returns there's a link to that here to report the tax on the to the IRS this is commonly included in the cost of the product so clearly the tax is usually passed on to the consumer which of course is the is the idea in general because again the kind of idea would be the people that are using the public goods are the ones that kind of should be paying more for them since they're provided by you know the government like the roads and whatnot and the idea being for the tobacco it's specifically designed simply to increase the price or that's the argument it's designed to generate revenue but we don't talk about that they're real it's designed to virtuously curb people's addictive habits or something like that and so it's supposed to be in the price because that's supposed to work its magic so in any case so it's in the price so while the end consumer doesn't usually see the excise tax on the receipt it may be charged at the time of import sale by the manufacturer sale by the retailer used by the manufacturer or consumer so you can see along the the production line until it gets to like the end product the tax could be imposed at some point in there of course by the end that it hits the actual consumer it's included in the price so many excise taxes go into trust funds for projects related to the tax products or services such as highways and airport improvements so once again you can see the argument there where you're saying why why why would one product you're taxing one product that doesn't make any sense it seems kind of discriminatory it seems arbitrary but if one product is being used more they're getting an advantage from the infrastructure which we all pay for then the idea would be that that they're going to get a disproportionate amount of tax to provide those infrastructures that they're getting more of a benefit from so excise taxes are independent for income taxes and by the way you can make a same argument for the tobacco people try to make that argument as well like tobacco they say well we've got to increase the cost of tobacco because we're going to apply that to health care and the people that use tobacco are going to have a higher health care cost so some people try to use that argument a little bit well it's a lot more indirect of an argument and then someone that uses the roads is clearly either use you know it's because and again if you go down that road making that argument you can make the same argument for like obesity and diet coke since or you know coke you know and soda pops and those kind of things so I can get you know that's a slippery slope of regulation if you but in any case often the retailer manufacturer or importer must pay the excise tax to the IRS and file form 720 so some excise taxes are collected by a third party the third party then sends the tax to the IRS and files the form 720 for example the tax on an airline ticket generally is paid by the purchaser and collected by the airline when to file businesses must file the form for each quarter of the calendar year here are the due dates you got quarter one January February in March those are the three months in the first quarter 12 months divided by four three months January February March it's due deadline April so you got the first three months which are due by the end of the following month after the first quarter quarter two which has three months of April May and June and the deadline to be filing for it is the month after that which is July quarter three which has three months of July August September the deadline for that quarter is October 31st the month after quarter four October November December in that quarter the deadline being January of the following year so if the deadline for filing the tax return falls on Saturday or Sunday legal holiday the due date is the next business day how to file the IRS does not accept pet paper excise tax return so you got to use some high techness in this area however electronic filing is strongly encouraged the iris does accept I'm sorry that iris does accept paper excise tax return so you can still use the paper returns apparently however what they would like to prefer and what they've been pushing for for many different areas electronic filing is strongly encouraged when possible to make this process easier for taxpayers of the contact information for all approved e-file transmitters there's a link to that here of excise forms is listed on irs.gov so you go to the link irs.gov or you can go there irs.gov business can submit form online 24 hours a day when businesses e-file they get confirmation that the irs receive their form which is nice so also e-filing reduces processing time in errors so in other words if you paper file it then you're not going to get the the verification that they've received it quite as easily it could still get lost in the mail and whatnot that kind of stuff so to electronically filed business business taxpayers will have to pay the providers fee for online submission so there could be actually a fee for that which is kind of that's kind of lame but it is what it is the excise tax forms available for electronic filing are you got the form 720 quarterly federal excise tax return form 2290 heavy highway vehicle use tax form 8849 claim for refund of excise taxes schedule 12356 and eight there's links to those items here links to this other stuff that we said there's links to links to this in the description