What Is Federal Excise Tax


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When Did Some Idling Reduction Devices Become Exempt From The Federal Excise Tax

Federal Excise Tax Claims One Time Filing Deadline – August 11

On October 3, 2008, the President signed into law the Emergency Economic Stabilization Act of 2008 . This law also enacted the Energy Improvement and Extension Act of 2008. Specifically, section 206 of the EIEA excludes some idling reduction devices and advanced insulation from the federal excise tax.

Heavy Highway Vehicle Use Tax

Anyone who has registered, or is required to register in their name, a heavy highway motor vehicle with a taxable gross weight of 55,000 pounds or more must file Form 2290 and pay the Heavy Highway Vehicle Use Tax. The filing season for Form 2290 filers is July 1 through June 30. The filing deadline is based on the month the taxable vehicle was first used on public highways during the reporting period. For vehicles first used on a public highway in July, file Form 2290 between July 1 and August 31. The tax for the current filing season is prorated for vehicles first used on a public highway after July. File Form 2290 by the last day of the month following the month in which the vehicle is first used on a public highway.

A Target Of Tax Reformers

The telephone excise tax has long been targeted by reformers on both the right and left. The conservative Tax Foundation argues that the tax was originally meant to be temporary and thus should not be part of the permanent tax code moreover, they argue there is no justification for a luxury tax on telephones, which are now an essential of modern life. On the left, antiwar activists argue that as a war tax it should be opposed on moral grounds since, they argue, it provides revenue for the waging of a so-called permanent war unauthorized by Congress.

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Learn About Federal Excise Tax Exemption

In the Energy Improvement and Extension Act of 2008 , Section 206 excludes certain idling reduction devices and advanced insulation from the federal excise tax. This law amends section 4053 of the Internal Revenue Code.

For purposes of section 4053 of the Internal Revenue Code, the Administrator of EPA, in consultation with the Secretary of Energy and the Secretary of Transportation, has determined that the devices reduce the idling of a tractor at a motor vehicle rest stop or other location where such vehicles are temporarily parked or remain stationary. For the purposes of EIEA, the effective date of this list is the first day after the enactment of EIEA . Companies interested in adding their technology to this list should contact EPA after reviewing the criteria for product eligibility below.

Motor carriers must ensure that all devices installed on Commercial Motor Vehicles conform to the Federal Motor Carrier Safety Regulations, 49 CFR 393, Parts and Accessories Necessary for Safe Operation. Those regulations of particular concern to users of auxiliary power units are contained in section 393.28, section 393.30, and SubPart E of Part 393. These requirements dictate the specifications of installation of wiring and fuel systems for this equipment.

What Is An Excise Tax

United States of Taxes: Excise taxes for beer, wine, &  spirits by state

An excise tax is a legislated tax on specific goods or services at purchase such as fuel, tobacco, and alcohol. Excise taxes are intranational taxes imposed within a government infrastructure rather than international taxes imposed across country borders. A federal excise tax is usually collected from motor fuel sales, airline tickets, tobacco, and other goods and services.

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How The Federal Gasoline Excise Tax Works

Federal gas taxes are put into the Highway Trust Fund to pay for infrastructure and transportation costs, and this policy has been a point of contention among many groups over the years. The American society of Civil Engineer’s Report Card for America’s Infrastructure notes that 40% of the nation’s roadways are in “poor” or “mediocre” condition. Some experts say that raising the gas excise tax could help fund improvements.

The federal gasoline excise tax is a combination of two taxes. It includes a $0.001-per-gallon leaking underground storage tank fee, which is added to the tax-per-gallon rate on both gasoline and diesel fuel.

The LUST fee goes into a trust fund that was created in 1986. Its intended to prevent petroleum leaks from federally regulated underground storage tanks. It also funds the oversight and enforcement of petroleum leak cleanups. It pays for cleanup when the responsible party isnt known, and it funds inspections.

Depending on where you live and how much gas costs in your state, the existing federal gasoline excise tax and each states gasoline tax can already make a big difference in the price you pay at the pump.

The federal gasoline excise tax rate is currently $0.184 a gallon. The rate has been raised 10 times since 1933, but it hasnt increased since 1997.

  • California: $5.730 per gallon
  • New Mexico: $0.1888 per gallon

The map below breaks down gas tax by state.

Excise Tax In The United States

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Excise tax in the United States is an indirect tax on listed items. Excise taxes can be and are made by federal, state and local governments and are not uniform throughout the United States. Certain goods, such as gasoline, diesel fuel, alcohol, and tobacco products, are taxed by multiple governments simultaneously. Some excise taxes are collected from the producer or retailer and not paid directly by the consumer, and as such often remain “hidden” in the price of a product or service, rather than being listed separately.

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History Of Excise Taxes

Excise taxes were among the first taxes imposed by the United States government. By taxing commonly used items such as liquor in 1791 and tobacco in 1794, the government could raise revenue without enacting unpopular income or sales taxes. Over time, Congress enacted more and more excise taxes, on everything from sugar in 1898 to automobiles in1937.

As explained on CQ Researcher, a website that serves as a library for information on current and historical congressional issues, excise taxes have often been used as a solution to raising needed government funds, such as for war. Sometimes excise taxes are seen as a way to both raise money and deter people from bad habits — hence the excise taxes on alcohol and tobacco.

Does The Consumer Directly Benefit From The Federal Excise Tax Exemption For Idling Reduction Devices

Excise Tax

The truck excise tax, which is nominally 12% of the sales price, is triggered by an event such as the first sale or use of a taxable vehicle. The tax is destined for the Federal Highway Trust Fund and can be paid by the truck retailer or purchaser, but is generally collected and remitted by the seller. Since the tax is generally paid by the purchaser or lessor in conjunction with the sale or lease, the exemption for idling reduction devices serves to incentivize purchasers to order such devices in conjunction with the purchase or lease of a new taxable truck or tractor.

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Does The Federal Government Pay Excise Taxes

Federal excise tax revenuescollected mostly from sales of motor fuel, airline tickets, tobacco, alcohol, and health-related goods and servicestotaled nearly $100 billion in 2019, or 2.9 percent of total federal tax receipts.

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Most of us are familiar with sales taxes: the small percentages state and local governments tack on to the retail price of goods and services. But there are often other, less apparent taxes baked into the totals you see at checkoutincluding excise taxes, which apply to specific items, from medical services to alcoholic beverages. Whether you know it or not, youand your customersare paying them. Heres more on excise taxes and how they fit into the tax code.

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An Overview Of Excise Tax

IRS Tax Tip 2020-133, October 7, 2020

In general, an excise tax is a tax is imposed on the sale of specific goods or services, or on certain uses. Federal excise tax is usually imposed on the sale of things like fuel, airline tickets, heavy trucks and highway tractors, indoor tanning, tires, tobacco and other goods and services.

Businesses that are subject to excise tax generally must file a Form 720, Quarterly Federal Excise Tax Return to report the tax to the IRS.

Excise taxes are imposed on a wide variety of goods, services and activities. The tax may be imposed at the time of

  • Sale by the retailer
  • Use by the manufacturer or consumer

Many excise taxes go into trust funds for projects related to the taxed product or service, such as highway and airport improvements. Excise taxes are independent of income taxes. Often, the retailer, manufacturer or importer must pay the excise tax to the IRS and file the Form 720. They may pass the cost of the excise tax on to the buyer.

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 Is Form 720 Due

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A. Form 720 is filed quarterly. The first return to report the indoor tanning services tax was due on October 31, 2010 for the third quarter period including July, August and September 2010. Service providers who do not file Form 720 and remit the tax by the due date may be subject to a penalty, as will any person who intentionally fails to collect and remit the tax. Quarterly return due dates for the remainder of the year are as follows:

For the months:

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Examples Of Excise Taxes

Consumers don’t often realize they’re paying excise taxes. These taxes are usually lumped into the price they pay or listed as a line item on a receipt. For these reasons, consumers often aren’t as aware of excise taxes as they may be of sales taxes. But several excise taxes impact purchases you may regularly make.

Common federal excise taxes are imposed on:

Some of these taxes are percentage-based. For instance, the indoor tanning services excise tax is 10% of the amount paid, and the electric outboard motors excise tax is 3% of the sales price. This means if you buy an electric outboard motor from a boat shop for $300, you would pay a $9 excise tax.

Other taxes are a flat dollar amount per unit. The gasoline excise tax is 18.4 cents per gallon. If you buy 10 gallons of gasoline, you’re paying $1.84 in federal excise taxes as part of the purchase price.

Excise taxes can be implemented on several levels, too. Gasoline excise taxes are often charged at both the state and federal levels.

Excise Taxes Dedicated To The Highway Trust Fund

Highway-related excise tax revenue totaled $40.5 billion in 2019, 41 percent of all excise tax revenue. Gasoline and diesel taxes, which are 18.4 and 24.4 cents per gallon, respectively, make up over 90 percent of total highway tax revenue, with the remaining from taxes on other fuels, trucks, trailers, and tires. Most other motor fuels are also subject to excise taxes, although partially exempt fuels produced from natural gas are taxed at much lower rates. Tax credits for producers of certain fuels deemed environmentally superiorincluding biodiesel, renewable diesel mixtures, alternative fuel, and alternative fuel mixturesexpired at the end of 2017 but were generally extended in December 2019 retroactively from 2018 through end of 2022, except for the alternatives fuels credit was extended only through 2020.

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Other Federal Tax Exemptions

Pursuant to 26 U.S.C.4293, the Secretary of the Treasury has exempted the United States from the communications excise tax imposed in 26 U.S.C.4251, when the supplies and services are for the exclusive use of the United States.

Pursuant to 26 U.S.C.4483, the Secretary of the Treasury has exempted the United States from the federal highway vehicle users tax imposed in 26 U.S.C.4481. The exemption applies whether the vehicle is owned or leased by the United States.

What Are The Reasons To Levy Excise Taxes

How excise tax is calculated

Excise taxes can be employed as Pigouvian taxes, or sin taxes, to price in externalities. An externality, in economics terms, is the side effect or consequence of an activity that is not reflected in the cost of said activity. For instance, excise taxes may be employed to reduce consumption of cigarettes or sugar-sweetened beverages, to curb pollution, or to reduce traffic congestion.

Excise taxes can also be employed as user fees. The role of excise taxes as a user fee is best understood with the example of the motor fuel tax, where gasoline purchases serve as a proxy for a drivers contributions to traffic congestion and road wear-and-tear, in effect setting a price on the use of public roads.

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I Operate An Indoor Tanning Salon How Do I Account For The Indoor Tanning Services Excise Tax When The Services Are Purchased Through An Online Social Buying Service

For example, an online social buying service offers to sell a voucher to its members for $50 that can be redeemed at my salon only for indoor tanning services that my salon normally sells to the general public for $100. The online social buying service keeps $25 of the $50 its members pay for each voucher as its fee for featuring my salon on the service. I collect $25 directly from the online social buying service. We need help answering the following questions:

  • Do I collect the 10 percent excise tax on $25, on $50, or on $100?
  • Do I collect the excise tax at the salon separately from the online social buying service voucher sale, or does the online social buying service collect the excise tax at the time its members purchase the vouchers?
  • What do I do if a voucher is never redeemed?

The person who purchased the voucher is the taxpayer for purposes of the indoor tanning excise tax, and the provider the salon in the example above is the collector. Therefore, the salon should collect and pay over to the IRS $2.27 when it receives the $25 for the sale of the voucher.

Because payments for indoor tanning services are subject to tax regardless of actual usage, the tax must be collected and paid over to the IRS even if the voucher is never redeemed for actual indoor tanning services.

For more information about the indoor tanning tax, you may call IRS toll-free at 866-699-4096 from 8 a.m. until 6 p.m. Eastern Time.

What Is Excise Tax And Who Pays It

Dan Rafter6-minute readSeptember 21, 2020

It can be difficult to keep track of all the terms and jargon thrown your way when it comes to your personal finances. You need to know what everything from compound interest and adjustable-rate mortgages are to how defined contribution plans and capital gains and losses work.

And those are just the more common personal finance terms out there. Some of the jargon youll encounter is downright obscure.

You might not now what excise taxes are, but they do have a direct impact on your personal finances and how much you spend each year. Learning about these taxes can be beneficial as you strive to build your savings and cut your spending.

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Where Do I File Form 720 And Pay The Tax

A. Send the completed Form 720, payment voucher Form 720-V, and a check or money order made payable to United States Treasury to:

Department of the TreasuryInternal Revenue ServiceOgden, UT 84201-0009

To electronically file Form 720 and pay the tax, select a vendor on the IRS 720 e-file page. The tax may also be paid via the Electronic Federal Tax Payment System.

Impact Of Excise Taxes

Progressive Policy Institute The Political Economy of the Beer Excise ...

Because excise taxes are levied on very specific items, they affect only the people who use those items. Many of the items taxed in this way are considered vices or luxury goods. But one of the most widespread excise taxes, on gasoline, affects almost everyone. Even if you dont drive a car, you receive goods and services delivered to you by automobile. Gasoline excise taxes increase the cost of a gallon of gas, and businesses may pass some of this cost onto their customers.

Federal excise taxes are only one part of the taxes on items such as gasoline. Many states have enacted excise taxes in addition to federal excise taxes. Some of the money from excise taxes goes into the governments general fund, while other excise tax money, such as funds collected via the excise tax on gasoline, go into special funds dedicated to specific purposes. The federal excise tax on gasoline goes to fund roads.

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What Is The Federal Telephone Excise Tax

The federal telephone excise tax is a statutory 3 percent federal tax on local telecommunications services. It is collected from the customer by telephone companies and then passed on to the U.S. Internal Revenue Service .

The tax does not apply to so-called bundled services such as prepaid calling cards, voice-over-internet protocol services and mobile phone contracts that do not distinguish between local and long-distance calls within the U.S.

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