Major Changes for Form 720

Description of Major Changes for First Quarter 2008 Form 720,
Quarterly Federal Excise Tax Return (Rev. 1-2008)

The Airport and Airway Extension Act of 2008 (P.L. 110-190) extended the termination
dated under IRC 4081(d)(2) to June 30, 2008. The dual tax and credit rates, which were
included on the 4th quarter 2007 Form 720, have been deleted.
Layout Changes
• IRS Nos. 29 (Ship Passenger tax) and 31 (Other Excise Tax) were moved to the
bottom of page 1 so we could accommodate the paid preparer’s signature box on
page 2.
Form 720
• We deleted IRS No. 71, Dyed diesel fuel used in trains. Section 6(d)(1)(A) of the
Tax Technical Corrections Act of 2007 (P.L.110-172) eliminates the double taxation
of the leaking underground storage tank (LUST) tax on dyed diesel fuel used in
trains.

imposition

• The title of IRS No 111 was changed to “Kerosene for use in aviation, LUST tax
on nontaxable uses.” This line is no longer applicable to use in foreign trade. This
change was made under section 6(d)(2) of the Tax Technical Corrections Act of 2007
(P.L.110-172).
• The title of IRS No. 123 was changed to “Liquid fuel derived from biomass.” This
change was made under section 5(a)(2) of the Tax Technical Corrections Act of 2007
(P.L.110-172).
• The new tax rate for IRS No. 106, Arrow Shafts, is $.043 per shaft. Rev. Proc.
2007-66.
• The new tax rate for IRS No. 64, Inland waterways fuel use tax, is $.20. Section
6(d)(1)(B) of the Tax Technical Corrections Act of 2007 (P.L.110-172) eliminates the
LUST tax on all fuels charged LUST tax under sections 4041(d) and 4081.
• We added new IRS No. 125, LUST tax on inland waterways fuel use, to capture
the LUST tax due on fuels not taxed under sections 4041(d) and 4081 (for example,
Bunker C residual fuel oil).
• We added the paid preparer signature block under section 8246 of the Small
Business and Work Opportunity Tax Act of 2007 (Public Law 110-28). Regulations
providing authority for assertion of the preparer penalties for failure to sign or furnish
a TIN are anticipated by the end of 2008. IRC section 6061(a) is the authority for
adding the preparer’s block to 2008 forms before adoption of the regulations.
We also added the sentence " Declaration of preparer (other than
taxpayer) is based on all information of which preparer has any
knowledge." to the jurat in the taxpayer signature block because this
jurat will also apply to the preparer.

Schedule C (Form 720)
• We added line 2d to capture the LUST claim for aviation gasoline used in foreign
trade (type of use 9). This change was made under section 6(d)(2) of the Tax
Technical Corrections Act of 2007 (P.L.110-172).
• We added lines 4e and 4f to capture claims for kerosene purchased at $.044 and
$.219 (aviation rates). The ultimate purchaser can make a claim on these lines for
kerosene used outside the propulsion system of an aircraft. This is a general
nontaxable use under IRC 6427(l)(1). This change is being made under guidance
from Chief Counsel, PSI:7.
• We added line 5e to capture the LUST claim for kerosene used in foreign trade
(type of use 9). This change was made under section 6(d)(2) of the Tax Technical
Corrections Act of 2007 (P.L.110-172).
• The title of line 6f was changed to “Liquid fuel derived from biomass.” This
change was made under section 5(a)(2) of the Tax Technical Corrections Act of 2007
(P.L.110-172).
• We added line 9f to capture the LUST claim for kerosene sold for use in foreign
trade (type of use 9). This change was made under section 6(d)(2) of the Tax
Technical Corrections Act of 2007 (P.L.110-172).
• Under line 14, Alternative Fuel Credit and Alternative Fuel Mixture Credit,
we deleted the Caution because the alternative fuel credit is no longer limited to the
section 4041 liability reported on Schedule C. Any credit in excess of the section
4041 liability can be no be claimed on Schedule C, Schedule 3 (Form 8849), or Form
4136. A payment is allowed for the alternative fuel credit under section 6427(i). This
change was made under section 5(a)(1) of the Tax Technical Corrections Act of 2007
(P.L.110-172).
• The title of line 14f was changed to “Liquid fuel derived from biomass.” This
change was made under section 5(a)(2) of the Tax Technical Corrections Act of 2007
(P.L.110-172).

Description of Major Changes for First Quarter 2008 Instructions for Form 720,
Quarterly Federal Excise Tax Return (Rev. 1-2008)
The Airport and Airway Extension Act of 2008 (P.L. 110-190) extended the termination
dates under IRC 4081(d)(2), 4261(j)(1)(A)(ii), and 4271(d)(1)(A)(ii) to June 30, 2008.
All references to the expiration date and dual tax /credit rates, which were included in the
4th quarter 2007 Instructions for Form 720, have been deleted.

Page 1
• We deleted the Caution because P.L. 110-190, Airport and Airway Extension Act
of 2008, extends the expiration dates under sections 4081(d)(2), 4261(j)(1)(A)(ii),
and 4271(d)(1)(A)(ii) to June 30, 2008.
•

What’s New, Changes Effective for the First Calendar Quarter of 2008,
highlights the following changes.
1. We updated the inflationary dollar figures under Arrow shafts, Domestic
segment tax, and Use of international air travel facilities. These changes
were made per Rev. Proc. 2007-66 and IR-2007-208.
2. Dyed diesel fuel used in trains. We deleted IRS No. 71, Dyed diesel fuel
used in trains. Section 6(d)(1)(A) of the Tax Technical Corrections Act of
2007 (P.L.110-172) eliminates the double taxation of the leaking underground
storage tank (LUST) tax on dyed diesel fuel used in trains. Therefore, the train
operator is not liable for LUST tax because the position holder of the dyed
diesel fuel is liable for the LUST tax under IRS No. 105.
3. Inland waterways fuel use tax (IRS No. 64). The inland waterways fuel use
tax is $.20. This change is made per IRC 4042(b)(a)(A)-(C). Section
6(d)(1)(B) of the Tax Technical Corrections Act of 2007 (P.L.110-172)
eliminates the LUST tax on all fuels charged LUST tax under sections
4041(d) and 4081.
4. LUST tax on inland waterways fuel use (IRS No. 125). We added new IRS
No. 125, LUST tax on inland waterways fuel use, to capture the LUST tax due
on fuels not taxed under sections 4041(d) and 4081 (for example, Bunker C
residual fuel oil).
5. Disregarded entities and qualified subchapter S subsidiaries. After
December 31, 2007, single-member limited liability companies (LLCs) and
qualified subchapter S subsidiaries are not disregarded for certain excise
taxes. This change was made under T.D. 9356.

•

Under Reminders, we added Electronic filing. This topic was discussed under
What’s New in the fourth quarter 2007.

•

Under Reminders, we deleted Qualified blood collector organizations because
this information has been discussed for 1 year.

Page 3
• We deleted the Caution under Air Transportation Taxes, because the expiration
date for air transportation taxes was extended to June 30, 2008. This change was
made under IRC 4261(j)(1)(A)(ii) and 4271(d)(1)(A)(ii) as modified by P.L. 110190, Airport and Airway Extension Act of 2008.
• Under Air Transportation Taxes, we updated the inflationary dollar figures for
Domestic segment tax and Use of international Air Travel Facilities. These
changes were made per IR-2007-208.

Page 4
• We deleted Dyed diesel fuel used in trains (IRS No. 71). Section 6(d)(1)(A) of
the Tax Technical Corrections Act of 2007 (P.L.110-172) eliminates the double
taxation of the leaking underground storage tank (LUST) tax on dyed diesel fuel
used in trains. Therefore, the train operator is not liable for LUST tax because the
position holder of the dyed diesel fuel is liable for the LUST tax under IRS No.
105.
• Under Kerosene for use in aviation (IRS Nos. 69, 77, and 111), we deleted
information about the tax rate change for IRS No. 69. This change was made
under IRC 4081(d)(2) as modified by P.L. 110-190, Airport and Airway
Extension Act of 2008.
• Under Aviation gasoline (IRS No. 14), we deleted information about the tax rate
change for IRS No. 14. This change was made under IRC 4081(d)(2) as modified
Page 5
• The title of IRS No. 123 was changed to “Liquid fuel derived from biomass.” This
change was made under section 5(a)(2) of the Tax Technical Corrections Act of 2007
(P.L.110-172).
Page 6
• Under Arrow shafts (IRS No. 106), we updated the tax rate per Rev. Proc.
2007-66.
Page 8
• Under Additional deposit of taxes in September 2008, we updated the due date,
if paid by EFPTS, for regular method taxes beginning on September 16th and
alternative method taxes beginning on September 1st. Per Regulations sections
40.6302(c)-2 and 40.6302(c)-3, the due date will be September 29, 2008.

Schedule C—Claims
Page 9
• We updated the discussion on period of claim to indicate that it should be a date
range (MM/DD/YYY – MM/DD/YYY).
Page 10
• Line 2. Nontaxable Uses of Aviation Gasoline
1. Under Allowable uses, we added instructions for new line 2d to capture the
LUST claim for aviation gasoline used in foreign trade (type of use 9). This
change was made under section 6(d)(2) of the Tax Technical Corrections Act
of 2007 (P.L.110-172)..
2. We deleted Claim rate. This change was made under IRC 4081(d)(2) as
modified by P.L. 110-190, Airport and Airway Extension Act of 2008.
•

Line 4. Nontaxable Use of Undyed Kerosene (Other Than Kerosene Used in
Aviation)
1. Under Allowable uses, we added instructions for new lines 4e and 4f to
capture claims for kerosene purchased at $.044 and $.219 (aviation rates). The
ultimate purchaser can make a claim on these lines for kerosene used outside
the propulsion system of an aircraft. This is a general nontaxable use under
IRC 6427(l)(1). This change is being made under guidance from Chief
Counsel, PSI:7.

•

Line 5. Kerosene Used in Aviation
1. Under Claimant, we added new line 5e to the rules applicable to line 5c and
5d.
2. Under Allowable uses, we added instructions for new line 5e to capture the
LUST claim for kerosene used in foreign trade (type of use 9). This change
was made under section 6(d)(2) of the Tax Technical Corrections Act of 2007
(P.L.110-172)..
3. We deleted Claim rate. This change was made under IRC 4081(d)(2) as
modified by P.L. 110-190, Airport and Airway Extension Act of 2008.

Page 12
• Lines 9a, and 9b. Sales By Registered Ultimate Vendors of Kerosene For Use
in Commercial Aviation (Other Than Foreign Trade)
1. We deleted Claim rate. This change was made under IRC 4081(d)(2) as
modified by P.L. 110-190, Airport and Airway Extension Act of 2008.
• Lines 9c, 9d, 9e, and 9f. Sales By Registered Ultimate Vendors of Kerosene
Sold For Use in Noncommercial Aviation
1. Under Claimant, we added new line 9f to the rules applicable to lines 9d and
9e.
2. Under Allowable Sales, we added instructions for new line 9f to capture the
LUST claim for kerosene sold for use in foreign trade (type of use 9). This

change was made under section 6(d)(2) of the Tax Technical Corrections Act
of 2007 (P.L.110-172)..
3. We deleted Claim rate. This change was made under IRC 4081(d)(2) as
modified by P.L. 110-190, Airport and Airway Extension Act of 2008.
•

Lines 10 and 11. Sales By Registered Ultimate Vendors of Gasoline and
Aviation Gasoline
1. We deleted Claim rate. This change was made under IRC 4081(d)(2) as
modified by P.L. 110-190, Airport and Airway Extension Act of 2008.
Page 13
• Line 13. Biodiesel or Renewable Diesel Mixture Credit
1. Under Claim requirements, we added the requirements for renewable diesel
used in a renewable diesel mixture. The requirements are described in Notice
2007-37.
•

Line 14. Alternative Fuel Credit and Alternative Fuel Mixture Credit
1. Under Alternative fuel credit, we added that taxpayers may now claim their
additional gallons on Schedule C (Form 720) or Schedule 3 (Form 8849).
Previously, the additional gallons could be claimed only on Form 4136. We
deleted the method for figuring the reduced number of gallons because the
alternative fuel credit is no longer limited the section 4041 liability. Section
5(a)(1) of the Tax Technical Corrections Act of 2007 (P.L. 110-172) allows a
payment for the alternative fuel credit.
Page 14
• Line 15d. Diesel-Water Fuel Emulsion
1. We deleted the reduced credit rate for use in trains. Trains are entitled to the full
credit of $.197 per gallon.
• Line 15e. Registered Credit Card Issuers.
1. Under Claim rates, we deleted the dual rates and the footnote regarding the
expiration date under section 4081(d)(2). This change was made under IRC
4081(d)(2) as modified by P.L. 110-190, Airport and Airway Extension Act of
2008.

The above major changes resulted in a revision of Form 720 and Instructions, adding
6 code references and 44 line items. The responses were increased by 18,000 to
correct a previous computation error.
**** These changes created a program change of +777,919, resulting in an overall
increase of burden hours to 4,354,623.
CAROLYN N. BROWN
Tax Analyst
3/5/2008