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Excise Taxes for a Business

 

Excise taxes are taxes paid when purchases are made on particular items. Excise taxes are often included in the price of the item. You may also pay excise taxes on certain activities, such as highway usage, telephone service or gambling.

Most of the time excise taxes are figured as part of the price of the commodity or service. Unlike sales tax, the excise tax isn’t listed separately. 

Business owners or product or service vendors are responsible for collecting the excise tax and turning it over to the government.

If you run a business that’s required to collect an excise tax, you collect the tax and pay the tax to the government each quarter. You’ll file Form 720, Quarterly Federal Excise Tax Return. Form 720 lists the various types of excise taxes in effect, including the following:

• Environmental taxes
• Communications and air transportation taxes
• Fuel taxes
• Tax on the first retail sale of heavy trucks, trailers, and tractors
• Manufacturers' taxes on the sale or use of a variety of different articles

There is a federal excise tax on certain trucks, truck tractors, and buses used on public highways. The tax applies to vehicles having a taxable gross weight of 55,000 pounds or more. Report the tax on Form 2290, Heavy Highway Vehicle Use Tax Return.

If you are in the business of accepting wagers or conducting a wagering pool or lottery, you may be liable for the federal excise tax on wagering. Use Form 730.

For more information on excise taxes, see Publication 510.

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FATCA - Foreing Account Tax Compliance - Who must file?

The Foreign Account Tax Compliance Act (FACTA) is an important development in U.S. efforts to combat tax evasion by U.S. persons holding accounts and other financial assets offshore. The legislation created new self-reporting requirements and increased penalties for failure to comply fully with complex reporting rules. The regulation imposes on all foreign financial institutions a vast new legal mandate to determine who among their clients are "U.S. Persons" and report directly to the IRS information on those clients' accounts. Usually, a withholding agent is required to withhold 30% on a withholdable payment made to a Foreign Financial Institution (FFI) or to a Non Financial Foreign Entity (NFFE), unless the FFI or NFFE meets certain requirements.

In general, federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. 

Generally U.S citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on Form 8938 if the aggregate value of those assets exceeds $50,000 on the last day of the tax year or $75,000 at any time during the tax year (higher threshold amounts apply to married individuals filing jointly and individuals living abroad).

Specified individuals, which include U.S. citizens, resident aliens, and certain nonresident aliens that have an interest in specified foreign financial assets and meet the reporting threshold must file Form 8938.

Form 8938 is due with your annual income tax return and filed with the applicable IRS service center.

There is a penalty up to $10,000 for failure to disclose and an additional $10,000 for each 30 days of non-filing after IRS notice of a failure to disclose, for a potential maximum penalty of $60,000; criminal penalties may also apply.

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