Form 720 is a quarterly tax form that businesses use to report and pay excise taxes on certain products and services. If you’re in the business of manufacturing, selling, or distributing these products and services, you’ll need to file Form 720. But what about dropshipping? Do you still need to file Form 720 if you’re not actually manufacturing or selling the products yourself? Let’s take a look.
What is Form 720?
Form 720 is a federal excise tax return that is required to be filed by certain businesses. The purpose of this form is to report and pay taxes on the manufacture, sale, or use of certain products. Businesses that are required to file Form 720 include those that manufacture or sell gasoline, diesel fuel, aviation fuel, and other petroleum products; those that produce or sell chemicals; and those that engage in certain kinds of gambling activities.
If your business falls into one of these categories, you will need to file Form 720 on a quarterly basis. For each quarter, you will need to report the total amount of excise tax owed for the products you have sold or used during that time period. You will then need to remit payment for the taxes owed with your return.
If you fail to file Form 720 or pay the taxes owed, you may be subject to penalties and interest charges. Therefore, it is important to make sure that you comply with this filing requirement if your business is subject to it.
When Do I Need To File Form 720?
If you are Drop Shipping products into the United States, you will need to file a Form 720 every quarter. The form is used to report and pay excise taxes on certain imported goods.
You will need to file Form 720 if you are importing:
-Certain chemicals and cosmetics
How to File Form 720
If you are a dropshipper, you are required to file Form 720 with the IRS. This form is used to report your quarterly excise tax liability.
To file Form 720, you will need to gather the following information:
Your Employer Identification Number (EIN)
The total amount of excise tax owed for the quarter
A list of the products that were subject to excise tax during the quarter
The name and address of each manufacturer or importer from whom you purchased excise tax-eligible products
Once you have gathered all of the required information, you can complete Form 720 online or by mail. If you opt to complete Form 720 online, you will need to create an account with the IRS e-Services portal.
If you choose to file Form 720 by mail, send your completed form and payment to:
Internal Revenue Service
P.O. Box 37004
Hartford, CT 06176-7004
Tips for Dropshipping
If you’re planning on dropshipping, there are a few things to keep in mind in order to stay compliant with the law. Here are some tips:
1. Keep good records. This means keeping track of your inventory, orders, and shipments. This will help you stay organized and be able to produce the necessary documentation if needed.
2. Be aware of your state’s sales tax laws. You may need to collect and remit sales tax on behalf of your customers depending on where they are located.
3. Know the rules for importing and exporting goods. There are certain regulations that must be followed when shipping goods internationally, so make sure you’re familiar with them before getting started.
By following these tips, you can help ensure that your dropshipping business is operated legally and smoothly.
Dropshipping can be a great way to get started in ecommerce without having to carry any inventory, but it’s important to be aware of the potential tax implications. One form that may need to be filed is Form 720, which is used for reporting excise taxes. If you’re not sure whether or not you need to file this form, we recommend talking to a tax professional.