If you own a business, you may feel as though your responsibilities are seemingly endless. This includes your tax-related obligations. Some businesses may need to pay excise taxes in addition to income, capital gain, and other types of taxes. Excise taxes are taxes paid when purchases are made on a specific good. An example of a type of good that is subject to an excise tax is gasoline. Excise taxes may also be levied on certain types of activities. Failing to pay these taxes can result in costly IRS problems for taxpayers.
Four Signs Your Business May Need to Pay Excise Taxes
When might your business be responsible for paying excise taxes? The following is a general overview:
- You manufacture or sell certain products
- You operate certain kinds of businesses
- You use various kinds of equipment, facilities, or products
- You receive payment for certain services
Excise taxes are reported on Form 720 and consist of environmental taxes, communications and air transportation taxes, fuel taxes, taxes on the first retail sale of heavy trucks, trailers, and tractors, and manufacturers' taxes on the sale or use of different articles. Depending on the nature of your business, additional forms may be required. Failing to file the required forms and pay the required taxes can land your business in hot water.
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