What is excise tax and how much is it paid in the United States?

( Spanish) — This year’s tax season is underway and Americans have until April 18 to file their 2022 tax return on time and avoid penalties.

Although the annual declaration is the topic that is taking the spotlight at the moment, there are other taxes that should be paid attention to, since the deadline for your declaration is getting closer.

These are taxes on articles of use and consumption (“Excise tax” in English), which must be declared quarterly (ie, four times a year).

What is excise tax?

The Internal Revenue Service (IRS) says that the taxes on articles of use and consumption are those that “are applied to the sale of certain goods or services or on certain uses”.

In the United States, these taxes are generally levied at the time of sale of certain federal consumption and use items, including:

• Fuel
• Plane tickets
• Cargo trucks and road tractors
• indoor tanning
• Tires
• Tobacco

Excise taxes may be imposed when a business imports an item, at the time of a sale by the manufacturer, when a retailer makes a sale, or when a manufacturer or consumer uses a service.

This means that companies are in charge of declaring the taxes of certain goods or services when buying or using them. According to the IRS, sometimes the consumer pays the excise tax, but the business is required to report it.

“For example, the tax on an airplane ticket is generally paid by the buyer and collected by the airline” to later file its declaration, explains the IRS.

When do consumption taxes have to be declared?

As mentioned above, consumption taxes are declared every three months, so you have to file these taxes four times a year.

These are the deadline dates of each quarter to make the declaration:

• Quarter 1 (January, February, March): April 30
• Quarter 2 (April, May, June): July 31
• Quarter 3 (July, August, September): October 31
• Quarter 4 (October, November, December): January 31

The foregoing indicates that the term for quarter 4 of 2022 has already ended and that the declaration for quarter 1 of 2023 is now approaching. As next April 30 is Sunday, the deadline is moved to the next business day, which in this case It will be Monday, May 1.

According to the IRS, the deadline for this return will always be moved to the next business day when the due date falls on a Saturday, Sunday, or holiday.

How much should I pay?

Excise taxes must be reported using “Form 720, Federal Quarterly Excise Tax Return.”

This form can be filed physically (click here for instructions)but the IRS recommends that it be done electronically so that the process is more agile and fast (consult here the instructions for the declaration via internet).

The amount to be paid will depend on the tax charged on each good or service purchased.

For example, if it is domestic crude oil or imported petroleum productsUS$0.09 per barrel plus US$0.164 per barrel will be paid in 2023 (the second amount is adjusted each year for inflation).

there is also the case of bets. In the case of bets authorized by the State, bettors pay 0.25% of the amounts bet and an annual fee of US$50 for each betting house or agent related to it. In those that are not authorized, 2% of the amounts bet is paid, while the annual fee rises to US$ 500.

In the case of indoor tans, the amounts paid for these services are subject to a 10% tax. Surely this tax is already applied to your final account, but the business will be in charge of declaring it.

To review more examples, click here.