In this blog, we will explore the Federal Oil Spill Tax and guide you through the two available methods for filing it. The topics covered will include:
What is the Federal Oil Spill Tax?
How to file the Federal Oil Spill Tax?
A step-by-step guide to online filing using Simple720.
By the end, you will have a clear understanding of the Federal Oil Spill Tax and how to file it, either manually or through the user-friendly online platform, Simple720.
The Federal Oil Spill Tax is a tax imposed on both imported petroleum products and crude oil. It applies when petroleum products enter the U.S. for consumption, use, or storage in a warehouse, and when crude oil is received at a U.S. refinery.
The revenue generated from this tax supports the Oil Spill Liability Trust Fund (OSLTF), which is used for oil spill prevention, response efforts, and environmental cleanup operations.
The IRS categorizes the oil spill tax into two types:
Domestic Petroleum Oil Spill Tax
Imported Petroleum Products Oil Spill Tax
Before filing, it's important to identify which category your oil falls under, as the IRS assigns different numbers for domestic and imported petroleum, and accurate filing depends on correctly classifying your oil spill tax category.
The Federal Oil Spill Tax must be filed quarterly, and there are two methods available for filing:
Manual Filing:
This method involves downloading the latest versions of Form 720 and Form 6627 from the official IRS website:
Here’s how to fill each form:
Filling Form 6627:
Name & EIN: Enter your name exactly as it appears in Form 720, along with your Employer Identification Number (EIN) and the relevant quarter for your filing.
Quantity and Tax Rate: Based on your oil spill category, enter the quantity of barrels and the applicable tax rate under IRS Number 6 or 8.
Filling Form 720:
Contact Information: Fill in your business name, contact details, EIN, and the quarter you are filing for.
Tax Category:
If your business falls under the Domestic Petroleum Oil Spill Tax, fill out IRS Number 18.
If it falls under the Imported Petroleum Products Oil Spill Tax, fill out IRS Number 21.
Payment Voucher (Form 720-V): Complete this section and include it with your payment.
Once both forms are filled out, attach your payment check and mail everything to the official IRS mailing address.
Filing the Federal Oil Spill Tax manually can be time-consuming. Simplify your process by switching to the online filing method through Simple720, which is quick and user-friendly.
Here’s how to file your Federal Oil Spill Tax online using Simple720:
Create an Account:
Sign up for a Simple720 account or log in with your existing account.
Enter Business Details:
Provide the necessary business information, including:
Business Name
Business Type
Employer Identification Number (EIN)
Business contact information
Signing authority information (if applicable).
Select Form Type and Filing Period:
Choose the type of form (Form 720) and specify the tax year and the quarter for which you're filing.
Select the Relevant Tax Category:
On the left panel under the "Form 720 Environmental Tax" section, select either IRS Number 18 for Domestic Petroleum Oil Spill Tax or IRS Number 21 for Imported Petroleum Products Oil Spill Tax, depending on your business's category.
Enter Tax Information:
Provide the tax date and select the tax type (whether the oil is imported or domestic).
Enter the quantity of barrels, and the tax amount will be automatically calculated and displayed on the dashboard.
Make Your IRS Payment:
Proceed with the payment through one of the available options:
Electronic Funds Withdrawal (Direct Debit)
EFTPS - Electronic Federal Tax Payment System
Complete Filing:
Once the payment is made, your filing is complete. You will receive an acknowledgment to your mailing address once the IRS approves your submission.
By filing through Simple720, the process is streamlined, ensuring efficiency and accuracy.
WRAP:
After reading this blog, you should now understand how to file the Federal Oil Spill Tax using both the manual and online methods. To make the process simpler and faster, opt for the online method and easily complete your filings using our IRS-approved online portal, Simple720.
Don’t wait till the last minute! Start your filing now! Our Tax experts are here to assist!