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What Is Low Liability Filing for Form 720 and Who Qualifies?
If you file IRS Form 720 and your quarterly excise tax stays below a certain dollar amount, the IRS lets you skip the semimonthly deposit cycle entirely and just pay with your return. Tax professionals refer to this as low liability filing for Form 720. It applies to businesses reporting Part I excise taxes such as fuel, environmental, and communications taxes, and it also connects directly with annual obligations like the PCORI fee, which employers with self-insured health plans report once a year on the second-quarter Form 720.
Understanding what is low liability filing can save a small business owner or benefits administrator a lot of unnecessary back-and-forth with the IRS. Pay at the right time using the right method, and you stay fully compliant without managing EFTPS deposits throughout the quarter. Miss the rules, and a failure-to-deposit penalty starts compounding fast. Whether you owe a modest fuel excise amount or you are filing solely to report the PCORI fee, knowing where you stand on the $2,500 deposit threshold determines how and when you pay.
What Low Liability Filing Actually Means
When a business owes federal excise taxes under Part I of Form 720, the standard rule requires semimonthly deposits through EFTPS. That means making payments roughly twice a month rather than paying one lump sum at quarter end.
The exception: if your total net excise tax liability for all Part I taxes combined does not exceed $2,500 for the quarter, you skip the deposit schedule entirely and pay the full amount when you submit your Form 720 return.
That is what is low liability filing in plain terms. It is not a separate form or a special application. It is simply the IRS rule that removes the semimonthly deposit obligation for filers whose quarterly Part I liability stays small.
The $2,500 Threshold at a Glance
| Your Part I Net Liability for the Quarter | Deposit Required? | What You Need to Do |
|---|---|---|
| $2,500 or less | No | Pay in full with your Form 720 return by the quarterly deadline. |
| More than $2,500 | Yes | Semimonthly EFTPS deposits required. Schedule A must be completed. |
| $0 for the quarter | No | A zero liability Form 720 return may still be required to maintain your compliance record. |
| Part II taxes only (e.g. PCORI fee) | Never | No semimonthly deposits ever required. Pay in full with the return. |
The $2,500 figure is a quarterly total across all Part I lines for the entire three-month quarter. Stay under that number and you qualify for low liability treatment for that quarter. Crossing the threshold does not change your electronic filing requirement, it only triggers the deposit schedule.
Who Qualifies for Low Liability Filing?
Not every business that files Form 720 will qualify every quarter. Here are the most common situations where low liability filing applies:
PCORI Fee Filers Only
Sponsor a self-insured health plan? File the 720 PCORI form once a year in Q2 and you will never owe a deposit for that return.
Small Fuel Distributors
Modest quarterly volumes where total Part I liability stays under $2,500 for the quarter.
Seasonal Businesses
Excise activity concentrated in one quarter, leaving other quarters with very small totals.
Manufacturers or Retailers
Covered under Form 720 Part I with limited taxable transactions in a given period.
One-Time Filers
Businesses with irregular excise activity such as a gas guzzler tax filing on a one-time basis.
If your situation fits any of these, confirm your quarterly Part I total before setting up EFTPS deposits. Many filers enrol in deposit accounts they never needed.
Low Liability vs. Zero Liability: Not the Same Thing
These two terms come up together often but they describe different situations entirely.
| Concept | What It Means | What You Must Do |
|---|---|---|
| Low Liability | You owe Part I tax but the total is $2,500 or less for the quarter. | File Form 720 and pay the full amount with the return. |
| Zero Liability | You owe no excise tax for the quarter but have a prior filing history. | A Form 720 zero liability return may still be required to keep your compliance record clean. |
In both cases no EFTPS deposits are made. The difference is whether any tax is actually due. Skipping the return entirely because you owe nothing is a common mistake that triggers IRS notices for a missing quarterly return.
How eFileExcise720 Prices Low Liability Filings
If your total tax liability is under $100 for the quarter, eFileExcise720 offers a dedicated low liability filing option at $29.95 per filing, designed for businesses with minimal excise tax liability who still need a clean, IRS-compliant submission.
- Pay less for small liability filings
- Secure IRS transmission
- Digital filing receipt
- Filing history and reports
- Phone and email support
How It Works Inside the Form 720 Return
When your Part I liability is at or under $2,500 for the quarter, here is what your filing looks like in practice:
Complete Part I of Form 720 as normal, reporting each applicable tax by IRS number.
Since no semimonthly deposits were made, there are no EFTPS confirmation numbers to reconcile.
Submit your full payment with the return by the quarterly deadline.
If any Part II taxes such as the PCORI fee apply, report those in Part II as usual. They follow the same pay-with-return approach regardless of the amount.
PCORI Fee and Low Liability Filing
The PCORI fee is the most common reason small and mid-size employers encounter Form 720 for the first time. Reported on the 720 PCORI form under IRS No. 133, it is filed annually as part of the second-quarter return and due by July 31 each year.
Since it is a Part II tax, the PCORI fee never triggers a deposit requirement. You calculate the fee based on the average number of covered lives under your self-insured health plan and pay it with the Q2 Form 720.
Plan years ending Oct 1, 2024 – Sep 30, 2025
Plan years ending Oct 1, 2025 – Sep 30, 2026
If you are filing Form 720 only for the PCORI fee, eFileExcise720's PCORI filing page walks you through the calculation and submission in a few minutes.
Penalties for Getting the Deposit Rules Wrong
If your Part I liability exceeds $2,500 in a quarter and you skip deposits assuming low liability still applies, the IRS will issue a failure-to-deposit notice:
Interest accrues daily on top of these penalties until the balance is cleared. Filing Form 720 on time does not cancel a deposit penalty if deposits were separately required and missed.
If you need to correct an error on a prior quarter's return, Form 720-X handles that amendment. If you overpaid excise tax or paid on a nontaxable fuel use, the 8849 form is how you claim that refund. You can also review Form 720 penalty and interest details on the eFileExcise720 site.
2026 Form 720 Filing Deadlines
Low liability filers pay with their return, so these are the only dates that matter:
If a deadline falls on a weekend or public holiday, it shifts to the next business day.
Frequently Asked Questions
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File Form 720 Now →This content is for general informational purposes only and does not constitute tax or legal advice. Refer to the current IRS instructions for Form 720 and consult a qualified tax professional for guidance specific to your situation.