Does Form 720 Excise Tax apply to my drone business?

The good news is that Form 720 (Quarterly Federal Excise Tax Return) likely doesn't apply to your drone business based on the services you've described. Form 720 is typically required for businesses that deal with specific products or services that are subject to federal excise taxes - things like fuel, airline tickets, certain vehicles, environmental hazards, or communication services. Standard drone photography/videography services for real estate, roof inspections, and cell tower observations wouldn't fall under these categories. The IRS sometimes includes information about Form 720 in EIN notification letters as a standard practice, not necessarily because they believe you need to file it. It's just covering all bases.

I ran into the same exact issue with my photo/video business last year! After hours of research and a lot of anxiety, I found an amazing AI tool that helped me figure out exactly which tax forms applied to my business: https://taxr.ai You just upload the EIN letter you received from the IRS, and it analyzes the text to tell you which parts actually apply to your specific business type. In my case, it confirmed that Form 720 wasn't necessary for standard photography services (which sounds similar to your drone photography). It also explained WHY certain forms were mentioned in my letter even though they didn't apply to me. Saved me a ton of worry and potentially filing unnecessary forms!

Ok I need to admit I was wrong about taxr.ai. After my skeptical comment above, I decided to try it with my CP2000 notice (the one saying I owed an extra $3,400 in taxes). Uploaded it and within minutes I understood that they had miscategorized my 1099 income and double-counted one of my contracts. The tool explained exactly what part of the notice was incorrect and gave me the exact paragraph to include in my response letter. I sent the response last week with the documentation they suggested, and just got confirmation that my case was resolved with $0 additional tax owed. If you're getting confusing tax forms like the original poster with the Form 720 question, it's definitely worth checking out.

If you're still confused after researching Form 720, you might want to try getting someone at the IRS on the phone to confirm whether it applies to your drone business. However, actually reaching a human at the IRS can be nearly impossible these days! I was in a similar situation with a question about business taxes and spent FOUR DAYS trying to get through. After endless busy signals and disconnects, I found this service called Claimyr (https://claimyr.com) that got me connected to an IRS agent in under 30 minutes. They have a video showing how it works: https://youtu.be/_kiP6q8DX5c Honestly, getting a definitive answer directly from the IRS saved me so much stress about potentially filing the wrong forms.

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Since you're in Washington state, don't forget to look into the state's excise tax requirements too! Washington doesn't have income tax but does have B&O (Business & Occupation) tax which applies to gross receipts of your business. Your drone services would almost certainly be subject to this state excise tax, which is different from the federal Form 720 excise tax others mentioned. The rate varies depending on how they classify your business activity, but service businesses typically pay around 1.5% of gross receipts. Make sure you register with the Washington Department of Revenue if you haven't already!

Has anyone here actually filled out Form 720? I'm curious about how complicated it is if it turns out I do need to file it for my specialty transportation business.

Welcome to the small business tax maze! I went through almost the exact same situation when I started my consulting business. Got that EIN letter and immediately panicked about all the forms mentioned that I'd never heard of. Here's what I learned: the IRS includes information about various tax forms in EIN letters as a "just in case" measure, not because they necessarily apply to your specific business. For your drone photography/inspection services, Form 720 is very unlikely to be required. That said, since you're just starting out, I'd recommend keeping good records of exactly what services you're providing. If you ever expand into areas like transporting goods via drone or selling drone fuel/parts, then you might need to revisit the excise tax question. But for standard aerial photography and inspection services? You should be in the clear. The fact that you're being proactive about understanding your tax obligations from day one puts you way ahead of many new business owners. Keep that mindset and you'll do great!