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- How does excise tax work? Can you provide examples?Answered by verified finance professionalsDirect taxes are taxes on your income or wealth. You are taxed on your income and you pay that to the government. Indirect taxes are those costs added to goods and services such as Sales Tax. Excise Tax is a type of indirect tax added to the purchase of specific goods, such as Alcohol, Tobacco and Gasoline. When a consumer buys these specific products, the cost of the product is increased due to the excise tax. The seller of the product remits those excise taxes imposed by the Federal government typically through Form 720 at a monthly, quarterly or annual period depending on the product subject to excise tax.Read moreChristopher Magee16 years exp · USA · CPA, Masters of Taxation from Fordham University
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What are the major federal excise taxes, and how …
Excise taxes are narrowly based taxes on consumption, levied on specific goods, services, and activities. They can be either a per unit tax (such as the per gallon tax on gasoline) or a percentage of price (such as the airline ticket tax).
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Excise taxes are imposed on manufacture, sale, or consumption of commodities, and upon licenses to pursue certain occupations. Federal dependence on excise taxes is down significantly since 1950, when almost 20 percent of federal tax …
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