Form 720 is for all types of Federal Excise Taxes. This is not the same as state sales tax or income tax.
There are taxes on certain life insurance sold.
If you are the writer of insurance policy, you may have a tax on the sale of the policy. If you are merely a salesperson and earning a commission, this tax does not apply to you.
It applies to the Insurer.
It really only applies to foreign insurers because the US is not collecting its normal taxes on these policies.
Who must file. The person who pays the premium to the foreign insurer (or to any nonresident person such as a foreign broker) must pay the tax and file the return. Otherwise, any person who issued or sold the policy, or who is insured under the policy, is required to pay the tax and file the return
If this does not apply, then don't need to feel.
But the letter states I must file by 4/30/13, so won't I get fined if I don't file and should I contact the irs to ask them why this form is required?
Are you subject to this tax?
If not, there is no penalty for not filing a form that you do not need to file.
Just write a note to whomever sent you the notice that the tax does not apply to you.