When we started to look into form 720 it started to mention that it was for alcohol sold and used as fuel. It was Publication 510 that explained what specific type of alcohol. This turned out to be any over 150-190 proof. Obviously way over beer.
It turns out that we needed to mail in the paperwork we got with our EIN and a letter stating that according to publication 510 we did not have to fill out the form.
Of course this seems really easy once we figured it out but Jess had the joy of sitting on hold for 3 hours to talk less than 10 minutes with an (very nice and helpful) IRS agent!
This is the perfect example of how the government works. Filling out a form to state you do not need to fill out a form! Dig a hole, fill it, repeat.