Case Studies
Case Study: Transition Relief for Remittance Transfer Providers Under OBBB
New guidance gives excise tax deadline relief to remittance transfer businesses—for three quarters of 2026. How these providers can take advantage.
By NomadicTax Research Team • 5-8 min read • November 14, 2025
## Overview of the Remittance Transfer Excise Tax
As of **January 1, 2026**, section 4475 under the One, Big, Beautiful Bill introduces a **1% excise tax** on remittance transfers when the **sender provides cash**, money orders, cashier’s checks or similar physical instruments. Remittance transfer providers are responsible for collecting, remitting, and depositing this tax. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-penalty-relief-for-remittance-transfer-providers-who-fail-to-deposit-excise-tax-under-the-one-big-beautiful-bill?utm_source=openai))
### Key dates and obligations:
- Providers must **make semimonthly deposits** of the tax liability, starting **January 29, 2026**, for the first semimonthly period. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-penalty-relief-for-remittance-transfer-providers-who-fail-to-deposit-excise-tax-under-the-one-big-beautiful-bill?utm_source=openai))
- They must file **Form 720**, the Quarterly Federal Excise Tax Return. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-penalty-relief-for-remittance-transfer-providers-who-fail-to-deposit-excise-tax-under-the-one-big-beautiful-bill?utm_source=openai))
- Penalties for failure to deposit are imposed under section 6656 unless relief applies. ([irs.gov](https://www.irs.gov/irb/2025-43_IRB?utm_source=openai))
## Transition Relief: What’s Offered
Notice 2025-55 grants **limited penalty relief** for remittance transfer providers for the **first three quarters of 2026**. If providers:
1. Make **timely deposits**, even if amounts are miscalculated; and
2. Pay full amount of any underpayment by the Form 720 deadline for that quarter;
then **deposit penalties under section 6656 may be waived**. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-penalty-relief-for-remittance-transfer-providers-who-fail-to-deposit-excise-tax-under-the-one-big-beautiful-bill?utm_source=openai))
Also, for those first three quarters, providers may still use the **deposit safe harbor** rules even if they fail required deposits—if they meet the reasonable cause standard. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-penalty-relief-for-remittance-transfer-providers-who-fail-to-deposit-excise-tax-under-the-one-big-beautiful-bill?utm_source=openai))
## Case Study: “GlobalRemit Inc.”
### Scenario:
- A provider (“GlobalRemit”) has remittances with some cash and cashier’s check usage. They estimate remittance tax but miscompute semimonthly deposits in Q1, Q2, Q3 of 2026.
- They file Form 720 on time and pay any underpayment in full by the deadline.
### Outcome:
Under Notice 2025-55, GlobalRemit can avoid deposit penalties for those quarters—so long as they meet both timeliness and full payment conditions. They can also rely on safe harbor during those quarters although deposits weren’t perfectly made. This gives them breathing room to properly implement new systems. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-penalty-relief-for-remittance-transfer-providers-who-fail-to-deposit-excise-tax-under-the-one-big-beautiful-bill?utm_source=openai))
## Best Practices
- Evaluate your remittance transfer flows now: how many transactions will involve **cash or similar physical instruments**? Do your systems track those correctly?
- Establish internal checks to estimate tax liability per semimonthly period—even if approximate for Q1-Q3 of 2026.
- File Form 720 on time, and when possible overpay slightly to cover any miscalculations.
- Stay informed: monitor IRS guidance for any additional clarity on “reasonable cause” criteria.
**Bottom line:** Transition relief gives remittance providers a chance to adapt to OBBB’s remittance tax. Use the grace period wisely and build compliance infrastructure now.