Compliance
Compliance Checklist for IRS Proposed Remittance Transfer Tax Under OBBB
A run-down on the 1% remittance tax, who is liable, key deadlines, and how to avoid penalties under the new regulations.
By NomadicTax Research Team • 5-8 min read • May 11, 2026
## What’s the Remittance Transfer Tax?
Under the *One, Big, Beautiful Bill* (OBBB), beginning **January 1, 2026**, a **1% excise tax** applies to certain remittance transfers made from the U.S. using physical instruments like cash, money orders, or cashier’s checks. The sender is primarily liable; remittance providers must collect, deposit, and report this tax. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
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## Who Must Comply & When
- **Senders** who provide a physical instrument for remittance transfers that crosses national borders.
- **Remittance providers** who collect the tax, handle **semimonthly deposits**, and file **quarterly returns** using Form 720. If providers fail to collect, they may be liable themselves. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
- Proposed regulations issued April 10, 2026; public comments were requested with deadline **June 12, 2026**. These regulations clarify definitions and scope of physical instruments. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
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## Key Compliance Steps
1. Determine whether your transfer mechanism uses taxable instruments: cash, money order, cashier’s check, or similar.
2. If you're a remittance provider, register for excise tax filing: understand semimonthly deposit schedules and reporting via **Form 720**.
3. If you're a sender, ensure your instrument is collected properly; if not collected by provider, you may need to self-report.
4. Retain clear documentation: dates, amounts, sender, recipient, instrument type. Useful if provider or senders later audited.
5. Watch for filing deadlines and proposed regulation period; changes might still be open for comment.
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## Penalties & Risk Areas
- Failure for provider to collect or deposit correctly can shift liability to them.
- Non-compliant documentation or use of unlisted instrument may expose both senders and providers to penalties.
- If provider misses semimonthly deposit deadline, penalties accrue—especially during the planned transition period under limited relief. Notice 2025-55 offered limited penalty relief for certain noncompliance during the first three quarters of 2026. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
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## Example Scenarios
- **Scenario A**: Alice sends $1,000 by cash internationally via remittance provider who collects tax; provider must collect $10 tax (1%) and remit via Form 720.
- **Scenario B**: Bob gives provider a money order for foreign remittance, but provider fails to collect tax; under rules, provider becomes liable.
- **Scenario C**: Janet purchases a cashier’s check from U.S. bank to send abroad; tax applies if instrument qualifies, even though transaction may seem informal.
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## What to Do Now
- Remittance providers: review contracts, instrument definitions, ensure your staff or systems recognize instruments that trigger tax.
- Senders: ask providers whether tax is being collected; avoid having liability unknowingly fall to you.
- Stay informed: Proposed regulations may change definitions; comments period ends June 12, 2026.
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## Bottom Line
The remittance transfer tax under OBBB is new and complex, but manageable with proper processes. If you or your business engage in international transfers using physical instruments, this is not just another regulation—it could affect your cash flows, tax filing, and documentation practices. Prioritize compliance to avoid unexpected tax liabilities or fines.