Compliance
Compliance Checklist for the New Remittance Transfer Tax
Ensure your business meets its reporting, collection, and deposit obligations under the 1 % remittance transfer tax effective from Jan 1, 2026
By NomadicTax Research Team • 5-8 min read • May 4, 2026
## What Is the Remittance Transfer Tax?
The One, Big, Beautiful Bill added **section 4475** to the Internal Revenue Code: as of **January 1, 2026**, a 1 % excise tax applies to remittance transfers sent from the U.S. to a designated foreign recipient when the sender uses **cash, money orders, cashier’s checks,** or **similar physical instruments** to fund the transfer. ([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))
## Who Must Comply?
- **Senders** of remittances using the specified instruments are liable for the tax. If the remittance transfer provider cannot collect the tax, the provider becomes liable. ([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))
- **Remittance transfer providers** must collect the tax (where applicable), make structured deposits, and file quarterly returns using **Form 720**. ([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))
## Key Compliance Requirements
1. **Instrumentation**: Only certain funding methods trigger the tax: cash, money orders, cashier’s checks, traveler’s checks as clarified in proposed regulations. Other instruments—like checks, debit/credit cards—are generally not triggering unless cashed by the provider and funds used in remittance. ([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))
2. **Tax Base**: The taxable amount is the amount transferred to the recipient (incl. promotional bonuses or discounts), **excluding fees and state taxes not passed through**, and excluding the tax itself. ([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))
3. **Filing & Deposit Schedule**: Remittance transfer providers must use **Form 720** quarterly. Deposits are **semimonthly**. ([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))
4. **When the Tax Attaches**: Either when the transfer is initiated or when the sender pays the provider/agent—**whichever is earlier**. Even if the transfer is later canceled or expires, refunds may be available under specific conditions. ([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))
5. **Comment Period & Final Rules**: Public comments on the proposed regulations are due by **June 12, 2026**, but providers should treat the proposed rules as binding for remittances made after December 31, 2025, if adopted fully. Final rules effective when published, planned impact for Q1 or Q2 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))
## Examples
- **Example A**: Sender pays $500 in cash using a money order; provider sends $500 to recipient; sender must pay 1 % of $500 → $5 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))
- **Example B**: Sender uses a credit card directly to pay the remittance. That funding method is excluded—no remittance transfer tax due—unless funds were first converted to cash or similar in a disallowed manner. ([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))
- **Example C**: Provider includes a $10 bonus to recipient; sender funds $100 with cash. Tax base is $110, tax due is $1.10—but the provider’s service fee and state taxes are excluded. ([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))
## What Businesses Should Do Now
- Review all methods you accept for funding remittances—ensure your systems identify eligible instruments correctly.
- Update pricing or disclosures: customers must be aware of the remittance transfer tax when paying via qualifying methods.
- Implement internal processes to track payments, hold funds, and manage deposits and Form 720 filings semimonthly/quarterly.
- Monitor for the publication of final regulations (when they become effective) to adjust practices accordingly. Proposed rules are open for comment until June 12, 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))
- Engage tax counsel if your business handles remittances or acts as agent in check cashing or similar because these roles can trigger liability.
## Risks & Penalties
- Failing to collect or remit the tax can create liability for the provider.
- Incorrect classification of funding method or reporting can lead to underpayments or penalties.
- Time misallocation or ignoring deposit schedule may trigger penalties under **section 6656**. Note: penalty relief is limited or phased for the first three quarters of 2026 under Notice 2025-55 for certain providers. ([irs.gov](https://www.irs.gov/irb/2026-18_IRB?utm_source=openai))