Compliance
Compliance Essentials: What the Remittance Transfer Tax Means for U.S. Senders
Recent proposed rules introduce a 1 % excise tax on certain remittance transfers starting Jan 1, 2026—learn who is liable, what qualifies, and how to comply.
By NomadicTax Research Team • 5-8 min read • June 30, 2026
## What Is the Remittance Transfer Tax?
Under the OBBB Act, beginning **January 1, 2026**, a **1 % remittance transfer tax** applies to certain transfers sent from the U.S. when the sender uses **cash, money order, cashier’s check**, or a similar physical instrument.([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)) The sender is generally liable, and remittance transfer providers (RTPs) must collect the tax, make **semimonthly deposits**, and submit **quarterly returns** via **Form 720**, Quarterly Federal Excise Tax Return.([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 Rules in Proposed Regulations
- Rules clarify what kinds of physical instruments trigger the tax (e.g. cash vs electronic debits).([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))
- RTPs are required to collect from the sender. If they fail, the RTP 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))
- The proposed rules outline how to determine the amount on which tax applies.([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 Is Affected?
- **Individuals** who send money abroad using cash, money order, or similar instruments—for example, sending cash in a courier package or paying by money order to a remittance provider.
- **RTPs**, including specialty remittance businesses, financial institutions, or others handling physical instruments.
- **Digital nomads** and foreign workers who send money home using physical payment methods should be especially aware.
## Practical Example
Suppose you are freelancing in the U.S. and regularly send cash to family abroad via a remittance provider. Under these rules:
- You are liable for the 1 % tax.
- If your remittance provider doesn’t collect it, the provider must report and pay it instead.
- You may see new fees or rates from remittance services to handle the compliance burden.
## Compliance Checklist
1. **Identify** whether your remittances use physical instruments covered by the law.
2. **Select** remittance providers that properly collect and remit the tax (review their disclosures).
3. **Retain documentation**, including receipts and proof of payment method, in case of IRS inquiry.
4. **RTPs** should adjust software to track physical vs non-physical instruments, collect tax correctly, file required returns, and deposit semimonthly.
## Action Steps Before Year-End
- Assess remittance practices: can you shift to electronic instruments to avoid the tax? If yes, modify your workflow.
- For providers: start collecting and tracking data now to prepare for Form 720 filings and semimonthly deposits.
Understanding the remittance transfer tax helps ensure you're compliant and avoid surprise liabilities—both individual senders and providers need to be proactive.