Compliance
Compliance Spotlight: Navigating the New Remittance Transfer Tax Rules
A deep dive into the new 1% remittance excise tax affecting certain foreign money transfers, including definitions, who must comply, and key tips to avoid surprises.
By NomadicTax Research Team • 5-8 min read • June 12, 2026
## What Is the Remittance Transfer Tax?
The One, Big, Beautiful Bill introduces a **1% excise tax** on remittance transfers made from the U.S. when the sender uses physical instruments—like **cash, money orders, cashier’s checks**, or similar tools—to send money abroad. ([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
- **Senders who use physical instruments**: If you send remittances abroad using cash or similar instruments, the tax applies to you. ([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**: They must collect the tax from senders when required. If they don’t, 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))
- **Reporting and payment obligations**:
* **Form 720**, the Quarterly Federal Excise Tax Return, will be used for filing. ([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))
* Providers must make **semi-monthly deposits** and file **quarterly returns**. ([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 Obligations
| Requirement | Who Must Do It | What Must Be Handled |
|---|---|---|
| **Tax collection** | Remittance transfer provider | Identify and collect 1% from eligible senders using physical instruments. |
| **Deposit schedule** | Provider | Deposit collected tax semi-monthly (twice each month). |
| **Periodic reporting** | Provider | File quarterly returns via Form 720, detailing remittance amounts and taxes. |
Note: Comments on proposed regulations were due **June 12, 2026**, indicating active rulemaking. ([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))
## Actionable Insights for Affected Parties
- **Remittance providers** should review business practices now:
* Identify what kinds of transactions trigger the remittance transfer tax.
* Update systems to accurately capture use of cash, money order, or cashier’s check inputs.
* Educate staff and contractors about the difference between physical vs non-physical payment instruments.
- **Individuals sending funds abroad**:
* Use non-physical methods (electronic transfers, bank wires) when possible to avoid the 1% excise tax.
* If physical instrument use is unavoidable, plan remittance amounts and timing carefully.
- **Keep an eye on final regulations**:
* The proposed rules are not yet finalized; details such as scope of “physical instruments” and definitions could change. ([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))
* Stay tuned for IRS guidance and ensure compliance when rules take effect.
## Example Scenario
Sarah lives in Texas and sends \$5,000 to her family in Honduras using a cashier’s check. She will owe **\$50** tax (1%). If a remittance provider fails to collect it, that provider could be responsible. If Sarah had instead used a bank transfer, this tax wouldn’t apply.
**Bottom line**: The remittance transfer tax brings new responsibilities for both individual senders and providers. Understanding key compliance steps now—before rules are final or enforcement begins—can save money and prevent penalties.