Entity Setup
Entity Setup: Structuring Your U.S. Business for Cross-Border Sales After the Remittance Transfer Tax
How U.S. businesses dealing in international money transfers should evaluate structure and compliance given the 1 % remittance transfer tax effective from January 1, 2026.
By NomadicTax Research Team • 5-8 min read • June 12, 2026
## Understanding the Remittance Transfer Tax under the One, Big, Beautiful Bill
As of **January 1, 2026**, a new **1 % excise tax** applies to remittances sent from the U.S. to foreign recipients when the sender uses cash, money orders, cashier’s checks, or similar 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)) This is known as the *remittance transfer tax*.
Remittance transfer providers are required to:
- **collect this 1 % tax** from senders using physical instruments in most cases;
- **make semi-monthly deposits; and**
- **file quarterly returns** using 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))
If the provider fails to collect, the provider becomes liable for the tax. Providers are working with proposed regulations that clarify exactly which instruments are covered, how to calculate amounts, and specific definitions. Comments on the proposed regulations were due by **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))
## Structuring Your Business for Compliance
If your business engages in cross-border remittance transactions, use these guidelines:
1. **Determine whether you or your business is a remittance transfer provider.** If you facilitate remittances using physical instruments, you're likely covered.
2. **Review customer payment methods.** Payments from digital or bank transfers may not trigger the tax—focus on instruments like cash or checks.
3. **Ensure proper reporting systems.** Collection of the tax, remittance to IRS, and filing Form 720 must match reporting periods.
4. **Train accounting and operations staff.** Everyone must know which instruments trigger tax, how to measure base, and when to deposit funds.
## Examples
- **Money-transfer business A** accepts only wire transfers and ACH for remittances abroad → **exempt** from the 1 % tax for those methods.
- **Remittance hub B** allows customers to send cash or purchase money orders, which are mailed abroad → these are **taxable transactions**, so 1 % tax must be applied.
## Entity Implications & Strategic Choices
- If you're in a **limited liability company (LLC)**, corporation (C-corp or S-corp), or partnership, ensure entity documents and operating agreements reflect who bears responsibility for remittance tax (sender vs provider).
- Consider **cost structure**, as remittance tax may increase pricing for end-users—factor this into contracts, fees, and service- level agreements.
## Action Items for Business Owners
- Review existing contracts and terms of service to ensure that remittance tax responsibility is clearly assigned.
- Update invoicing systems to include or show remittance taxes when required.
- Monitor IRS for finalized regulations (following the proposed ones, comments due June 12, 2026) for clarity and compliance. ([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))
## Conclusion
The remittance transfer tax adds a new layer of compliance for U.S. cross-border transactions involving physical instruments. Businesses must stay ahead by adapting structures, reporting systems, and customer disclosures. With proper setup, you can avoid liability, minimize cost, and maintain competitive pricing.