Compliance
How the Remittance Transfer Tax Could Affect Your Small Business
Beginning January 1, 2026, a new 1% excise tax on certain remittances imposes fresh responsibilities for remittance providers and senders alike.
By NomadicTax Research Team • 5-8 min read • July 7, 2026
## What is the Remittance Transfer Tax?
Under the **One, Big, Beautiful Bill (OBBB)**, a new **1% excise tax** applies to remittances sent from the U.S. to foreign recipients when the remitter uses a physical instrument—such as cash, money order, cashier’s check, or similar methods—rather than electronic transfers. ([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’s Responsible
- **Senders** must pay the tax when they use a qualifying physical instrument.
- **Remittance transfer providers**—entities that facilitate these transfers—are responsible for collecting this tax from senders, making **semimonthly deposits**, and filing **quarterly returns** using **Form 720**, starting in 2026. If they fail to collect it, the provider might be held 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))
## Key Dates & Relief
- The tax took effect on **January 1, 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))
- Providers get **limited penalty relief** for failing to deposit the correct amount during the first three quarters of 2026—if they make timely deposits and correct underpayments. ([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))
## Practical Example
Imagine a small money transfer business accepts cash from Client A to send overseas. The business must now:
1. Add 1% of the remittance amount as excise tax.
2. File quarterly returns with Form 720.
3. Deposit the tax semimonthly—i.e., twice a month.
If the business doesn’t collect it, they’re liable for the tax themselves. Missed record-keeping or late payments could trigger penalties unless limited relief 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))
## What You Should Do Now
- Review your **payment methods**: If you're set up to accept cash or physical instruments, ensure compliance systems are in place.
- Update **contract terms** and client disclosures to include the excise tax when needed.
- Track deadlines: First semimonthly deposit due **January 29, 2026**, for relevant remittances. Form 720 filings must be regular and accurate. ([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))
## Why It Matters
This excise tax adds a layer of **administrative burden** and a financial hit to remitters, especially businesses dealing with frequent foreign transfers. Ignorance of this obligation could lead to unexpected costs or liability. With relief limited to early compliance, alignment with the policy from the start is vital.
Bold steps now—system changes, client notices, and proper documentation—can protect your business and earnings moving forward.