Digital Nomad
How U.S. Businesses Should Prepare for the New Remittance Transfer Tax
A new excise tax on U.S. remittance transfers takes effect from January 1, 2026—know how it works, who is liable, and how to comply under the proposed regulations.
By NomadicTax Research Team • 5-8 min read • June 15, 2026
## What Is the Remittance Transfer Tax?
As part of the “One, Big, Beautiful Bill”, the U.S. introduced a **1% excise tax** on remittances sent **from the United States to foreign recipients** when funds are transferred through **physical instruments** such as cash, money orders, cashier’s checks, or similar instruments. This applies from **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))
## Who Bears the Tax and What Are Providers’ Obligations?
- The **sender** (individual or entity) is ultimately liable for the tax.
- **Remittance transfer providers** are required to:
• Collect the remittance transfer tax from senders when required;
• Make **semimonthly tax deposits**;
• File **quarterly returns** on Form 720 (Quarterly Federal Excise Tax Return);
• If they cannot collect from sender, they become 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))
## Proposed Regulations Issued
In April 2026, the Treasury and IRS released proposed regulations for how this tax should be administered. These clarify:
- What counts as a “physical instrument” for purposes of triggering the tax;
- How the taxable base is measured (what amount is subject to the 1%);
- Examples to illustrate compliance scenarios.
Comments were open through June 12, 2026. Final rules are pending. ([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 Steps for Businesses & Individuals
1. **Determine whether your remittance qualifies**: Is the transfer via cash, money order, cashier’s check or similar? Is the recipient abroad? If yes, the new tax may apply.
2. **Remittance transfer providers (banks, remittance agencies)** need to update their systems to collect the tax, generate remittance tax forms, calculate deposits, and file with IRS.
3. **Senders** should request remittance provider’s pricing and disclosures—costs may include this tax passed through or additional remittance fees.
4. **Keep records**: The proposed regulations call for definitions and examples—maintain documentation of amounts, instruments used, intermediary involvement in transfers, to support either exemption or liability.
5. **Watch for final regulations**: The comment period close (June 12, 2026) means final rules may become effective later; early compliance or readiness essential.
## Example
Suppose Clara in New York wants to send \$10,000 by money order to a sibling overseas via a licensed remittance provider. Starting Jan 1, 2026, she owes 1% tax (\$100), collected by the provider. The provider must report it on Form 720 for that quarter. If Clara pays cash directly at a remittance provider, the same rule applies. If Clara used electronic funds transfer (wire or bank ACH), then the tax likely doesn’t apply. Verification depends on the definitions in the proposed regulation.
## Why This Matters
- **Businesses**: Remittance providers will have compliance costs and potential exposure if they fail to collect correctly.
- **Individuals**: Senders may face new costs and need to choose remittance methods more carefully.
- **Policy context**: This excise tax is part of efforts to broaden revenue base under recent legislation, address informal cash flows abroad, and ensure fairness in transfers.
## Actionable Takeaways
- If you or your business sends remittances using physical instruments, evaluate the cost impact now.
- Remittance providers should model compliance scenarios and start implementing tracking and filing systems.
- Individuals should ask whether this affects preferred remittance methods and explore alternatives (electronic transfers, digital remittance services).
- Monitor IRS announcements for final rulemaking and publications clarifying ambiguous definitions.