Compliance
Maximizing the Remittance Transfer Excise Tax Relief Under the OBBB
Remittance providers will benefit from penalty relief for the first three quarters of 2026—but only if they comply with tight timing, safe harbor rules, and payment deadlines.
By NomadicTax Research Team • 5-8 min read • November 17, 2025
## What Is the Remittance Transfer Excise Tax?
Under the **One, Big, Beautiful Bill** (OBBB), U.S. remittance transfer providers must collect a **1% excise tax** on certain types of transfers starting **January 1, 2026**. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-penalty-relief-for-remittance-transfer-providers-who-fail-to-deposit-excise-tax-under-the-one-big-beautiful-bill?utm_source=openai)) This applies to transfers made using cash, money orders, cashier’s checks, or similar physical instruments, not electronic or card transactions. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-penalty-relief-for-remittance-transfer-providers-who-fail-to-deposit-excise-tax-under-the-one-big-beautiful-bill?utm_source=openai))
## Key Relief: Notice 2025-55
On **October 7, 2025**, IRS issued **Notice 2025-55**, providing **penalty relief** for remittance providers for **failure to make proper deposits** of this new tax for the **first three calendar quarters of 2026**. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-penalty-relief-for-remittance-transfer-providers-who-fail-to-deposit-excise-tax-under-the-one-big-beautiful-bill?utm_source=openai))
### What Relief Covers
- No failure-to-deposit penalty under **Internal Revenue Code § 6656** if both of these conditions are met within each quarter:
• You make deposits **on time**, even if calculation is incorrect.
• Any underpayment is paid **in full by the due date of Form 720** for that quarter. ([irs.gov](https://www.irs.gov/irb/2025-43_IRB?utm_source=openai))
- Safe-harbor rules (under treas. reg. § 40.6302(c)-1(b)(2)) remain available even with underpayments, if reasonable cause is shown. ([irs.gov](https://www.irs.gov/irb/2025-43_IRB?utm_source=openai))
## Deadlines & Key Dates
| Item | Date | Notes |
|------|------|-------|
| Law effective date for tax on remittances | January 1, 2026 | Only transfers after this date subject to section 4475 tax. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-penalty-relief-for-remittance-transfer-providers-who-fail-to-deposit-excise-tax-under-the-one-big-beautiful-bill?utm_source=openai)) |
| First semimonthly deposit due | January 29, 2026 | For the first 15 days of January. ([irs.gov](https://www.irs.gov/irb/2025-43_IRB?utm_source=openai)) |
| Quarterly return & payment deadline | Last day Form 720 due for each quarter in 2026 | Underpayment must be caught up by this date. |
| Relief period | Q1-Q3 2026 | Relief only for first three calendar quarters. |
## Practical Examples
- **Example 1**: A remittance provider incorrectly estimates semimonthly deposits for Q1 2026 but still deposits “something” on the due date (Jan 29). Then, by April 30 (due date for Form 720 for Q1), makes full payment of underpaid tax. **No penalty** under section 6656. <br>
- **Example 2**: In Q2 2026, provider delays deposit past semimonthly due date but shows reasonable cause, and pays full underpayment by July 31 (Form 720 due date). Relief may apply if reasonable cause standard is met. <br>
## Actionable Steps for Remittance Providers
1. **Implement or update systems** now to track eligible transfers, calculate remittance tax correctly, and schedule deposits.
2. Understand deadlines: semimonthly deposits and quarterly return due dates.
3. Document any calculation errors and show reliance on safe harbor rules.
4. Ensure that any underpayment each quarter is paid in full by the due date of Form 720.
5. Keep records proving “reasonable cause” in case of inquiries.
## Why This Matters
- Helps avoid penalties while transitioning to comply with OBBB.
- Shows flexibility from IRS during implementation.
- Essential for budgeting and financial forecasting for remittance providers.
By following the relief rules in Notice 2025-55 and preparing sufficiently ahead of enforcement dates, remittance transfer providers can minimize risk and be ready for the new tax requirements under OBBB. Be sure to consult a qualified tax advisor to ensure complete compliance.