Compliance
Navigating the New Remittance Transfer Tax Under the One, Big, Beautiful Bill
Starting January 1, 2026, certain remittances sent using cash or similar physical instruments will be subject to a new 1% excise tax. Understanding who it affects and how to comply is essential for both senders and remittance providers.
By NomadicTax Research Team • 5-8 min read • May 6, 2026
## What is the Remittance Transfer Tax?
In the One, Big, Beautiful Bill (OBBB) passed in mid-2025, a new excise tax was introduced under Internal Revenue Code § 4475. Beginning January 1, 2026, this **1% tax** applies to remittances sent from the U.S. to foreign recipients when the sender uses **cash, money orders, cashier’s checks, or similarly 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))
## Who is Liable?
- **Sender**: If you send funds using a taxable instrument (physical form) you may owe the excise tax.
- **Remittance transfer provider**: Entities handling money orders, cash, etc., must collect the tax if dealing with senders using taxable instruments. If they don’t collect it, 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))
## Key Definitions & Instruments Covered
The proposed regulations, released April 10, 2026, clarify:
- The **instruments** that trigger the tax: cash, money orders, cashier’s checks, *similar physical instruments*, and under proposed rules, traveler’s checks as well. ([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 is **not taxed**: standard bank transfers like direct debit, ACH, and other non-cash/electronic settlement instruments are excluded. ([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 & Compliance Requirements
- Remittance transfer providers need to **collect from senders or pay the tax themselves**, depending on whether remission is practical.
- Must **file quarterly returns** and make **semimonthly deposits** of collected remittance transfer tax using **Form 720**. ([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))
- Comments on proposed regulations are open through **June 12, 2026**. The final regulations will specify implementation rules moving forward. ([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 Steps & Examples
**For remittance providers**:
- Audit your systems to detect transfers funded with cash or physical instruments.
- Update contracts and platforms to collect tax from senders when required.
- Prepare for recordkeeping, deposit schedules, and reports.
**For individuals**:
- If you send money using **non-physical methods** like bank wire, ACH, or electronic payment, **you’re not affected**.
- If using money orders, cash, or physical checks to send funds overseas, plan for the extra 1% as an increase in your cost.
- Retain documentation proving your method to avoid disputes.
## Example Scenarios
| Scenario | Method Used | Is Remittance Transfer Tax Due? |
|---|---|---|
| Sending $1,000 to a family abroad using a physical money order | Money order | **Yes**, 1% = $10 tax added or collected, or imposed on provider. |
| Same amount via bank wire transfer | Bank wire (electronic) | **No**, excluded from tax. |
| Funding transfer by cash presented to a remittance provider | Cash | **Yes**. |
## Timeline & What’s Next
- Proposed regulations currently in comment phase. Must be finalized for full clarity. \n- Providers and senders may rely on proposed rules for transfers made after Dec 31, 2025, if they consistently follow them until final regulations are published. ([irs.gov](https://www.irs.gov/pub/irs-irbs/irb26-18.pdf?utm_source=openai))
- Final regulations likely to address technical matters like what makes an instrument “similar physical instrument,” safe harbors, and transitional issues.
## Bottom Line
If you or your business sends or handles remittances using cash, cashier's checks, money orders, or similar instruments, expect an added compliance burden and cost. Plan ahead, update documentation and systems, and use electronic payment methods where possible to avoid this new 1% tax. Ensuring compliance now will save surprises at tax time in 2027.