New excise tax under OBBB: what it is
- Starting January 1, 2026, a 1% excise tax is imposed on certain remittance transfers where senders use cash, money orders, cashier’s checks, or similar physical instruments. (irs.gov)
- The sender is responsible for the tax, but the remittance transfer provider must collect and remit the tax to the IRS via Form 720 quarterly, and make semimonthly deposits. (irs.gov)
What relief is being offered
- Notice 2025-55 grants relief from failure-to-deposit penalties for the first three quarters of 2026, if:
- The provider makes semimonthly deposits on time, even if computed incorrectly.
- The provider pays any underpayment by the due date of the quarterly Form 720. (irs.gov)
- Risk of penalties remains if there’s willful neglect, or deposits are late. “Reasonable cause” standard still applies. (irs.gov)
Implications for remittance businesses
- Must set up infrastructure to collect and remit the new excise tax by early 2026.
- Must monitor payment methods of senders: only physical instruments trigger the tax. Electronic methods (ACH, credit card) are excluded. (irs.gov)
Example scenario
- Company A processes remittances in early 2026. Over a 15-day period, remittance transfer providers using physical instruments collect remittances totaling $100,000. They’re supposed to deposit 1% tax ($1,000) semimonthly by Jan 29, 2026.
- If they miss correct calculation but deposit $900 on time, and later pay the $100 shortfall when filing Form 720, they’re protected from deposit penalties under Notice 2025-55. (irs.gov)
- But if deposits are late, penalties apply unless reasonable cause is shown.
Action steps for providers
- Update tracking systems to flag when payments are made via qualifying physical instruments.
- Train staff or platform partners on categorizing payments correctly.
- Prepare for the first deposit due on Jan 29, 2026 for semimonthly periods. Ensure calendar reminders etc. are in place.
- Consult legal / tax counsel to ensure compliance and documentation of steps taken.