What’s New: Remittance Transfer Tax Under the One, Big, Beautiful Bill
Beginning January 1, 2026, a 1% excise tax will apply to certain remittance transfers when the sender uses cash, a money order, cashier’s check, or similar physical instrument. Remittance transfer providers must collect the tax from senders, deposit it semimonthly, and file Form 720 quarterly. (irs.gov)
Transitional Relief & Penalty Provisions
Notice 2025-55 provides penalty relief for providers for the first three calendar quarters of 2026 if they comply with certain conditions: (irs.gov)
- Deposits are made on time—even if calculations are incorrect.
- Any underpayment is paid in full by the due date of the quarterly return.
- Providers may still use the deposit safe harbor rules—even if underpayments occur—as long as they exhibit reasonable cause. (irs.gov)
Examples of Obligations & Relief
| Situation | Action Required | Relief Available |
|---|---|---|
| You are a remittance transfer provider collecting cash transfers | Start collecting 1% tax from sender on eligible transactions beginning Jan 1, 2026 | Relief available if deposit amounts are late/miscalculated but full payment made by Form 720 due date for early quarters |
| Deposits due semimonthly but look-back quarter data missing | Use timely but estimated deposits, make up underpayment quarterly | Safe harbor preserved if conditions met and reasonableness standard satisfied |
Best Practices for Compliance
- Train staff now for the new rules—create checklists for correct identification of taxable remittance transfers.
- Set up accounting systems to track when senders use eligible instruments.
- Prepare to track deposits semimonthly and schedule quarterly filing of Form 720.
- Document cause and systems in place—should reasonable cause be required for relief.
Staying ahead of this change avoids steep penalties once relief expires.
Category: Compliance
Author: NomadicTax Research Team
Read Time: 5-8 min
Published: true