Compliance
Remittance Transfer Tax Compliance Relief: What Providers Need to Know
New excise tax starting Jan 1, 2026 introduces reporting responsibilities and penalties—but relief is available for remittance transfer providers.
By NomadicTax Research Team • 5-8 min read • November 21, 2025
## 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](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))
## 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](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))
- 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](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))
## 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