Tax Planning

Understanding the New US Remittance Transfer Tax and What Businesses Need to Know

A new 1% tax on remittance transfers from the US came into effect Jan 1, 2026—this article lays out who’s liable, what triggers it, and compliance tips for exporters, migrants, and businesses.

By NomadicTax Research Team • 5-8 min read • June 6, 2026

## What is the Remittance Transfer Tax? Under the US “One, Big, Beautiful Bill” legislation, starting **January 1, 2026**, certain remittances sent from the United States using physical instruments—cash, money order, cashier’s check, or similar—are subject to a **1% excise tax**, called the *remittance transfer tax*. The sender is primarily responsible. ([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 it affects and under what circumstances **Triggers**: - Remittances sent **outside the US** when payment is via **physical instruments** like money orders, cash, or cashier’s checks. Electronic transfers not involving these instruments are generally not subject. ([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)) **Liability**: - The **sender** of the remittance is liable for the tax. - If the remittance transfer provider doesn’t collect the tax, that 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)) **Reporting & timing**: - Remittance transfer providers must file **Form 720**, the Quarterly Federal Excise Tax Return. Semimonthly deposits are required. ([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)) - Proposed regulations published, public comments accepted through **6 June 2026**, with a deadline for comments set at **June 12, 2026**. ([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)) --- ## Compliance strategies & potential pitfalls - **Choose remittance method carefully**: If possible, use electronic transfers to avoid triggering the physical instrument tax. - **Record keeping**: Keep detailed records of transfers—type, amount, instrument used—as you’ll need this for your filings and to determine when the tax applies. - **For remittance providers**: - Ensure systems in place to collect 1% tax when due - Understand who is liable (sender vs provider) - Track semimonthly deposit deadlines and quarterly return filings under Form 720 --- ## Practical examples - **Immigrant family sending money home**: Marcos sends $1,000 to his family abroad via money order. He must pay $10 (1%) remittance tax along with the cost of the transfer. - **Business paying suppliers overseas**: If payment is by physical instruments, the business either pays the 1% or requires the supplier/agent to collect; if not collected, becomes liable itself. - **Choosing payment instrument**: An electronic wire avoids the tax; a cashier’s check triggers it. --- ## What remains proposed and what’s in effect - The tax is already in effect as of 1 January 2026. However, **proposed regulations** are open—especially around definition of physical instruments and who must collect the tax. ([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)) - Providers and senders should review proposed rules and possibly submit comments by **June 12, 2026**. ([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)) --- ## Summary Businesses and individuals handling remittances from the US must be aware of this 1% excise tax if using physical instruments. By choosing payment method, maintaining strong records, and staying current on regulations, senders and providers can avoid surprises.