IRS proposes remittance transfer tax rules

The Internal Revenue Service and the Treasury Department released a set of proposed regulations Friday on a new excise tax under the One Big Beautiful Bill Act that would impose new costs on remittances sent by immigrant workers to their family members abroad.

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The proposed regulations include rules and definitions related to the new remittance transfer tax. Starting Jan. 1, 2026, a 1% remittance transfer tax applies to remittances sent from the U.S. to recipients in foreign countries when the sender provides cash, a money order, a cashier’s check, or other similar physical instrument to the remittance transfer provider.

The sender is liable for paying the tax, while remittance transfer providers are now required to collect the remittance transfer tax from certain senders, as well as make semimonthly deposits and file quarterly returns with the IRS. If the remittance transfer provider doesn’t collect the tax from the sender, the tax then becomes a liability of the remittance transfer provider.

The proposed regulations clarify the application of the remittance transfer tax, including:

• Specifying the amount on which the remittance transfer tax is imposed;
• Determining the full scope of physical instruments that trigger the tax; and,
• Offering examples showing how these proposed definitions and rules would be applied.

Remittance transfer providers have to report the new remittance transfer tax on Form 720, “Quarterly Federal Excise Tax Return,” with the first semimonthly deposits due Jan. 29, 2026. Last October, the IRS released Notice 2025-55, offering limited penalty relief for remittance transfer providers who fail to deposit the correct amount of the remittance transfer tax as required during the first three quarters of 2026.

The Treasury and the IRS are asking for comments from the public on the proposed regulations within the next 60 days via Regulations.gov. The complete instructions on submitting comments are included in the proposed regulations. Comments on them are due June 12, 2026.