- The IRS and Treasury proposed rules for 1% tax on cash-funded international money transfers.
- The tax exempts digital payments such as bank wires, ACH transfers, and U.S.-issued debit cards.
- Providers must collect the tax at transaction and file quarterly returns using Form 720.
(UNITED STATES) — The Internal Revenue Service and the Treasury Department issued proposed rules on April 10, 2026 for a new 1 % remittance-transfer tax that applies to certain money transfers sent abroad after December 31, 2025.
The tax, created under Internal Revenue Code Section 4475 by the One Big Beautiful Bill Act, Public Law 119-21, adds a charge equal to 1% of the total amount a sender provides for a covered transfer. That means a $1,000 transfer carries a $10 tax, a $500 transfer carries a $5 tax, and a $200 transfer carries a $2 tax.
Senders pay the tax when they provide cash, a money order, a cashier’s check, or a similar physical instrument to a remittance transfer provider for delivery to a foreign recipient. The tax base includes promotional bonuses tied to the transfer, but excludes provider fees and state taxes.
Providers such as Western Union and MoneyGram sit at the center of collection. The sender is primarily liable, but the remittance transfer provider must collect the tax at the point of transaction, make semimonthly deposits to the IRS, and file quarterly returns on Form 720, Quarterly Federal Excise Tax Return.
The first semimonthly deposit came due on January 29, 2026. Quarterly returns are due on the last day of the month following each quarter, and providers face secondary liability if they fail to collect the tax and must pay the IRS themselves.
President Trump signed the law on July 4, 2025. Treasury and the IRS later issued proposed regulations, identified as REG-114499-25, and published them in the Federal Register on April 13, 2026. The proposal is available in the [Federal Register notice](https://www.federalregister.gov/documents/2026/04/13/2026-07085/excise-tax-on-remittance-transfers).
Those proposed rules define terms, set the scope of the tax, and address anti-conduit rules meant to stop structured avoidance, including arrangements involving prepaid cards. Taxpayers and providers may rely on the proposed rules for transfers made after December 31, 2025 until final regulations are issued.
No final regulations had been issued as of May 7, 2026. The public comment period on the proposal closes on June 12, 2026, according to [IRS guidance IR-2026-48](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill).
Not every cross-border payment falls under the tax. Transfers funded by U.S. bank wires, ACH transfers, U.S.-issued debit or credit cards, digital wallets, or withdrawals from financial accounts are exempt.
Transfers under $15 are also exempt, as are business wire transfers. Cryptocurrency transactions and transfers initiated outside the United States fall outside the tax as well.
That distinction leaves one group exposed more than others: U.S.-based people who still rely on cash-funded services to support relatives overseas. That group includes immigrants, visa holders, frequent travelers, mobile employees, and expatriates, and the tax applies regardless of citizenship, residency, or income.
Digital or account-funded options avoid the tax entirely. A sender who funds the same transfer through a U.S. bank account, ACH, a U.S.-issued debit or credit card, a digital wallet, or a withdrawal from a financial account does not trigger the 1 % remittance-transfer tax.
The scale of the market helps explain why the rule reaches beyond a narrow group of cash users. Over 2019–2024, annual cash remittances sent through money service businesses averaged $520 billion, and average transfer sizes ranged from $290 to $740.
For people who send money in small amounts every month, the extra charge is modest on a single transaction but recurring over time. A worker sending $500 twelve times in a year would pay $5 each time under the examples in the IRS summary, adding up to $60 in tax across the year.
The proposal also carries compliance duties for companies that process covered transfers. They must collect the tax at the counter or other point of transaction, deposit it on a semimonthly schedule, and report it on quarterly excise tax filings rather than treating it as an informal surcharge.
Treasury and the IRS offered some limited administrative relief while the new system takes hold. IRS Notice 2025-55, announced on October 7, 2025 in IR-2025-102, provides limited relief from failure-to-deposit penalties for providers during the first three quarters of 2026, covering Q1-Q3.
That relief applies to providers, not to the existence of the tax itself. The obligation to collect and remit remained in place for covered transfers made after December 31, 2025.
Recordkeeping rules add another layer for both businesses and senders. Providers must keep records for four years, while the IRS guidance says senders should retain receipts showing the 1% tax for at least three years.
Those receipts matter because this levy stands apart from other international financial reporting regimes. The IRS guidance says the remittance-transfer tax is separate from FBAR and FATCA reporting.
The anti-conduit provisions in REG-114499-25 show how Treasury intends to police workarounds. The proposed rules target structured avoidance, including prepaid-card arrangements designed to make a cash-funded remittance appear to fall outside the tax.
That leaves a clear dividing line in how the government is treating outbound consumer transfers. Cash, money orders, cashier’s checks, and similar physical instruments handed to a remittance transfer provider for overseas delivery fall within Section 4475; bank-connected and digital payment channels do not.
The practical effect reaches people whose payment habits have not shifted to bank-funded or app-based transfers, even as those methods remain widely available. The new tax does not apply to sending money abroad in general; it applies to a narrower set of payment methods still common in walk-in remittance transactions.
With no final regulations yet in place, the proposed rules now serve as the operating framework for taxpayers and for each remittance transfer provider handling covered transactions. Comments remain open until June 12, 2026, while the tax itself continues to apply to transfers made after December 31, 2025.
