The 1% Remittance Transfer Tax: CPA Notes | HelloBooks A 1% excise tax applies from January 1, 2026 to remittances funded with cash or money orders. Who pays, who collects, and the Form 720 rules.
From 2026 a 1% excise tax applies to some money sent from the United States to people abroad. It matters to two kinds of client: remittance providers who must collect it, and individuals who send money home.
Free Plan with invoices within 200 transactions, bills & quotes — no credit card.
Tax rate
1% of the transfer
Applies: Transfers from January 1, 2026From IRS.gov · checked October 10, 2026
The tax applies to remittances from the US to recipients in a foreign country when the sender pays the provider with cash, a money order, a cashier’s check or a similar physical instrument. The sender is liable, but the provider must collect it, and if it does not, the tax becomes the provider’s liability.
Providers report the tax on Form 720, make semimonthly deposits and file quarterly. The first semimonthly deposits were due January 29, 2026. Notice 2025-55 gives limited penalty relief for incorrect deposits during the first three quarters of 2026, so the fourth quarter is when accuracy really counts.
For a provider, tax collected from customers is a liability, not revenue. Set up a separate liability account for remittance tax collected and reconcile it against each deposit, the same way you would treat sales tax.
The plain-English summary for business owners
Payroll and information returns · tipped occupations
Information returns · backup withholding
By client type · small employers
General information for tax professionals, not advice on a specific return. Figures are from IRS.gov on the date shown; check the current IRS instructions before filing.
Free Plan with full access to the AI accountant — no credit card, no time limit.