IRS Issues Proposed Rules for the OBBBA's 1% Remittance Transfer Tax — Cash, Money Orders, and Traveler's Checks Only; No Safe Harbor for Small Providers

The Internal Revenue Service and the Treasury Department have issued a Notice of Proposed Rulemaking (REG-114499-25) laying out how they intend to administer the 1 percent excise tax on remittance transfers created by the One, Big, Beautiful Bill Act (OBBBA, Public Law 119-21). The 42-page document went to Federal Register public inspection at 08:45 a.m. EDT on April 10, 2026, and is scheduled for formal publication on April 13.

The underlying tax is already in force. Section 70604 of the OBBBA, signed July 4, 2025, added Section 4475 to the Internal Revenue Code and imposes the remittance transfer tax on qualifying transfers made after December 31, 2025 — meaning every cash-funded remittance sent from the United States since New Year's Day is nominally subject to it, pending final rules. The proposed regulations are Treasury's implementation document.

The rate and who owes it

Section 4475(a) imposes a 1 percent excise tax on the amount of a taxable remittance transfer. The tax is owed by the sender. It is collected and remitted by the remittance transfer provider on a quarterly basis using IRS Form 720 (Quarterly Federal Excise Tax Return), with semimonthly deposits required under existing Excise Tax Procedural Regulations at 26 CFR § 40.6302(c)-1(a)(1). If the provider fails to collect the tax at the time of the transfer, the provider is on the hook under Section 4475(b)(3).

The Treasury Department and IRS already issued Notice 2025-55 on October 20, 2025, providing relief from deposit-failure penalties for the first three calendar quarters of 2026 while providers adapt their systems.

What funding instruments trigger the tax

This is the critical part of the rulemaking. The OBBBA limits the tax to remittance transfers funded with specific physical instruments. The proposed regulations list them: