Remittance Tax Penalty Relief Explained

Remittance tax penalty relief is real, but it is narrow. On October 7, 2025, the IRS announced limited relief for remittance transfer providers that get their deposits wrong during the first three quarters of 2026. It reduces penalty risk on deposits. It doesn't reduce the tax, and the announcement stops at the third quarter.

The remittance transfer tax itself is a 1% excise tax, reported as IRS No. 155, on certain transfers that occur after 2025. This article covers only the penalty side.

What two things must a provider do to get the relief?

According to the IRS news release, providers may avoid deposit penalties if they:

• Make timely deposits, even if the deposits are incorrectly calculated, and
• Ultimately pay the full amount of any underpayment by the due date of Form 720 for the quarter.

The release also says providers may use the deposit safe harbor rules even if there was an underpayment of required remittance tax deposits for those quarters. It then adds a limit: providers must satisfy the reasonable cause standard for deposit penalties.

So there is still a judgment call. A provider should keep notes on what went wrong and why, such as a system that wasn't ready for the new tax. The IRS said it gave this relief because it understands there might be challenges implementing the new law.

Which quarters and due dates does the relief cover?

The due date in this table matters because it is your deadline for clearing any shortfall. For the third quarter, that means Monday, November 2, 2026. Pay the remaining balance by then, and the condition is met for that quarter.

What does a covered shortfall look like?

The provider and figures are made up. For July 1 to 15, 2026, a provider's correct net tax is $4,000. Its new system undercounts, and it deposits $2,800 on time by July 29.

• The normal rule asks for a deposit of at least 95% of net liability for the period. That would be $3,800, so the deposit falls short.
• The deposit was timely, though, which meets the first condition.
• The provider finds the error and pays the $1,200 difference by the November 2, 2026 due date, which meets the second.

Now change one fact. If the provider sent nothing for that period and paid everything with the return, the first condition isn't met, because no timely deposit was made.

What does the relief leave untouched?

What changes for deposits from October 2026 on?

Without the relief, the standard deposit rules in the Form 720 instructions are the ones to plan around:

• Each semimonthly deposit must be at least 95% of the net tax liability for that period, unless the safe harbor rule applies.
• The safe harbor generally treats you as compliant if each semimonthly deposit is at least 1/6 (16.67%) of the net tax liability on the lookback quarter return, which is the second calendar quarter before the current one. For October to December 2026, that is April to June 2026.
• To use the safe harbor, you must pay any underpayment by the due date of the return and check the box on Form 720, line 5.
• If the 14th or 29th falls on a weekend or legal holiday, the deposit moves to the preceding business day. The second October period is an example: November 14, 2026 is a Saturday, so that deposit is due November 13.

The safe harbor has an exception worth checking. It doesn't apply to a quarter whose liability includes a tax that wasn't in effect throughout the lookback quarter. The remittance tax began January 1, 2026. Its lookback quarters for the first two quarters of 2026 came before that date, so read the notice if you relied on the safe harbor for those quarters.

How to clean up 2026 and file correctly

• Reconcile your taxable transfers against your deposits for each semimonthly period.
• Pay any shortfall for a quarter by that quarter's return due date.
• If you find a mistake in a Form 720 you already filed, don't adjust it on a later return. The instructions send prior-quarter adjustments to Form 720-X.
• If you get a penalty notice, reply to the notice with your explanation.

For the return itself, EasyFile720 offers guided Form 720 filing online, including IRS No. 155 and Schedule A. You enter your figures, the math is calculated for you, and validations catch common mistakes before you submit. It costs $39.95 per filing, and creating an account is free. Your past returns stay saved in your account, which helps when you reconcile the quarters. To size a quarter first, try the remittance transfer tax calculator. The remittance transfer tax guide covers the tax from the start.

FAQ

Sources: IRS news release IR-2025-102 (Oct. 7, 2025); Instructions for Form 720 (Rev. June 2026); IRS Publication 510 (Rev. December 2025). General information, not tax advice. Confirm how the rules apply to you with a qualified advisor or the IRS.