Who Owes the 1% Remittance Transfer Tax
Who pays the remittance transfer tax? Two parties are involved, and they have different jobs. The sender is the person the 1% is collected from. The remittance transfer provider collects it, deposits it with the IRS, and files Form 720 under IRS No. 155. If you run the counter, the paperwork is yours. If you are the customer, nothing in these IRS sources asks you to file a return.
Who does what under the remittance transfer tax?
| Party | Role in the IRS sources |
|---|---|
| Sender | Makes the transaction and pays with cash, a money order, a cashier's check, or a similar physical instrument. The tax is collected from certain senders. |
| Remittance transfer provider | Must collect the tax, make semimonthly deposits, and file quarterly returns. |
| Recipient | Not assigned any role in the instructions or the news release. |
The law behind this is section 4475, created by the One Big Beautiful Bill Act of 2025. It applies to certain transfers that occur after 2025, and the first semimonthly deposit was due January 29, 2026.
Which senders is the tax collected from?
The test in the instructions is how the sender pays. The 1% applies "when the sender makes the transaction with cash, a money order, a cashier's check, or a similar physical instrument."
Here is how that plays out at a counter. The customers and amounts are made up.
| Customer pays with | Amount sent | What the instructions say | Tax at 1% |
|---|---|---|---|
| Cash | $600 | Named | $6.00 |
| Money order | $250 | Named | $2.50 |
| Cashier's check | $1,200 | Named | $12.00 |
| Another paper instrument | $400 | Depends on whether it is a "similar physical instrument" | $4.00 if it is |
The provider's calculation is just the amount times 1%. To run a batch of transfers, use the remittance transfer tax calculator.
What exceptions do the Form 720 instructions list?
None. The instructions describe the taxable transfers by payment method and stop there. They contain no separate list of exemptions, and several questions a provider will ask aren't answered in the instructions or the news release:
- How a transfer funded from a bank account or by card is treated.
- What exactly counts as a "similar physical instrument."
- Who counts as a "remittance transfer provider," including how an agent location is treated compared with the network it works for.
- Whether the tax is added on top of the amount or taken out of it, and how fees are treated.
- Who bears the tax if the provider fails to collect it from the sender.
Those answers belong to the law and the regulation project, not to a summary of Form 720. The instructions point to REG 114499-25 on this excise tax, and section 4475 itself. If your products sit near any of these edges, have a tax professional read those texts against your actual flows. Don't decide from a line on the form.
What does the provider have to do once it collects?
- Deposit. The instructions say providers must make semimonthly deposits. Generally, semimonthly deposits aren't required if net Part I liability for the quarter doesn't exceed $2,500, and the tax is paid with the return instead.
- File. Form 720 is due for each quarter. A provider also files for later quarters until it files a final return, entering a zero on a tax it normally reports but has none for.
- Schedule A. IRS No. 155 is a Part I item, and Form 720 requires Schedule A for any Part I liability.
For an overview of the tax, see our remittance transfer tax guide. The Form 720 page for remittance providers is written for businesses in this position.
What happens if the provider gets it wrong?
Publication 510 lists acts that can bring penalties and interest. They include failing to collect and pay over tax as the collecting agent, failing to make deposits, depositing late, and failing to file.
The instructions and Publication 510 describe a trust fund recovery penalty for collected taxes on communications, air transportation, and indoor tanning. They don't name remittance transfers in that passage, and our sources don't say whether it reaches this tax. Treat collected money as the government's until it is deposited, and ask a tax professional about personal exposure if you are behind.
For the first three quarters of 2026, the IRS offered limited relief from deposit penalties. Providers must make timely deposits and pay any underpayment by the Form 720 due date for the quarter. That relief isn't named for the fourth quarter of 2026.
Your next step depends on which side you are on
If you are a sender, you have no Form 720 to file under these sources, and you don't need an account with us. Ask your provider how the charge appears on your receipt.
If you are a provider, your next step is the quarterly return. EasyFile720 is an IRS-authorized e-file provider for Form 720. It guides you through filing Form 720 online, from business details to submission, including IRS No. 155 and Schedule A. You enter your total transfers and the math is calculated for you. Creating an account is free, with no credit card needed to start, and each filing is $39.95. Whether a given transfer is taxable stays your decision, so settle that first.
FAQ
Is the tax on the amount sent or on the fee?▼
The instructions impose 1% on the amount of the remittance transfer, and Form 720 prints the rate as 1% of transfer. They don't separately say how a provider's own fee is treated.
Do transfers made before 2026 count?▼
No. The tax applies to certain remittance transfers that occur after 2025.
I send money home in cash each month. Do I file Form 720?▼
The IRS sources assign the deposits and the quarterly return to the provider. They describe the sender as the person the tax is collected from, not as a filer.
Is there a minimum transfer amount?▼
The Form 720 instructions and the IRS news release don't state one. Check section 4475 and REG 114499-25 before relying on any threshold.
File Form 720 online
Create a free account with no credit card and build your return. You pay $39.95 only when you file. EasyFile720 is an IRS-authorized e-file provider, and you get an acknowledgment when the IRS accepts your return.
Sources: Instructions for Form 720 (Rev. June 2026); Form 720 (Rev. June 2026); IRS news release IR-2025-102 (Oct. 7, 2025); 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.
