Guidance is now available from the Internal Revenue Service for deposit penalty relief for the first three quarters of 2026 to remittance transfer providers.
Acknowledging "challenges implementing the new law," the notice provides limited penalty relief for remittance transfer providers who fail to deposit the correct amount of remittance transfer tax as required during the first three quarters of 2026.
These providers may avoid deposit penalties if they:
- Make timely deposits, even if they are incorrectly calculated; and,
- Ultimately pay the full amount of any underpayment by the due date of
Form 720, "Quarterly Federal Excise Tax Return ," for the quarter.
Additionally, under the guidance, remittance transfer providers may use the deposit safe harbor rules under the Excise Tax Procedural Regulations even if there was an underpayment of required deposits of the remittance transfer tax for the first three quarters of 2026. Providers must satisfy the reasonable cause standard for deposit penalties.
Beginning next Jan. 1, remittance transfer providers must collect the remittance transfer tax from certain senders, make semi-monthly deposits and file quarterly returns with the IRS. The first semi-monthly deposit is due Jan. 29, 2026.
The 1% remittance tax will apply to certain remittances when the sender makes the transaction with cash, a money order, a cashier's check or a similar physical instrument.
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