The Internal Revenue Service (“IRS”) has issued Notice 2025-55 granting temporary penalty relief to remittance transfer providers under new Internal Revenue Code section 4475, which imposes a 1% excise tax on certain remittance transfers made from the U.S. to foreign recipients beginning January 1, 2026. The relief applies to failures to make timely deposits of the tax during the first three calendar quarters of 2026. When a sender funds a transfer with cash, money orders, cashier’s checks, or similar instruments, the sender is liable for the tax, but the remittance transfer provider (such as banks, credit unions, financial service institutions) must collect and remit the tax semimonthly to the IRS. Remittance transfer providers must then file an excise tax return quarterly.
For excise tax deposits, filers may ordinarily take advantage of the “deposit safe harbor” under Section 40.6302(c)-1(b)(2), where the deposit amount may be based on a prior quarter’s tax liability. But because the remittance transfer tax is new, there will be no prior quarter data to rely upon for early 2026. To make the transition easier, the IRS is providing penalty relief for the first three quarters of 2026 if remittance transfer providers meet two requirements.
First, the provider must make timely deposits of the remittance transfer tax, even if the amounts are calculated incorrectly. Second, any underpayment for each quarter must be paid in full by the due date of the corresponding Form 720, Quarterly Federal Excise Tax Return. If the provider meets both of these requirements, the failure to make a deposit penalty under section 6656 will not apply. Beginning in the fourth quarter of 2026, the standard deposit safe harbor based on the prior quarter’s tax liability will apply. For further updates regarding this notice, contact Liskow attorneys Caroline Lafourcade and Kevin Naccari, Jr. and visit our Tax practice page.