Treasury and IRS Announce Temporary Penalty Relief for Remittance Transfer Providers

The Department of the Treasury and the Internal Revenue Service (IRS) have released Notice 2025-55, introducing deposit penalty relief for remittance transfer providers during the first three quarters of 2026. The notice relates to the new remittance transfer excise tax established under the One, Big, Beautiful Bill (OBBB).

Transitional Relief for Implementation

Starting January 1, 2026, remittance transfer providers will be required to collect a 1% remittance transfer tax on certain transactions. The tax applies when senders use cash, money orders, cashier’s checks, or similar physical instruments to make remittances. Providers must collect the tax, make semimonthly deposits, and file Form 720, Quarterly Federal Excise Tax Return, with the IRS.

Recognizing the implementation period needed for this new requirement, the IRS will not impose deposit penalties for the first three quarters of 2026 if providers:

• Make deposits on time, even if amounts are calculated incorrectly, and

• Pay any underpaid tax in full by the due date of the related Form 720.

This measure offers limited administrative flexibility while providers update systems and procedures to align with the new tax obligations.

Safe Harbor and Reasonable Cause

Under the guidance, providers may also apply the deposit safe harbor rules contained in the Excise Tax Procedural Regulations, even if deposits for the new tax were incomplete during the covered period. To qualify, providers must demonstrate that any underpayment was made in good faith and that they meet the reasonable cause standard for penalty relief.

This relief applies strictly to deposit penalties and does not alter other tax filing or payment requirements.

The New Excise Tax Framework

The One, Big, Beautiful Bill introduces the remittance transfer tax as part of a broader legislative effort to update excise tax structures. The new provision extends to certain physical remittance instruments, reflecting an expanded focus on payment flows involving cash and money orders.

The IRS has indicated that the first semimonthly deposit for this tax will be due January 29, 2026. Remittance transfer providers are advised to prepare for timely compliance through system adjustments, procedural reviews, and appropriate staff training.

Information for Taxpayers and Providers

Notice 2025-55 is designed to ease the transition to a new compliance environment without removing the underlying tax responsibility. The relief period offers time for remittance providers to align operations with the new regulatory framework before standard enforcement resumes in late 2026.

For official details, taxpayers and practitioners can review Notice 2025-55 and the One, Big, Beautiful Bill provisions on IRS.gov.