Beginning this year, a 1% excise tax applies to certain remittance transfers from U.S. senders to recipients in foreign countries. Remittance transfer providers must collect these remittance transfer taxes from senders and pay them to the IRS. Specifically, the tax is levied when remittances are sent from the U.S. to recipients in foreign countries if the sender provides cash, a money order, a cashier’s check or another similar physical instrument to the remittance transfer provider. The IRS has issued proposed regulations that, among other things, specify the amount on which the remittance transfer tax is imposed and determine the full scope of physical instruments that trigger the tax.
