KPMG flags proposed 1% tax on remittance transfers, comment deadline June 12

A worker sending $500 home each month would pay an extra $5 per transfer, or $60 over a year, under the proposed 1% remittance tax. For employees who rely on every dollar of take-home pay, that is not a theoretical policy change. It is a direct cut in the value of money that leaves a paycheck before it ever reaches family abroad.

KPMG said the Treasury Department and the Internal Revenue Service released proposed regulations on April 10 for the new tax, which applies to certain remittance transfers after December 31, 2025. The package, issued under section 4475 and labeled REG-114499-25, sets out who owes the tax, who collects it, and which transfers are included or excluded. The sender owes the tax, but the remittance transfer provider must collect it, report it on Form 720, and remit it quarterly. The Federal Register notice sets June 12, 2026, as the deadline for comments and requests for a hearing.

For KPMG’s tax, financial services, payments, and cross-border compliance teams, the practical work starts where the statute ends. Clients will need help mapping the new charge into operating processes, including how to define a remittance transfer, how anti-conduit rules may apply, what disclosures are required, and whether payment flows need to be redesigned. That is the sort of assignment that pulls together tax, legal, treasury, and technology teams at once, and it is the kind of issue that can expand quickly across employment tax, financial services tax, and compliance automation practices as large employers and payment platforms ask how to update systems and controls.

The proposed rules also draw a line around payment method. Certain transfers funded from qualifying bank or broker accounts, or funded with a U.S.-issued debit or credit card, are excluded from the tax. That matters for workers and for the firms that serve them, because the cost can hinge less on who is sending money than on how the transfer is funded.

The IRS has already told remittance transfer providers to make semimonthly deposits and file quarterly returns on Form 720, with the first semimonthly deposit due January 29, 2026. IRS Notice 2025-55, issued October 7, 2025, gave providers relief from section 6656 failure-to-deposit penalties for the first three calendar quarters of 2026, as long as certain conditions are met. That relief suggests Washington knows the industry needs time, but not much of it, to change how money moves across borders.