The IRS has announced new guidance offering relief from penalties for remittance transfer providers as they adjust to the new excise tax rules coming into effect in 2026. This update, released under Notice 2026-55, outlines how the IRS will handle penalties for failing to deposit the remittance transfer tax during the initial rollout period.
What the New IRS Relief Payment 2026 Notice Covers
Under this notice, the IRS is granting temporary relief from the failure-to-deposit penalty that normally applies under Section 6656 of the Internal Revenue Code. The relief applies to remittance transfer providers for the first, second, and third calendar quarters of 2026.
The remittance transfer tax, established under Section 4475, was introduced by the One, Big, Beautiful Bill Act (OBBBA) signed into law on July 4, 2026. It imposes a 1% excise tax on certain money transfers made after December 31, 2026, when the sender uses cash, money orders, cashier’s checks, or similar physical payment instruments.
Who Pays and How It Works
The sender is responsible for paying this new 1% tax. However, remittance transfer providers are tasked with collecting and remitting the tax to the Treasury Department on a quarterly basis. If the tax is not collected at the time of the transfer, the provider itself becomes liable for payment.
Calculate Your 2026 COLA Increase →Remittance providers must report these taxes on Form 720 (Quarterly Federal Excise Tax Return). Normally, semimonthly deposits are required under IRS rules, but since this tax is new, providers will not yet have a “look-back quarter” to calculate deposits under the safe harbor provision.
Temporary Relief from Penalties
To allow providers time to adapt, the IRS is offering a transition period. During the first three quarters of 2026:
- Providers who make deposits on time, even if the amounts are miscalculated, will be considered to have met the reasonable cause standard.
- Any underpaid tax for the quarter must be fully paid by the due date of Form 720 for that quarter.
- Providers will not lose eligibility for the deposit safe harbor in later quarters, as long as they meet these conditions.
This relief gives businesses time to familiarize themselves with the new requirements without facing penalties during the early implementation phase.
What Businesses Should Do Next
Remittance transfer providers should begin preparing now by:
- Updating internal systems to calculate and track the new 1% remittance tax.
- Ensuring deposits are made on schedule beginning January 2026.
- Reviewing Form 720 filing requirements.
Providers who meet these criteria will qualify for IRS penalty relief under Notice 2026-55, helping them transition smoothly into the new tax compliance process.
Contact for More Information
Questions about this IRS relief payment 2026 update can be directed to the Office of the Associate Chief Counsel (Energy, Credits, and Excise Tax) at (202) 317-6855 (not toll-free).
