§4475 Imposition of Tax

Summary

A 1 percent tax must be paid on any remittance transfer. The sender is responsible for the tax. The remittance transfer provider must collect that 1 percent from the sender and send the money to the Secretary every quarter in the way the Secretary requires. If the sender does not pay when the transfer is made, the provider must pay the tax. The tax only applies when the sender gives cash, a money order, a cashier’s check, or a similar physical instrument. It does not apply when money is taken from certain bank accounts (accounts at institutions listed in 31 U.S.C. 5312(a)(2)(A)–(H) that follow chapter 53 rules) or when the transfer is funded by a U.S. debit or credit card. The terms “remittance transfer,” “remittance transfer provider,” and “sender” follow their meanings in section 919(g) of the Electronic Fund Transfer Act (15 U.S.C. 1693o–1(g)). “Credit card” and “debit card” use the meanings in sections 920(c)(3) and 920(c)(2) of that Act (15 U.S.C. 1693o–2). For anti-conduit rules in section 7701(l), a remittance in a multi-party setup is treated as a financing transaction.