One Big Beautiful Bill 5% tax on remittances

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seeker

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Does anyone know the details about the 5% tax on the outgoing remittances for foreigners? I can imagine that lots of non-US citizens will wire the money out of US before this kicks in. It's not only Indians who will be impacted; it is every non-US citizen. Is there any way to get around this? Can we use Wise to convert to another currency before wiring the fund, would that be considered an outgoing remittance from US?



https://www.msn.com/en-us/money/news/trump-s-remittance-tax-plan-may-impact-indians/ar-AA1FefS4
 
This seems quite risky to me. Does not appear to have differentiation e.g. for non-resident aliens who are simply banking in the US with no other relevant ties (which is actually quite a lot of people). Interested to see what others have to say on this topic.



Including the direct excerpt from the bill below for clarity as well:










SEC. 112105. EXCISE TAX ON REMITTANCE TRANSFERS.



(a) In General.--Chapter 36 is amended by inserting after

subchapter B the following new subchapter:



``Subchapter C--Remittance Transfers



``Sec. 4475. Imposition of tax.



``SEC. 4475. IMPOSITION OF TAX.



``(a) In General.--There is hereby imposed on any remittance

transfer a tax equal to 5 percent of the amount of such transfer.

``(b) Payment of Tax.--

``(1) In general.--The tax imposed by this section with

respect to any remittance transfer shall be paid by the sender

with respect to such transfer.

``(2) Collection.--The remittance transfer provider with

respect to any remittance transfer shall collect the amount of

the tax imposed under subsection (a) with respect to such

transfer from the sender and remit such tax quarterly to the

Secretary at such time and in such manner as provided by the

Secretary.

``(3) Secondary liability.--Where any tax imposed by

subsection (a) is not paid at the time the transfer is made,

then to the extent that such tax is not collected, such tax

shall be paid by the remittance transfer provider.

``(c) Exception for Remittance Transfers Sent by Citizens and

Nationals of the United States Through Certain Providers.--

``(1) In general.--Subsection (a) shall not apply to any

remittance transfer with respect to which the remittance

transfer provider is a qualified remittance transfer provider

and the sender is a verified United States sender.

``(2) Qualified remittance transfer provider.--For purposes

of this subsection, the term `qualified remittance transfer

provider' means any remittance transfer provider which enters

into a written agreement with the Secretary pursuant to which

such provider agrees to verify the status of senders as

citizens or nationals of the United States in such manner, and

in accordance with such procedures, as the Secretary may

specify.

``(3) Verified united states sender.--For purposes of this

subsection, the term `verified United States sender' means any

sender who is verified by a qualified remittance transfer

provider as being a citizen or national of the United States

pursuant to an agreement described in paragraph (2).

``(d) Definitions.--For purposes of this section, the terms

`remittance transfer', `remittance transfer provider', `designated

recipient', and `sender' shall each have the respective meanings given

such terms by section 920(g) of the Electronic Fund Transfer Act (15

U.S.C. 1693o-1; relating to ``Remittance Transfers'').

``(e) Application of Anti-conduit Rules.--For purposes of section

7701(l) with respect to any multiple-party arrangements involving the

sender, a remittance transfer shall be treated as a financing

transaction.''.

(b) Refundable Income Tax Credit Allowed to Citizens and Nationals

of the United States for Excise Tax on Remittance Transfers.--Subpart C

of part IV of subchapter A of chapter 1 is amended by inserting after

section 36B the following new section:



``SEC. 36C. CREDIT FOR EXCISE TAX ON REMITTANCE TRANSFERS OF CITIZENS

AND NATIONALS OF THE UNITED STATES.



``(a) In General.--In the case of any individual, there shall be

allowed as a credit against the tax imposed by this subtitle for any

taxable year an amount equal to the aggregate amount of taxes paid by

such individual under section 4475 during such taxable year.

``(b) Social Security Number Requirement.--

``(1) In general.--No credit shall be allowed under this

section unless the taxpayer includes on the return of tax for

the taxable year--

``(A) the individual's social security number, and

``(B) if the individual is married, the social

security number of such individuals's spouse.

``(2) Social security number.--For purposes of this

subsection, the term `social security number' has the meaning

given such term in section 24(h)(7).

``(3) Married individuals.--Rules similar to the rules of

section 32(d) shall apply to this section.

``(c) Substantiation Requirements.--No credit shall be allowed

under this section unless the taxpayer demonstrates to the satisfaction

of the Secretary that the tax under section 4475 with respect to which

such credit is determined--

``(1) was paid by the taxpayer, and

``(2) is with respect to a remittance transfer with respect

to which the taxpayer provided to the remittance transfer

provider the certification and information referred to in

section 6050AA(a)(2).

``(d) Definitions.--Any term used in this section which is also

used in section 4475 shall have the meaning given such term in section

4475.

``(e) Application of Anti-conduit Rules.--For rules providing for

the application of the anti-conduit rules of section 7701(l) to

remittance transfers, see section 4475(e).''.

(c) Reporting by Remittance Transfer Providers.--

(1) In general.--Subpart B of part III of subchapter A of

chapter 61 is amended by adding at the end the following new

section:



``SEC. 6050AA. RETURNS RELATING TO REMITTANCE TRANSFERS.



``(a) In General.--Each remittance transfer provider shall make a

return at such time as the Secretary may provide setting forth--

``(1) in the case of a qualified remittance transfer

provider with respect to remittance transfers to which section

4475(a) does not apply by reason of section 4475(c), the

aggregate number and value of such transfers,

``(2) in the case of any remittance transfer not described

in paragraph (1) and with respect to which the sender certifies

to the remittance transfer provider an intent to claim the

credit under section 36C and provides the information described

in paragraph (1)--

``(A) the name, address, and social security number

of the sender,

``(B) the amount of tax paid by the sender under

section 4475(b)(1), and

``(C) the amount of tax remitted by the remittance

transfer provider under section 4475(b)(2), and

``(3) in the case of any remittance transfer not included

under paragraph (1) or (2)--

``(A) the aggregate amount of tax paid under

section 4475(b)(1) with respect to such transfers, and

``(B) the aggregate amount of tax remitted under

section 4475(b)(2) with respect to such transfers.

``(b) Statement to Be Furnished to Named Persons.--Every person

required to make a return under subsection (a) shall furnish, at such

time as the Secretary may provide, to each person whose name is

required to be set forth in such return a written statement showing--

``(1) the name and address of the information contact of

the required reporting person, and

``(2) the information described in subsection (a)(2) which

relates to such person.

``(c) Definitions.--Any term used in this section which is also

used in section 4475 shall have the meaning given such term in such

section.''.

(2) Penalties.--Section 6724(d), as amended by the

preceding provisions of this Act, is amended--

(A) in paragraph (1)(B), by striking ``or'' at the

end of clause (xxvii), by striking ``and'' at the end

of clause (xxviii) and inserting ``or'', and by adding

at the end the following new clause:

``(xxix) section 6050AA(a) (relating to

returns relating to remittance transfers),

and'', and

(B) in paragraph (2), by striking ``or'' at the end

of subparagraph (MM), by striking the period at the end

of subparagraph (NN) and inserting ``, or'', and by

inserting after subparagraph (NN) the following new

subparagraph:

``(OO) section 6050AA(b) (relating to statements

relating to remittance transfers).''.

(d) Conforming Amendments.--

(1) Section 6211(b)(4)(A) is amended by inserting ``36C,''

after ``36B,''.

(2) Section 6213(g)(2), as amended by the preceding

provisions of this Act, is amended by striking ``and'' at the

end of subparagraph (Z), by the striking the period at the end

of subparagraph (AA) and inserting ``, and'', and by inserting

after subparagraph (AA) the following new subparagraph:

``(BB) an omission of a correct social security

number under section 36C(b) to be included on a

return.''.

(3) Section 1324(b)(2) of title 31, United States Code, is

amended by inserting ``36C,'' after ``36B,''.

(4) The table of sections for subpart C of part IV of

subchapter A of chapter 1 is amended by inserting after the

item relating to section 36B the following new item:



``Sec. 36C. Credit for excise tax on remittance transfers of citizens

and nationals of the United States.''.

(5) The table of sections for subpart B of part III of

subchapter A of chapter 61 is amended by adding at the end the

following new item:



``Sec. 6050AA. Returns relating to remittance transfers.''.

(6) The table of subchapters for chapter 36 is amended by

inserting after the item relating to subchapter B the following

new item:



``subchapter c--remittance transfers''.



(e) Effective Date.--

(1) In general.--Except as otherwise provided in this

subsection, the amendments made by this section shall apply to

transfers made after December 31, 2025.

(2) Tax credit.--The amendments made by subsection (b), and

paragraphs (1) through (4) of subsection (d), shall apply to

taxable years ending after December 31, 2025.

Click to expand...
 
Hold your accounts in a LLC :










3. Non-consumer accounts. A transfer that is requested to be sent from an account that was not established primarily for personal, family, or household purposes, such as an account that was established as a business or commercial account or an account held by a business entity such as a corporation, not-for-profit corporation, professional corporation, limited liability company, partnership, or sole proprietorship, is not requested primarily for personal, family, or household purposes. A consumer requesting a transfer from such an account therefore is not a sender under § 1005.30(g). Additionally, a transfer that is requested to be sent from an account held by a financial institution under a bona fide trust agreement pursuant to § 1005.2(b)(2) is not requested primarily for personal, family, or household purposes, and a consumer requesting a transfer from such an account is therefore not a sender under § 1005.30(g).

Click to expand...
 
Do you think they will ever implement this?



On one side, it will prevent a lot of money from being sent to the US by private individuals for personal investment, savings, etc. On the other side, the execution will be very difficult as you can literally just use debit cards for withdrawal abroad, set up a company as @aniglo22 suggests, and then what about all those HSBC Global View, Citi Global etc. where you can move money easily. They would then have to remove the US from those programs, putting them on a line with India, China and other currency controlled places.



In any case, I think it entails serious harm while avoidance is easily.
 
ilke said:






This seems quite risky to me. Does not appear to have differentiation e.g. for non-resident aliens who are simply banking in the US with no other relevant ties (which is actually quite a lot of people). Interested to see what others have to say on this topic.



Including the direct excerpt from the bill below for clarity as well:

Click to expand...

I guess it should be interpreted as "physically in US at the moment of transfer". Not exactly clear though. Definition:

(2) the term "remittance transfer"-

(A) means the electronic (as defined in section 106(2) of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006(2))) transfer of funds requested by a sender located in any State to a designated recipient that is initiated by a remittance transfer provider, whether or not the sender holds an account with the remittance transfer provider or whether or not the remittance transfer is also an electronic fund transfer, as defined in section 1693a of this title
 
They know. This isn’t targeted at people like you or even middle class Indians or Chinese. This is targeted at poor Mexicans and Guatemalans who are definitely not going to be able to set up a LLC or use crypto. Those types will have to smuggle cash back with cousin Jose with all the associated cost and risk. They don’t even think this tax will raise money and that’s not the point. The point is to harass those types of people and cause more of them to go home.
 
Xshore said:






Was this still in the bill that passed through congress?

Click to expand...



Yes but figure has changed to 3.5%.



https://www.congress.gov/bill/119th-congress/house-bill/1/text



-----












SEC. 112104. EXCISE TAX ON REMITTANCE TRANSFERS.



(a) In General.--Chapter 36 is amended by inserting after

subchapter B the following new subchapter:



``Subchapter C--Remittance Transfers



``Sec. 4475. Imposition of tax.



``SEC. 4475. IMPOSITION OF TAX.



``(a) In General.--There is hereby imposed on any remittance

transfer a tax equal to 3.5 percent of the amount of such transfer.

``(b) Payment of Tax.--

``(1) In general.--The tax imposed by this section with

respect to any remittance transfer shall be paid by the sender

with respect to such transfer.

``(2) Collection.--The remittance transfer provider with

respect to any remittance transfer shall collect the amount of

the tax imposed under subsection (a) with respect to such

transfer from the sender and remit such tax quarterly to the

Secretary at such time and in such manner as provided by the

Secretary.

``(3) Secondary liability.--Where any tax imposed by

subsection (a) is not paid at the time the transfer is made,

then to the extent that such tax is not collected, such tax

shall be paid by the remittance transfer provider.

``(c) Exception for Remittance Transfers Sent by Citizens and

Nationals of the United States Through Certain Providers.--

``(1) In general.--Subsection (a) shall not apply to any

remittance transfer with respect to which the remittance

transfer provider is a qualified remittance transfer provider

and the sender is a verified United States sender.

``(2) Qualified remittance transfer provider.--For purposes

of this subsection, the term `qualified remittance transfer

provider' means any remittance transfer provider which enters

into a written agreement with the Secretary pursuant to which

such provider agrees to verify the status of senders as

citizens or nationals of the United States in such manner, and

in accordance with such procedures, as the Secretary may

specify.

``(3) Verified united states sender.--For purposes of this

subsection, the term `verified United States sender' means any

sender who is verified by a qualified remittance transfer

provider as being a citizen or national of the United States

pursuant to an agreement described in paragraph (2).

``(d) Definitions.--For purposes of this section, the terms

`remittance transfer', `remittance transfer provider', `designated

recipient', and `sender' shall each have the respective meanings given

such terms by section 920(g) of the Electronic Fund Transfer Act (15

U.S.C. 1693o-1; relating to ``Remittance Transfers'').

``(e) Application of Anti-conduit Rules.--For purposes of section

7701(l) with respect to any multiple-party arrangements involving the

sender, a remittance transfer shall be treated as a financing

transaction.''.

(b) Refundable Income Tax Credit Allowed to Citizens and Nationals

of the United States for Excise Tax on Remittance Transfers.--Subpart C

of part IV of subchapter A of chapter 1 is amended by inserting after

section 36B the following new section:

Click to expand...



--------

Interesting article on it.



undefinedThe Remittances Tax: High Paperwork, Low Payoff​#-the-remittances-tax-high-paperwork-low-payoff

https://taxfoundation.org/blog/us-remittances-tax-big-beautiful-bill/



----



One example would be an international investor who maintains an account within the United States for the purpose of business. If this investor wishes to transfer funds to another account outside the country, it may bear the appearance of a remittance. But it is not one: the investor is withdrawing his or her own money, not transferring funds to others. An RTP may have difficulty verifying this, wrongfully charging someone withdrawing investment returns. In this case, the tax may function even as a de facto capital control, bearing the appearance of a capital outflow tax. This could disincentivize further and future foreign investment in the United States.



-----



Yikes...
 
So, just for my understanding: if i as a non-us citizen , residing outside of the US, have a personal ibkr account in the US and want to wire money to my personal account in the EU or Switzerland for example, will this be taxed??
 
Suzy Emerald said:






if i as a non-us citizen , residing outside of the US, have a personal ibkr account in the US and want to wire money to my personal account in the EU or Switzerland for example, will this be taxed?

Click to expand...

No. Your withdrawal doesn't count as "remittance transfer" according to the definitions in the law. In addition, you also might not even be a "sender" according to the definitions in the law.



The article Martin quoted says it might be difficult for service providers to verify where a wire is really going and so they may wrongfully charge you. Seems a bit farfetched to me, but okay.
 
Ok thanks. In case of ibkr you are not allowed to transfer to 3rd parties anyway as part of ibkrs own rules. As mentioned before in this thread it may be more an integral part of the US anti-migration laws this bill.
 
Suzy Emerald said:






you are not allowed to transfer to 3rd parties anyway as part of ibkrs own rules

Click to expand...

They actually do allow exceptions when you request them specifically from support, if you have a good reason. I have a 3rd party in my IBKR recipients list.
 
Buttout said:






They actually do allow exceptions when you request them specifically from support, if you have a good reason. I have a 3rd party in my IBKR recipients list.

Click to expand...

Ah yes , read about that. But dont have good reasons or a need for it.
 
Buttout said:






No. Your withdrawal doesn't count as "remittance transfer" according to the definitions in the law. In addition, you also might not even be a "sender" according to the definitions in the law.

Click to expand...

Can you point out where in the law it says that a foreign investor can transfer money without tax? The articles mention that but I couldn't see it in the law text. It does say it doesn't apply to business accounts, but a ibkr investment account is not a business account is it?
 
Suzy Emerald said:






So, just for my understanding: if i as a non-us citizen , residing outside of the US, have a personal ibkr account in the US and want to wire money to my personal account in the EU or Switzerland for example, will this be taxed??

Click to expand...



Bad news...see what EY says below. Best to ask IBKR on their approach so everything is clear.



-------



Remittance transfer

"Remittance transfer" is defined by cross-reference to the Electronic Funds Transfer Act (EFTA), which applies to banks, money transmitters and others in the business of making electronic funds transfers. The purpose of the remittance transfer provisions in EFTA is to require the RTP to disclose the fees, exchange rate, net amount to be received by the recipient and certain other information.










EY observes: Because RTPs already are required to comply with EFTA, they may have business processes in place that identify remittance transfers.

Click to expand...

A remittance transfer occurs when an RTP transfers funds from a "consumer" (defined under the EFTA as a "natural person") to a "designated recipient," whether or not the consumer holds an account with the RTP. A typical use case is individuals from a foreign country who send money to their home country through a money transmitter, although EFTA applies much more broadly, for example, when a US parent sends money to child studying abroad. A remittance transfer does not include a transfer of $15 or less.

A "designated recipient" is any person located in a foreign country and identified by the sender as the authorized recipient of a remittance transfer to be made by an RTP, and may be an entity as well as an individual. The foreign location of the recipient is a requirement, so US-to-US transfers would not result in tax.

According to a 2019 FDIC publication that explains EFTA, remittance transfers include:


"Transfers in cash or by another method conducted through a money transmitter or a financial institution.
Consumer wire transfers conducted by a financial institution upon a sender's request to wire money from the sender's account to a designated recipient.
An addition of funds to a prepaid card by a participant in a prepaid card program, such as a prepaid card issuer or its agent, that is directly engaged with the sender to add these funds, where the prepaid card is sent or was previously sent by a participant in the prepaid card program to a person in a foreign country, even if a sender retains the ability to withdraw such funds.
International ACH transactions sent by the sender's financial institution at the sender's request.
Online bill payments and other electronic transfers that a sender schedules in advance, including preauthorized remittance transfers, made by the sender's financial institution at the sender's request to a designated recipient."









EY observes: Without an RTP, no tax would apply, so a transfer of stablecoin or other digital assets from one wallet or address to another wallet or address by an individual would not be subject to the excise tax, provided the individual makes the transfer without the assistance of an RTP. (It is also not clear that digital assets constitute "funds" under EFTA.) The excise tax could, therefore, create an incentive to transfer funds via digital assets rather than through the banking system or fintech companies that provide alternatives to banks.

Click to expand...

Exceptions

No tax would apply at source if the following to conditions were met:

  • The RTP is a "qualified" RTP that has entered into a written agreement with Treasury to verify the status of senders as US citizens or "nationals"
  • The sender is a "verified United States sender," which is defined as a US citizen or "national," as verified by the qualified RTP (A "national" owes allegiance to the US but is not a citizen; the category consists almost exclusively of persons born in American Samoa or on Swains Island.)

-------
 
As the bill is about to pass the Senate, it has been reduced to 1%.



Quote from politico.com














A proposed tax on remittances that’s kicked up a good amount of controversy would further shrink to 1 percent under the latest draft of Senate Republicans’ megabill.



That’s down from the 3.5 percent they had previously considered, and well off the 5 percent charge House Republicans approved last month as part of their version of the plan.



It’s one of a number of tax increases in the legislation on undocumented immigrants Republicans are using to help finance their package, and it’s a priority for President Donald Trump.



But it’s sparked concern it could hit a wide range of other cross-border payments as well, from cash parents send kids studying abroad to money flows in the global financial system, and lawmakers have faced myriad demands from banks to the government of Mexico to scale it back.



The change comes as Senate Republicans attempt to finalize their tax, energy, defense and immigration bill and get it to Trump early next month.



A cost estimate of the new iteration was not available, though the 3.5 percent levy Senate Republicans had previously contemplated was estimated to raise $1 billion. The House version is expected to bring in $26 billion.

Click to expand...
 
seeker said:






As the bill is about to pass the Senate, it has been reduced to 1%.



Quote from politico.com

Click to expand...

This likely has to go through conference committee and revote. I doubt the House will approve it as-is. We’ll see what shakes out of that process.
 
So its watered down even further. Bravo to Western Union etc for their lobbying I guess. Isn't that how it works in America
 
Martin Everson said:






So its watered down even further. Bravo to Western Union etc for their lobbying I guess. Isn't that how it works in America



Click to expand...

Probably the H1b farms like Tata Consultancy, Infosys, etc. behind the lobbying.
 
Xshore said:






And they exempted bank and brokerage accounts, admnd cards.

https://taxnews.ey.com/news/2025-13...-excise-tax-proposed-for-remittance-transfers

Click to expand...

Thanks for the info, it states banks and brokers under the exceptions. Hopefully, they will accept this amendment.



Exceptions

No tax would apply if:

  • The transfer was made from an account held in or by a financial institution, as defined under the Bank Secrecy Act (e.g., banks, credit unions, brokers and dealers)
or

  • The transfer involves a debit card or a credit card issued in the United States
 
The bill passed. 50/50 tie with Vice president approval



But since the bill has been modified it needs to pass in House again
 
Last edited:
Alonzo said:






The bill passed. 50/50 tie with Vice president approval



But since the bill has been modified it needs to pass in House again

Click to expand...

So Musk's threats didn't work. With 899 taken out and remittance tax reduced & scoped, is there anything else buried in the bill that would impact cross-border banking?
 
seeker said:






So Musk's threats didn't work.

Click to expand...



Lol....Musk is a guy that came to America and now acts like he runs the country. Good luck to his new political party idea he is floating i.e the n**i Party.....sorry I mean the "American Party".











seeker said:






With 899 taken out and remittance tax reduced & scoped, is there anything else buried in the bill that would impact cross-border banking?

Click to expand...



I don't think so. Section 899 is now section 70604 which is watered down as per EY.
 
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