Excise Tax on Remittance Transfers

The League of United Latin American Citizens (LULAC) opposes the proposed remittance transfer tax because it disproportionately burdens unbanked and underbanked households, particularly within Latino communities. They argue that the rule creates a "tax penalty" on those lacking access to digital banking and traditional financial infrastructure, effectively taxing essential family support and increasing economic inequality.

FGA Action supports the proposed regulations on the excise tax on remittance transfers, arguing that they are necessary to disincentivize the fraudulent movement of taxpayer-funded benefits overseas. The organization specifically praises the inclusion of check-cashing rules, anti-avoidance provisions, and the inclusion of traveler's checks as effective measures to protect the integrity of public programs.

The Main Street Foundation’s Center for Regulatory Analysis and Engagement (CRAE) supports the IRS's proposed regulations for the remittance transfer excise tax. They argue that the rule appropriately leverages existing regulatory frameworks to minimize administrative burdens and urge the IRS to prioritize simplicity and proportionality in implementation.

INFiN, a national trade association representing financial services providers, supports the federal goal of improving tax compliance but urges the IRS to modify the proposed rule to be more equitable for unbanked and underbanked consumers. They specifically request modifications to the refund process for canceled transfers, a shift to quarterly tax reporting, and a more nuanced "intent" test for the "principal purpose" rule regarding prepaid cards.

The Money Services Round Table (TMSRT) and the Electronic Transactions Association (ETA) oppose several provisions of the proposed regulations regarding the excise tax on remittance transfers. They argue against the current refund procedures, the inclusion of "anti-avoidance" provisions that would tax non-cash funding sources, and the proposed effective date, requesting more time for system adaptation.

The Money Services Business Association (MSBA), representing the non-bank money services industry, opposes several aspects of the proposed regulations for the remittance tax. They argue that the semi-monthly deposit requirement is operationally burdensome for small retail agents, and they request the elimination of the tax-avoidance provision, a change in the timing of tax attachment to when funds are received, and an extension of the transition relief period.

America’s Credit Unions supports the IRS's proposed rules for the excise tax on remittance transfers, particularly the alignment with existing regulations and the inclusion of traveler's checks as exempt instruments. They request additional clarification regarding the IRS's authority to recharacterize transactions for tax avoidance and the status of foreign military bases.

The Illinois Credit Union League, a trade association representing credit unions, is seeking clarification on the proposed excise tax on remittance transfers. They are requesting streamlined reporting procedures for institutions with infrequent taxable transactions and guidance on specific exemptions and compliance triggers for share account funding.

The Financial Technology Association (FTA) supports the Proposed Rule's definition of "other similar physical instrument" and its exclusion of prepaid cards from the remittance transfer tax. However, they urge the IRS to clarify the anti-avoidance provision to exempt digital-only providers from being held liable for tax avoidance schemes involving unrelated third parties.

U.S. Money Express Co., a state-regulated money transmitter, supports the proposed excise tax but requests a provider-level adjustment mechanism for uncompleted transfers. They argue that allowing providers to refund the tax directly to customers and claim corresponding credits would improve the consumer experience, simplify compliance for various business sizes, and reduce the administrative burden on the IRS.