If you run a US LLC from outside the country, a new line item has probably crossed your feed: a 1% remittance tax on money sent abroad, live since the start of 2026. The worry writes itself — does this 1% skim my LLC's profit every time I wire it home, and do I now have to file Form 720 every quarter, like some blogs are telling foreign-owned LLCs to do? For a foreign-owned LLC moving money by an ordinary bank wire, the answer to both is essentially no. The tax is far narrower than its nickname, it's exempt for the way founders actually move money, and the filing is somebody else's job. Here's the line that actually decides it.
Key takeaways
- A normal bank wire is exempt (2026). The 1% remittance transfer tax added by the One Big Beautiful Bill (IRC §4475, applying to transfers after December 31, 2025) hits only transfers you fund with "cash, a money order, a cashier's check, or any other similar physical instrument" handed to a money-transfer provider. Money withdrawn from a US financial-institution account — a plain wire or ACH — is carved out by §4475(d). Sending your LLC's profit by wire doesn't touch this tax.
- The exemption is about the source of funds, not the word "bank." The carve-out covers money pulled from an account at a Bank Secrecy Act–regulated US financial institution, or funded by a US-issued debit or credit card. A cashier's check you bought from that same account and then walk into a storefront transmitter is still the taxed path. The line is electronic account-to-account versus a physical instrument given to a provider.
- You don't file Form 720 — the provider does. Under §4475(b) the provider collects the tax and files the return; the IRS says providers "make semimonthly deposits, and file quarterly returns" on Form 720. Advice telling LLC owners to file Form 720 for this tax confuses the provider's job with yours.
- This is a fourth tax, not your income tax. It's an excise on how you move money — separate from sales tax, tariffs, and income tax. Whether pulling money out of your LLC is an income-taxable event is a different question under different rules.
- The 3.5% and 5% figures were proposals, not the law. Earlier versions of the bill carried higher numbers; the enacted statute sets the rate at 1 percent (§4475(a)). The implementing regulations are still proposed — comments closed June 12, 2026, and a final rule had not been issued as of this writing.
Does the 1% remittance tax apply when you wire your US LLC's profit home?
Short answer: no — not when you send it as an ordinary bank wire or ACH from a US account. The tax reaches only transfers funded with physical, cash-like instruments handed to a money-transfer provider. Your standard profit distribution — LLC bank account to your account abroad, moved electronically — sits outside the taxed triangle entirely.
The nickname does a lot of damage here. "Remittance tax" sounds like a toll on every dollar that leaves the country, and that reading is what has non-resident founders bracing for a 1% haircut on every distribution. The statute is much smaller than the headline. It doesn't tax "sending money abroad." It taxes a specific, narrow way of doing it — and that way is not how a founder moves company profit.
What the law actually taxes
Start with the operative rule. Section 4475(a) is short: "There is hereby imposed on any remittance transfer a tax equal to 1 percent of the amount of such transfer." Read alone, that sounds sweeping. The very next subsection cuts it down to size.
Section 4475(c), titled "Tax limited to cash and similar instruments," says the tax "shall apply only to any remittance transfer for which the sender provides cash, a money order, a cashier's check, or any other similar physical instrument (as determined by the Secretary) to the remittance transfer provider." That word only is the whole story. If you didn't walk a physical instrument up to a transmitter, subsection (a) never engages.
And §4475(d) spells out the carve-out from the other direction. The tax "shall not apply to any remittance transfer for which the funds being transferred are withdrawn from an account held in or by a financial institution" — an account at a US bank or credit union covered by the Bank Secrecy Act — "or funded with a debit card or a credit card which is issued in the United States." Money that leaves your US bank account electronically, or moves on a US-issued card, is expressly outside the tax. A bank wire is precisely that.
(There's even a further reason the everyday business wire is safe: §4475 borrows its definition of "remittance transfer" from a consumer-protection statute built around consumer transfers, which raises a question of whether a company's bank-to-bank wire is a "remittance transfer" at all. You don't need to win that argument, though — the account-withdrawal carve-out already settles it.)
The exemption runs on where the money comes from — not on the word "bank"
Here's the nuance that trips people up, and it matters if you want to be exact rather than lucky. The exemption is not a label that says "banks are safe." It attaches to the source of the funds. The carve-out is for money withdrawn from an account at a regulated financial institution, or funded with a US-issued card. Flip either of those and you can lose the exemption even though a bank was involved.
The clean example: you draw a cashier's check from your US business account and carry it into a storefront money transmitter to send abroad. A bank issued that check — but you have now handed a physical instrument to a provider, which is exactly the fact pattern §4475(c) taxes. The dollars started in a bank account and the transfer is still on the taxed side of the line.
So the real boundary is electronic, account-to-account (exempt) versus a physical instrument presented to a provider (taxed). "I used my bank" isn't the test. "Did the money move as an account debit or as a cash-type instrument I handed over?" is. For founders this is reassuring, because the normal way you pay yourself — an outbound wire or ACH from the company account — is the exempt way by construction.
You don't file Form 720 — the provider does
The second worry making the rounds is the filing one, and it's a genuine mix-up. Some tax guides aimed at foreign-owned LLCs have told owners they need to file Form 720 quarterly for this tax. That takes a real obligation and pins it on the wrong person.
Section 4475(b) puts the machinery on the remittance transfer provider — the money-transmitter business, not you. The IRS restates it plainly: "The sender is liable for the tax, and remittance transfer providers are required to collect the remittance transfer tax from certain senders, make semimonthly deposits, and file quarterly returns with the IRS," reporting it "on Form 720, Quarterly Federal Excise Tax Return." In other words: if the tax applies, it's collected from you at the counter by the provider, who deposits and files it. You never compute it, and you never file a return for it. And when the transfer is an exempt bank wire, there's no tax to collect in the first place.
This is a useful moment to separate the forms you do file from the ones you don't. A foreign-owned single-member LLC generally does have its own annual filing — Form 5472 with a pro forma 1120 — and the penalties for missing it are steep, which we take apart in the Form 5472 penalty brief for foreign-owned LLCs. Form 720 for the remittance tax is the opposite case: a form with your money in it that is nonetheless not your form to file. Don't let a form number scare you into a filing that isn't yours.
This is a fourth tax — not your income tax
It's easy to file this new excise into a mental bucket that already exists, and the wrong bucket produces the wrong fix. The remittance tax is a tax on how you move money — the instrument you use — not on the sale, the profit, or the import. It's genuinely a separate regime.
We've written before about separating the three US taxes founders keep merging — the import duty at the border, the sales tax a state charges on a retail sale, and the federal income tax on your profit. The remittance excise is a fourth item on that list, and it lives on yet another axis: the means of a transfer. Keeping it separate is the point, because nothing you do about this excise changes your income or sales-tax picture, and vice versa.
That separation also clears up a specific confusion. Discussions of "sending your LLC's money home" often drift into whether a distribution is an income-taxable event — the kind of point where you'll read that pulling money out of a single-member LLC isn't itself a taxable moment. That's an income-tax statement, under income-tax rules, and it's a different question from this excise. Don't stack them. The remittance tax doesn't care whether the money is income; it cares whether you moved it as a bank debit or as a cash instrument.
Where the "3.5%" (and "5%") came from
If you've seen a scarier number attached to this tax, you were probably looking at a draft. As the One Big Beautiful Bill moved through Congress, earlier versions carried higher rates — a 5% figure appeared early on, and a 3.5% rate in a House-passed version — before the enacted statute settled at 1 percent, the rate written into §4475(a). The version that became law also narrowed the tax to cash-type instruments (above) and applies to senders regardless of citizenship. If a page still quotes 3.5% or 5%, it's describing a proposal that didn't survive, not the law.
What's still being written
One honest caveat. The statute is in force for transfers after December 31, 2025, but the regulations that fill it in are still in proposed form. Treasury and the IRS issued the proposed rules on April 10, 2026, and the comment window closed on June 12, 2026; as of this writing (July 2026) a final rule had not yet been published. The statute itself hands the Secretary the job of determining what counts as "any other similar physical instrument," so the precise outer edge of the taxed category is exactly the kind of detail that can move in the final regulations. The core mechanics we've described — cash-type instruments taxed, account withdrawals and US-card funding exempt, provider files — come straight from the statute and won't flip. The fine print at the margins is still open.
This is general information about a new US federal excise tax, not legal or tax advice, and it is not advice about the income-tax treatment of your distributions. The regulations implementing §4475 were still in proposed form as of this writing, and how any rule applies turns on your specifics. Confirm your own situation with a US cross-border tax professional before you rely on any of this.
So how would a founder actually pay this — and how to make sure you don't
Put the pieces together and there's really only one way a founder trips this tax by accident: by funding an overseas transfer with cash, a money order, or a cashier's check presented to a storefront or app-based money transmitter. If you never do that — if your profit leaves the company account as a wire or ACH, or on a US-issued card — the 1% simply doesn't apply, and there's nothing for you to file.
Which quietly points at the real dependency. The exempt path runs on you having a US bank account in good standing to wire from. Opening that account has its own gate — the beneficial-ownership check a bank runs before it lets a non-resident-owned LLC in — which we cover in opening your first US account as a foreign-owned LLC. And keeping it is its own problem: the same account can later be closed in a wave of de-risking, which is the quiet irony here — the tax-exempt way to move money leans on the one piece of your setup that's least guaranteed to stay open.
That's where the boring infrastructure earns its keep. A US bank account, and the ability to keep it, both rest on a consistent US business address — the location the bank verifies, and where its statements and notices actually reach you. On the US side, our partner SaveOffice handles that address layer (Auteur doesn't run the US service directly); you can see how it works on the US virtual office page. To be exact about scope: an address has nothing to do with the remittance tax itself — the exemption is decided by how you fund the transfer, full stop. What the address does is keep the account underneath the exempt path stable and reachable, which is the part of this that genuinely runs on a location.
FAQ
Who is exempt from the remittance tax? The exemption is defined by how the transfer is funded, not by who you are. Under §4475(d), the 1% tax does not apply when the money is withdrawn from an account held at a Bank Secrecy Act–regulated US financial institution — an ordinary bank wire or ACH — or when it's funded with a US-issued debit or credit card. The tax applies only to transfers funded with cash, a money order, a cashier's check, or a similar physical instrument handed to a money-transfer provider (§4475(c)). So a founder wiring an LLC distribution from a US business account is, in practice, using the exempt method.
What is the 3.5% remittance tax? It isn't a real tax — it's a figure from an earlier draft. As the One Big Beautiful Bill moved through Congress, a 3.5% rate appeared in a House-passed version (and a 5% figure earlier still). The rate that was actually enacted is 1 percent, written into §4475(a). If a page quotes 3.5% or 5%, it's describing a proposal that didn't become law.
Do I have to file Form 720 for my foreign-owned LLC because of this tax? No. Form 720 for the remittance tax is filed by the remittance transfer provider, not by you. Under §4475(b) the provider collects the tax from the sender and remits it; per the IRS, providers make semimonthly deposits and file the quarterly Form 720. As the sender you may be liable for the tax if it applies, but you don't compute or file it — and for an exempt bank wire there's no tax at all. (Your LLC may still have its own separate filing, such as Form 5472; that's a different obligation.)
Bottom line
The "1% remittance tax" is real, it's live for transfers after December 31, 2025, and it is much smaller than its name. It taxes cash-type instruments handed to a money transmitter — only that. Money withdrawn from a US account, or funded by a US-issued card, is carved out by statute, so a normal outbound wire of your LLC's profit never touches it. The filing belongs to the provider, not to you. And the number that is actually law is 1 percent, not the 3.5% or 5% still floating around from earlier drafts.
So the practical move isn't to plan around a tax you won't owe — it's to keep the exempt rail intact. Move money by wire or ACH, not by cashier's check across a counter; keep the US account that rail depends on open and reachable; and anchor it to a US address you actually monitor — the one layer that keeps the exempt path working while the regulations at the margins are still being written. For US-facing founders, our partner SaveOffice can hold that address steady on the US virtual office page, so the stable part is handled and the 1% stays where it belongs: off your wire.
