S. 2002: Requiring Excise for Migrant Income Transfers Act

This bill, called the "Requiring Excise for Migrant Income Transfers Act" or "REMIT Act," proposes new tax regulations specifically targeting remittance transfers sent from the United States. Here’s a breakdown of its main components:

Excise Tax on Remittance Transfers

The bill establishes an excise tax of 15% on remittance transfers. A remittance transfer is generally defined as any transfer of money abroad, particularly sending money back to families or individuals in other countries.

• The sender of the remittance will be responsible for paying this tax when conducting a transfer.
• The remittance transfer providers (such as banks or money transfer services) are mandated to collect this tax from senders and remit it to the U.S. government quarterly.
• If the tax is not collected at the time of the remittance, the provider will be liable to pay it instead.

Exceptions for U.S. Citizens

Not all transfers are subject to this tax. There is a provision that exempts certain remittance transfers sent by U.S. citizens and nationals if the transfer provider is recognized as a qualified remittance transfer provider. Here are the details:

• Transfers are exempt if the provider verifies the sender's status as a U.S. citizen or national.
• Providers must enter into a written agreement with the Secretary of the Treasury to maintain this verification process.

Tax Credits for U.S. Citizens

The bill includes provisions for a refundable income tax credit to offset the excise tax on remittances paid by U.S. citizens and nationals. Key points include:

• Eligible individuals can claim a credit equal to the amount of excise tax paid during the year on their remittance transfers.
• To claim this credit, the individual must provide their Social Security number on their tax return, as well as that of their spouse if married.
• Taxpayers must demonstrate that they paid the tax when claiming the credit.

Reporting Requirements

Remittance transfer providers will have new reporting responsibilities, including:

• Providers must submit annual returns detailing the aggregate number and value of remittance transfers that are subject to the excise tax.
• They must also report information regarding amounts paid and remitted under the tax.

Penalties for Non-Compliance

The legislation introduces penalties related to non-compliance concerning the reporting of remittance transfers and the payment of the excise tax. This includes penalties for incorrect or incomplete reporting.

Effective Date

The bill’s provisions would apply to transfers made after December 31, 2025, and the associated tax credits for remittance transfers would apply for taxable years ending after that date.

Relevant Companies

• MA - Mastercard: As a prominent payment processing company, any increase in transaction costs due to the excise tax could affect their services and fees associated with remittance transfers.
• V - Visa: Similar to Mastercard, Visa may experience changes in transaction volumes and fees related to the remittance tax affecting their business model.
• WU - Western Union: As a company that focuses on money transfers and remittances, it would be directly impacted by the new tax structure and its compliance requirements.