Weekly Ecommerce Accounting Insights

TITLE: UK, US & Global Ecommerce Tax and Compliance Briefing: Week Commencing 28 September 2026

For the week commencing 28 September 2026, your priority is clear: reconcile marketplace data, protect Q4 margins, and prepare every filing before its deadline.

This briefing covers the key UK, US, EU, Canadian and Australian compliance points for ecommerce sellers, digital businesses and growing international SMEs.

1. File your UK VAT return by 7 October

If your VAT quarter ended on 31 August 2026, your VAT return and cleared payment are due by 7 October 2026. The deadline is one calendar month and seven days after the period end.

You must submit through Making Tax Digital-compatible software. Use the official HMRC VAT return guidance to confirm your filing process.

Before submitting, complete this reconciliation:

  • Match Amazon settlement reports to your bookkeeping records.
  • Reconcile Shopify payouts to individual orders.
  • Separate sales, refunds, chargebacks and payment fees.
  • Check the VAT treatment of UK sales against EU sales.
  • Review stock locations and fulfilment countries.
  • Confirm marketplace-collected VAT is recorded correctly.
  • Investigate differences between order, dispatch and payout dates.
  • Check that credit notes and refunds are included in the correct VAT period.

The UK VAT registration threshold remains £90,000 of taxable turnover on a rolling 12-month basis, including the 30-day forward look. The deregistration threshold remains £88,000. Monitor both figures as Q4 sales increase.

2. Check whether a director must register for Self Assessment

New Self Assessment taxpayers for 2025/26 must register with HMRC by 5 October 2026.

This can affect company directors who receive untaxed income outside the company, including:

  • Dividends.
  • Property income.
  • Side-business income.
  • Other taxable personal income.

The registration requirement applies to the individual, not the Limited Company. A Limited Company does not register for Self Assessment simply because it has directors or shareholders.

Use HMRC’s Self Assessment registration service if you need to notify HMRC.

3. Pay quarterly PAYE by 22 October

For the quarter ending 5 October 2026, electronic PAYE payment is due by 22 October 2026. Payment by cheque is due by 19 October 2026.

Keep your RTI submissions and pay dates aligned with your bank records. This helps you identify:

  • Incorrect payroll dates.
  • Missing or duplicated payments.
  • Differences between payroll reports and bank transactions.
  • Unpaid PAYE or National Insurance liabilities.

Accurate payroll records will also make year-end accounts and cash-flow forecasting easier.

4. Prepare for the Autumn Budget without speculating

The Autumn Budget 2026 is confirmed for Wednesday 28 October 2026.

Do not change your returns or accounting treatment based on speculation. Instead, prepare scenarios for:

  • Possible VAT changes.
  • Corporation Tax changes.
  • Employer or employee NIC changes.
  • Dividend versus salary mix.
  • Capital allowance timing.
  • Stock purchases before your year end.

A simple scenario model will show which changes could affect cash flow, margins and planned inventory investment.

5. Model Amazon FBA Q4 costs before peak fees begin

Amazon’s festive peak fulfilment fee runs from 15 October 2026 to 14 January 2027. The fee applies by ship date and averages approximately:

  • £0.12 per small or standard parcel item.
  • £0.07 per large or extra-large envelope item.

The fee can apply to local UK FBA and Remote Fulfilment EU-to-UK orders. Oversize and Low-Price FBA items are exempt.

The 1.5% fuel and logistics surcharge, introduced from 17 April 2026, applies year-round and must be included in Q4 margin calculations.

Important dates include:

  • 15 October 2026: festive peak fee begins.
  • 28 October 2026: recommended UK inventory arrival for Black Friday Week.
  • 18 November 2026: Black Friday Week deal submissions close.
  • 14 January 2027: festive peak fee ends.

Amazon also charges £12 upfront per promotion, plus 0.75% of promotional sales, with the variable element capped at £600.

Use Amazon’s Revenue Calculator and the FBA Fee Preview report to model:

  • Referral fees.
  • Standard and peak FBA fees.
  • Fuel and logistics surcharges.
  • Storage and removal costs.
  • Promotion fees.
  • VAT.
  • Settlement timing.

This is core Amazon FBA accounting UK work. A profitable sales forecast is not enough if your settlement deductions and fulfilment costs are incomplete.

6. Protect Amazon FBM business delivery performance

From 30 September 2026, Amazon.co.uk FBM sellers must maintain a 90% business-hour delivery rate for Amazon Business customers.

From 30 October 2026, listings may be deactivated for business customers if the required rate is not met.

Run this diagnostic now:

  • Compare promised handling time with actual dispatch time.
  • Review carrier performance by SKU.
  • Check inventory accuracy.
  • Review business-hour data in Seller Central.
  • Identify at-risk SKUs and delivery destinations.
  • Confirm that commercial-address deliveries are being handled correctly.

Amazon Automated Handling Time can also activate where configured handling time has been exceeded or differs from actual performance for more than 30 days. Review your SKU settings before Amazon changes customer promises automatically.

7. Post Amazon EPR charges correctly

Amazon has changed how the UK EPR Pay on Behalf service fee is charged. It is now charged directly to the selling account within 30 days of enrolment for each reporting period, rather than from an account-level reserve.

The service fee and eco-contribution fee are invoiced separately. The service fee remains £20 per year for each applicable EPR category.

Sellers with a valid packaging registration number are compliant and are not charged the service fee.

Check that your bookkeeping records:

  • Eco-contribution fees as expenses.
  • EPR service fees separately.
  • Amazon invoices in the correct accounting period.
  • Refunds or adjustments against the original expense.

8. Keep your own VAT records while marketplace rules are reviewed

HMRC’s consultation on extending online marketplace VAT liability to domestic sales closed on 18 August 2026. No law has changed yet, and the government is still reviewing responses.

Do not treat the consultation as legislation. Continue maintaining clear records of:

  • Sales and refunds.
  • Customer type.
  • VAT treatment.
  • Stock location.
  • Marketplace and direct sales.
  • Dispatch and delivery dates.
  • VAT collected by
Daily Australia Tax Update: 28 September 2026. Treasury Consultation Closes Today, ATO’s Expanded Software Royalty Ruling & WA Public Holiday Shifts Payday Super Deadlines

Daily Australia Tax Update: 28 September 2026. Treasury Consultation Closes Today, ATO’s Expanded Software Royalty Ruling & WA Public Holiday Shifts Payday Super Deadlines

TITLE: Australian Tax and Compliance Deadlines: Treasury Consultation, Software Royalties, Payday Super and More

Submit Treasury consultation responses before today’s deadline

Treasury’s consultation on exposure draft legislation for the 2026–27 Budget tax reform measures closes on Monday, 28 September 2026.

The proposals sit within the proposed Treasury Laws Amendment (Tax Reform No. 5) Bill 2026 and cover several important measures for Australian start-ups, investors and businesses conducting research and development.

Innovative Business CGT Concession

The proposed Innovative Business CGT Concession (IBCC) would provide a 50% CGT discount for early investors in eligible innovative Australian start-ups.

However, the draft tests may be difficult for businesses that evolve over time. Industry bodies and advisers have raised concerns about:

  • Complex innovative business and predominant activity tests.
  • The treatment and valuation of business assets.
  • Employee-based tests that may not suit founder-led start-ups.
  • Revenue tests that may be difficult for pre-revenue businesses.
  • The risk that a start-up could lose eligibility after pivoting or changing strategy.
  • Potential issues for founders and early investors where control and affiliate rules apply.

Accounting Times reported concerns about the complexity of the proposed tests, while SmartCompany reported Ai Group’s concerns about start-ups losing the concession after changing direction.

The IBCC remains exposure draft legislation. It is not enacted law. Do not treat the proposed concession as an available tax outcome until legislation is passed and the final rules commence.

R&D Tax Incentive simplification

The consultation package also proposes changes to the R&D Tax Incentive, including:

  • Removing eligibility for certain supporting R&D activities.
  • Increasing the minimum eligible R&D expenditure threshold.
  • Increasing the maximum expenditure threshold.
  • Changing offset rates.
  • Changing the turnover threshold for the refundable offset.
  • Restricting the refundable offset for entities within their first 10 years.
  • Extending the relevant period to 15 years for entities conducting R&D connected with therapeutic goods.

These changes could affect Australian technology companies, SaaS businesses, medical technology businesses and other growing companies that rely on R&D tax offsets to support development costs.

Expanded venture capital tax incentives

The proposals would also expand venture capital tax incentives through Venture Capital Limited Partnership (VCLP) and Early Stage Venture Capital Limited Partnership (ESVCLP) structures. The aim is to ensure the eligible investment framework reflects the modern Australian start-up environment.

Action today: If your company, fund or investment structure may be affected, submit comments through the Treasury consultation platform before the end of today.

Keep:

  • A copy of your submission.
  • The version of the exposure draft you reviewed.
  • Supporting calculations and assumptions.
  • Evidence of the date and time of submission.

KPMG’s summary of the consultation package provides a useful overview of the proposed IBCC, R&D and venture capital changes.

Review offshore software payments under TR 2026/2

The ATO issued Taxation Ruling TR 2026/2 on 4 September 2026. It replaces outdated 1993 guidance and explains when cross-border payments for software and intellectual property may be treated as royalties.

The practical issue is whether the payment is for the use of, or the right to use, copyright or similar intellectual property rights.

Payments may fall within royalty treatment where an arrangement gives a business rights to:

  • Reproduce software.
  • Communicate or distribute software in a way involving copyright rights.
  • Modify or adapt software.
  • Host, integrate or otherwise exploit software beyond ordinary access.
  • Authorise others to exercise relevant copyright rights.

New analysis published by Dentons on 28 September 2026 highlights that arrangements involving licence keys and login-gated access may fall within the wider analysis. The label used in a contract, such as “subscription”, “distribution fee” or “royalty-free”, will not decide the tax treatment.

The ruling applies to both new and existing arrangements.

Complete a software payment review

If your Australian company pays an offshore software, SaaS or digital platform provider, review:

  1. The contract and all schedules.
  2. Who hosts the software.
  3. Whether your business can copy, modify, adapt or communicate the software.
  4. Whether licence keys provide access only or support wider IP rights.
  5. Whether the payment combines software rights with support, implementation or distribution services.
  6. Whether Australian withholding tax applies.
  7. Whether an applicable tax treaty changes the outcome.
  8. Whether your accounts payable and bookkeeping coding captures any withholding obligation.

The ATO’s software royalty guidance should be reviewed alongside the final ruling.

Australian software and digital businesses invoicing overseas customers should also document what they are supplying. Clear contracts and transaction records will help distinguish software access, services, support and the use of intellectual property.

Skip today’s WA public holiday when counting Payday Super

Today is the King’s Birthday public holiday in Western Australia. Because it is a whole-of-state public holiday, it does not count as an Australian business day for Payday Super purposes.

This applies nationally. Your business does not need to be located in Perth or Western Australia for the holiday to affect the calculation.

Under the ATO’s Payday Super guidance, employers must pay superannuation at the same time as wages, with a limited number of business days allowed for the payment to reach the fund.

Missing a Payday Super deadline can trigger the Superannuation Guarantee Charge, which includes:

  • The unpaid superannuation amount.
  • Interest.
  • An administration fee for each employee.
  • Loss of the deduction for the superannuation contribution.

Businesses should recalculate any Payday Super deadline that falls near 28 September 2026, particularly where the deadline falls on or after today. Confirm the correct deadline with your payroll provider and document the calculation you used.

Prepare for the 1 October card surcharge ban

From 1 October 2026, businesses will no longer be permitted to pass on card surcharges to customers for card payments. The change follows the RBA’s review of merchant card payment costs and surcharging.

The ban applies to:

  • Debit card payments.
  • Credit card payments.
  • Prepaid card payments.
  • Card payments processed through a mobile wallet or digital wallet.

The ban does not apply to surcharges for other payment methods, such as BPAY, PayPal or cash, unless those surcharges breach existing rules.

Businesses should now:

  1. Identify which payment methods currently attract a surcharge.
  2. Determine the cost impact of absorbing card surcharges.
  3. Update merchant terminals, online checkout and point-of-sale systems.
  4. Update pricing, signage, invoices, quotes and contract terms.
  5. Train staff on the change.
  6. Seek legal or accounting advice on pricing decisions.

Businesses that absorb the surcharge may choose to increase prices or change their cost structure. Any increase should be reviewed against existing pricing and contract arrangements.

Prepare for foreign resident CGT changes from 1 October

From 1 October 2026, changes to the foreign resident capital gains tax rules take effect for CGT events occurring on or after that date.

Key changes include:

  • Removing the main residence exemption for foreign residents, subject to transitional rules.
  • Introducing a broader principal asset test for indirect interests in Australian real property.
  • Extending the non-final withholding and CGT rules to more asset classes.

Foreign residents selling Australian property or holding interests in Australian entities with significant Australian real property should obtain advice before proceeding with a transaction.

The changes may affect:

  • The calculation of capital gains and losses.
  • Available exemptions.
  • Withholding obligations on purchasers.
  • The way transactions are structured.

Businesses and individuals with foreign resident owners or investors should confirm whether the changes apply before 1 October 2026.

Key dates to note

Date Action
Monday, 28 September 2026 Treasury consultation on the 2026–27 Budget tax reform measures closes.
Monday, 28 September 2026 King’s Birthday public holiday in Western Australia — does not count as a business day for Payday Super.
Thursday, 1 October 2026 Card surcharge ban commences.
Thursday, 1 October 2026 Foreign resident CGT changes take effect.
Saturday, 31 October 2026 Tax lodgment cutoff for relevant entities.

Businesses and their advisers should confirm each deadline against their own circumstances and the current ATO guidance.

USA Update: IRS Proposes New Deduction Allocation Rules for CFC Income and FDII, Comments Close 10 November 2026

USA Update: IRS Proposes New Deduction Allocation Rules for CFC Income and FDII, Comments Close 10 November 2026

The IRS has proposed new rules that could change how certain deductions affect foreign tax credit calculations and the FDII deduction for tax years beginning after 31 December 2025.

The proposal is most relevant to US C corporations claiming the FDII deduction and US shareholders of controlled foreign corporations (CFCs). It may also matter to non-US founders who own US entities that elect corporate treatment.

The IRS published the proposal as REG-117273-25 in Internal Revenue Bulletin 2026-40 on 28 September 2026. Written comments and requests for a public hearing must be submitted by 10 November 2026 through Regulations.gov.

The rules are still proposed. Their mechanics may change before finalisation. However, taxpayers may generally rely on them for qualifying tax years beginning after 31 December 2025, provided they follow the proposed rules in full.

Check whether the proposal affects your US group

You should review these changes if your business includes any of the following:

  • A US C corporation claiming the section 250 FDII deduction.
  • A US corporation with one or more foreign subsidiaries that are CFCs.
  • A US-headquartered ecommerce, SaaS, agency or digital services group selling internationally.
  • A UK, Canadian, Australian or UAE-based founder operating a US corporation.
  • A foreign-owned US LLC or single-member entity that has elected corporate tax treatment.
  • A group claiming foreign tax credits against foreign-source income.

The rules are less directly relevant to a foreign-owned US LLC that remains a disregarded entity for US federal income tax purposes. However, its reporting and bookkeeping records may still need to support the US entity’s tax classification, transactions and compliance filings.

Understand the new section 904(b)(5) allocation rules

The One Big Beautiful Bill Act (OBBBA), Public Law 119-21, added new section 904(b)(5). The change applies to tax years beginning after 31 December 2025.

Section 904 limits the foreign tax credit to the US tax attributable to foreign-source taxable income. To calculate that limitation, taxpayers must allocate and apportion deductions between US-source income and foreign-source income categories.

The proposed regulations create special rules for foreign-source section 951A category income, commonly associated with GILTI or CFC tested income.

Under the proposal:

  1. Section 250 deductions attributable to net CFC tested income are allocated to foreign-source section 951A category income.
  2. Certain state and local income tax deductions connected with that income are also allocated to the section 951A category.
  3. Interest expense is not allocated to foreign-source section 951A category income.
  4. Research and experimental expenditure deductions are not allocated to that category.
  5. Other deductions are allocated to section 951A category income only if they are directly allocable.

Any excluded deduction that would previously have been allocated to foreign-source section 951A category income is instead reallocated to US-source income.

This is important because the reallocation can change your foreign tax credit limitation, US-source loss position and future overall domestic loss calculations.

Identify which deductions are directly allocable

The IRS proposal interprets “directly allocable” more narrowly than “properly allocable”.

A deduction may be properly allocable under the general section 861 rules but still fail the closer connection required under section 904(b)(5).

The proposed rules specifically identify the following as not directly allocable to foreign-source section 951A category income:

  • Stewardship expenses.
  • Legal and accounting fees and expenses.
  • Damages awards.
  • Prejudgment interest.
  • Settlement payments.
  • Overhead costs.
  • General and administrative expenses.
  • Supervisory and other supportive expenses.

These costs may have supported the group’s wider operations. That does not necessarily create the direct connection required to reduce section 951A category income under the proposed rules.

The proposal identifies certain items that may be directly allocable, including:

  • Section 986(c) foreign currency losses arising from distributions of previously taxed earnings and profits (PTEP).
  • Net operating loss deductions allocated to the section 951A category under the applicable rules.

This makes accurate transaction tagging essential. For example, your accounting records should separately identify PTEP distributions, related foreign exchange movements and the CFC income category connected with each distribution.

See how reallocation can create a US-source loss

The IRS provides an example showing why these rules may produce a significant result.

In simplified terms, a US corporation has:

  • $100x of US-source income.
  • $60x of foreign-source section 951A category income.
  • $50x of foreign-source general category income.
  • Interest expense and supportive expenses that would previously have reduced section 951A income.

Under the proposed rules, $40x of interest expense and $10x of supportive deductions are reallocated to US-source income.

That changes the company’s US-source position from $30x of income to a $20x domestic loss.

The section 951A category income is no longer reduced by those reallocated deductions. Instead, the domestic loss may reduce foreign-source income across relevant categories under the section 904 rules. It may also create an overall domestic loss (ODL).

An ODL can affect how US-source income is treated as foreign-source income in later years. In practical terms, an allocation decision made for the current year may affect foreign tax credit calculations and income sourcing in future periods.

Recalculate DEI and FDDEI for the FDII deduction

The proposal also updates the calculation of deduction eligible income (DEI) and foreign-derived deduction eligible income (FDDEI) under section 250.

For tax years beginning after 31 December 2025, DEI and FDDEI are reduced by expenses and deductions, including taxes, that are properly allocable to the relevant gross income.

However, the calculation is made without regard to interest expense and research or experimental expenditures.

This means DEI and FDDEI are treated as measures of taxable income after the relevant deductions, but before interest expense and R&E deductions are taken into account for this purpose.

For an international seller, this may affect the amount of income eligible for the section 250 deduction. You should review how your accounting system identifies:

  • Foreign-use sales.
  • Services provided to non-US persons or relating to property outside the United States.
  • Revenue by customer location.
  • Revenue by product, service and market.
  • Operating expenses connected with FDDEI.
  • State and local income taxes.
  • Interest expense and R&E expenditure categories.

The IRS has also stated that it intends to issue separate section 250 guidance on other OBBBA changes, including the removal of the deemed tangible income return and deemed intangible income from the FDII calculation.

Daily Australia Tax Update: 27 September 2026. Tax Reform Consultation Closes Tomorrow, Card Surcharge Ban Starts 1 October & Permanent $20,000 Write-Off Explained

TITLE: Australia’s Compliance Calendar: Tax Reform Consultation, Card Surcharge Ban and Asset Write-Off Updates

Australia’s compliance calendar is moving quickly. This week, you should prioritise the Treasury consultation deadline, payment system changes, asset records and 2025–26 return preparation.

The following updates apply as at Sunday, 27 September 2026.

Submit feedback on the tax reform exposure draft by tomorrow

Treasury’s consultation on exposure draft legislation for several 2026–27 Budget tax reform measures closes on Monday, 28 September 2026.

The package is included in the proposed Treasury Laws Amendment (Tax Reform No. 5) Bill 2026. It covers three areas that may affect innovative businesses, investors and companies claiming research and development support:

1. Innovative business CGT concession

The proposed concession would give early investors in eligible innovative Australian start-ups access to a 50% capital gains tax discount.

The exposure draft includes eligibility conditions around the business, the investment and the period during which the investor holds the relevant interest. The concession is intended to support investment in qualifying innovative companies and may be relevant to founders, early investors and businesses raising capital.

Read the Treasury consultation and exposure draft materials before the deadline. KPMG’s 14 September 2026 TaxNewsFlash also summarises the proposed measures.

2. Changes to the R&D Tax Incentive

The proposed reforms would better target the R&D Tax Incentive by:

  • Removing eligibility for certain “supporting” R&D activities.
  • Increasing the minimum eligible R&D expenditure threshold.
  • Increasing the maximum expenditure threshold.
  • Changing the offset rates.
  • Changing the turnover threshold for the refundable offset.
  • Restricting access to the refundable offset for entities within their first 10 years of carrying on an enterprise, or from their first R&D registration.
  • Extending the relevant period to 15 years for entities conducting R&D connected with therapeutic goods.

If your digital business, software company or growing SME relies on the R&D Tax Incentive, maintain clear project records now. Separate eligible activities, supporting activities, employee costs, contractor costs and development evidence. This will make future claims easier to review and reduce the risk of unsupported expenditure being included.

3. Expanded venture capital tax incentives

The proposal would expand the scope of entities that can receive funding through Venture Capital Limited Partnership (VCLP) and Early Stage Venture Capital Limited Partnership (ESVCLP) investment structures.

This may improve access to venture capital for larger or later-stage innovative businesses. However, the rules remain subject to the final legislation. Do not treat the exposure draft as enacted law.

Action today: If the proposed measures affect your company, investors or funding structure, submit any relevant comments to Treasury by 28 September 2026. Keep a copy of your submission and the version of the exposure draft reviewed.

Remove card surcharges before 1 October

From 1 October 2026, businesses will no longer be able to apply surcharges to covered card payments on:

  • Visa credit, debit and prepaid cards.
  • Mastercard credit, debit and prepaid cards.
  • eftpos debit and prepaid cards.
  • American Express credit cards.

The Reserve Bank of Australia explains that the change is implemented through card network “no-surcharge” rules. Businesses usually deal with an acquiring bank or payment service provider, while card networks set rules for those participants. The ACCC provides business guidance, but the rules are enforced through card network and payment provider arrangements rather than directly by the ACCC.

Read the ACCC guidance on card surcharges, the business.gov.au update and the RBA’s frequently asked questions.

The ban applies to fees added because a customer chooses to pay by card. It does not remove unrelated charges such as:

  • Weekend surcharges.
  • Public holiday surcharges.
  • Booking fees.
  • Delivery fees.
  • Service or handling fees.

Those charges must still be clearly disclosed and must not be presented as a card payment surcharge.

Complete your payment systems review this week

Contact your payment provider before 1 October and confirm how the change will be applied to:

  1. Physical payment terminals.
  2. Online checkout pages.
  3. Payment links.
  4. Subscription billing.
  5. Customer invoices.
  6. Marketplace payment settings.
  7. Point-of-sale integrations.
  8. Accounting software and transaction rules.

Do not assume that a provider’s terminal update will correct your ecommerce checkout or invoicing system automatically.

If you previously passed card costs to customers, review the effect on your margins and cash flow. You may need to update prices so payment processing costs are reflected in the general price rather than added as a separate surcharge.

Also review the bookkeeping and GST coding for merchant fees. Reconcile gross sales, payment processor deductions, refunds and fees separately. Accurate records will help you report sales correctly and identify whether your accounting system is treating merchant fees consistently.

Use the permanent $20,000 instant asset write-off correctly

The ATO confirms that the $20,000 instant asset write-off is permanent from 1 July 2026 for small businesses with aggregated annual turnover under $10 million that use the simplified depreciation rules.

You may claim an immediate deduction for the business portion of an eligible depreciating asset that:

  • Costs less than $20,000.
  • Is first used, or installed ready for use, during the relevant income year.
  • Is used for business purposes.

The threshold applies on a per-asset basis. Therefore, several eligible assets may qualify if each asset costs less than $20,000.

Assets costing $20,000 or more generally enter the small business depreciation pool instead. The ATO’s small business newsroom update also confirms that the low-value pool threshold increases to $20,000.

The five-year lock-out period for re-entering the simplified depreciation regime remains suspended until 30 June 2027.

Keep the evidence needed for each claim

For every asset, retain:

  • The tax invoice.
  • Purchase date.
  • Payment evidence.
  • Date first used or installed ready for use.
  • Busin
USA Update: IRS Extends Remittance Transfer Tax Penalty Relief, What International Sellers Must Know Before the 2 November Form 720 Deadline

USA Update: IRS Extends Remittance Transfer Tax Penalty Relief, What International Sellers Must Know Before the 2 November Form 720 Deadline

TITLE: IRS Extends Penalty Relief for the 1% Remittance Transfer Tax

The IRS Has Extended Penalty Relief for the New US Remittance Transfer Excise Tax

On 24 September 2026, the IRS issued Notice 2026-52. The notice extends relief previously provided by Notice 2025-55.

The relief now continues for eligible semimonthly deposit periods until final regulations under Internal Revenue Code section 4475 become applicable. It is no longer limited to the first three quarters of 2026.

For international sellers, ecommerce businesses and non-US owners of US LLCs, the key question is simple:

Did any business or personal transfer from the United States use cash or another physical payment instrument?

For most businesses using ordinary bank-to-bank wires, the 1% tax does not apply.

What Changed on 24 September 2026?

Notice 2026-52 extends temporary relief from the failure-to-deposit penalty under IRC section 6656.

A remittance transfer provider can be treated as meeting the reasonable cause standard if it:

  1. Makes timely semimonthly deposits, even if the amounts are calculated incorrectly.
  2. Pays any quarterly underpayment in full by the Form 720 filing deadline.

The notice also preserves access to the deposit safe harbour under Treasury Regulation section 40.6302(c)-1(b)(2), provided the reasonable cause conditions are satisfied.

This relief is important because the rules are new, the final regulations are still pending, and providers have had to build systems while the IRS continues to clarify the tax treatment.

The relief does not remove the tax itself. It also does not excuse a late Form 720 or an unpaid balance after the return deadline.

Understand the 1% Remittance Transfer Tax Before Reviewing Your Records

IRC section 4475 was added by section 70604 of the One, Big, Beautiful Bill Act, Public Law 119-21.

It imposes a 1% excise tax on certain remittance transfers made after 31 December 2025.

The tax generally applies when:

  • A sender in the United States transfers money to a recipient outside the United States.
  • The sender funds the transfer with cash.
  • The sender uses a money order, cashier’s check, traveller’s check or similar physical instrument.

The tax generally does not apply when the transfer is funded:

  • From an account at a regulated financial institution.
  • With a US-issued debit card.
  • With a US-issued credit card.

The sender is liable for the tax. However, the remittance transfer provider must collect and remit it. If the provider fails to collect the tax, the liability can become the provider’s responsibility.

The first semimonthly deposit was due on 29 January 2026. Providers report the liability on Form 720, Quarterly Federal Excise Tax Return, using IRS No. 155.

The IRS Form 720 instructions confirm that providers must make semimonthly deposits and file quarterly returns.

When Does the Tax Attach?

The tax attaches at the earlier of:

  • The provider initiating the transfer.
  • The sender paying for the transfer.

It can apply even if the money is never paid to the recipient.

If a transfer is cancelled or expires and the funds are returned, refund or credit rights may be available. Keep the cancellation evidence, original receipt, payment record and proof of returned funds. This documentation will support the accounting treatment and any claim.

What Notice 2026-52 Actually Changes

Notice 2025-55 covered the first three calendar quarters of 2026.

Notice 2026-52 modifies and amplifies that relief. It now applies to semimonthly periods ending before the applicability date of final section 4475 regulations.

This creates an open-ended transition period. The relief continues until final regulations become applicable, rather than ending automatically after September 2026.

However, you must still act carefully:

  • Make each required deposit on time.
  • Record how the deposit was calculated.
  • Reconcile the actual quarterly liability.
  • Pay any shortfall by the Form 720 due date.
  • Monitor when final regulations become applicable.

The Treasury and IRS published proposed regulations under REG-114499-25 in April 2026. The comment period closed on 12 June 2026. The proposal includes anti-avoidance rules that may allow the IRS to disregard or recharacterise arrangements designed mainly to avoid the tax.

Examples include using prepaid or gift cards as pass-through instruments before sending money overseas.

Mark 2 November 2026 for the Third-Quarter Form 720

The third-quarter 2026 Form 720 covers transfers made during July, August and September.

The normal deadline is 31 October. Because that date falls on a Saturday, the return is due on Monday, 2 November 2026.

By that deadline, a qualifying provider must:

  • File the third-quarter Form 720.
  • Report the remittance transfer tax under IRS No. 155.
  • Pay the full quarterly liability.
  • Pay any underpayment arising from earlier semimonthly deposits.

Do not treat the extended penalty relief as permission to delay payment. It protects against a specific failure-to-deposit penalty where the stated conditions are met. It does not provide a general filing or payment extension.

The IRS recommends electronic filing for excise tax returns where available. The IRS excise tax guidance also explains that some Form 720 filers must make semimonthly deposits in addition to filing the quarterly return.

New Examiner Guidance Signals Closer Review

On 8 September 2026, IRS Small Business/Self-Employed issued interim guidance updating IRM 4.26.6.5.3.16.

The SB/SE memorandum allows examiners to refer potential foreign remittance tax issues to the excise tax function using Form 5346.

The guidance highlights:

  • Foreign transfers funded by cash where no remittance tax was collected or paid.
  • Prepaid or gift card purchases followed by an overseas transfer for the same or a similar amount.
  • Unusual patterns of cancelled or expired foreign transfers.
  • Transactions that may have been structured mainly to avoid the tax.

The memorandum also confirms an important boundary: inbound money transmissions received in the United States are not subject to the section 4475 tax.

This does not mean every international seller is automatically at risk. It means your records should clearly distinguish:

  • Money received from customers or marketplaces.
  • Ordinary bank payments to suppliers.
  • Cash-funded outbound remittances.
  • Transfers that were cancelled or refunded.

Money transfer counters are common in major US trade and immigrant communities, including parts of California, Texas, Florida, New York, New Jersey and Illinois. If your business, owner or staff uses a counter-based service, review those transactions now.

Three Examples for International Sellers

1. UK Owner of a Wyoming Single-Member LLC

A UK resident owns a Wyoming single-member LLC. The owner withdraws profits and sends the money