WASHINGTON–The Defense Credit Union Council (DCUC) and the Association of Military Banks of America (AMBA) have sent a joint letter to the Senate Finance Committee that expresses “strong concern” over a proposed 3.5% excise tax on outbound remittances included in the current reconciliation package.
Both organizations are requesting Chairman Mike Crapo (R-ID) and Ranking Member Ron Wyden (D-OR) “prioritize key amendments to protect U.S. servicemembers and their families from unintended financial harm.”
DCUC and AMBA said their letter highlights how the current legislative language, “while intended to deter unauthorized cross-border transfers, may inadvertently penalize lawful and essential financial support within military communities—particularly for those deployed overseas.”
‘United in Belief’
“Our two organizations represent the full range of regulated financial institutions that serve military families—AMBA through military-focused banks, and DCUC through defense credit unions,” the organizations said. “While we often represent different segments of the financial system, we are united in our belief that this tax, as drafted, would undermine military financial readiness and penalize lawful financial support.”
The Concerns
According to DCUC and AMBA, their concerns include:
Impact on Military Families Abroad
- Transfers could be automatically taxed if the provider cannot verify citizenship—even between two U.S. citizens
- Lawful permanent residents (green card holders), including military spouses and parents, would be taxed when sending funds to U.S. service members
- The refund process proposed is cumbersome, slow, and not realistic for deployed personnel.
Operational Challenges for Military-Focused Institutions
- Lack of clarity from Treasury on verification protocols
- Unclear provider qualification standards
- Inadequate infrastructure for rapid implementation, especially for smaller, community-based institutions serving military installations.
Recommendations
DCUC and AMBA provided the following recommendations to the Committee:
- Exempt U.S. military personnel and their families—both as senders and recipients—from the remittance tax, regardless of provider
- Include green card holders in the exemption when transferring funds to U.S. citizen service members
- Delay implementation until financial institutions receive the necessary regulatory guidance and tools
- Instruct the Treasury Department to establish clear verification standards and a safe harbor for regulated institutions serving military members.
“This issue transcends institutional lines. It goes to the heart of our duty to protect those who protect us,” the organizations said in a statement. “We urge the Committee to act swiftly to refine this proposal and preserve the trust and stability our military families deserve.”
