WASHINGTON—America’s Credit Unions said an Internal Revenue Service proposal on the excise tax on remittance transfers provides clarity around several rules and requirements that are necessary for credit union compliance.
At the same time, a trade group has filed suit over a new tax on remittances in Tennessee.
In a comment letter to the IRS, America’s Credit Unions said the proposal provides rules and definitions relating to the excise tax imposed on certain remittance transfers that occur after Dec. 31, 2025, as enacted in H.R. 1.
“We support the NPRM adopting existing definitions and exceptions regarding remittance transfers and ask, where possible, for the IRS to continue to prioritize consistency with existing rules,” the letter states.
Additional Clarity Sought
The trade group said it is also seeking additional clarity around:
- Relevant facts and circumstances that the IRS will consider when determining whether a provider or sender structures a transaction for tax-avoidance purposes
- IRS’s anti-conduit authority to disregard or recharacterize a transaction as a method of tax avoidance
- Whether the proposal aligns with the Official Interpretation of Regulation E, which states that foreign military bases are treated as located in a State for the purpose of remittance transfer requirements.
The full letter can be found here.
Lawsuit Over Tennessee Law
Separately, in Tennessee, a trade association for fintechs has filed suit over a new Tennessee law levying a tax on international financial transfers passed by the Tennessee General Assembly this year.
In a filing in Davidson County (Tenn,) Chancery Court, the Financial Technology Association contends that the tax amounts to a “discriminatory treatment of foreign commerce [that] violates the Commerce Clause of the U.S. Constitution … and the Import-Export Clause of the U.S. Constitution,” according to the Nashville Banner.
The law includes a $10 per-transaction tax, plus additional charges on transfers of more than $500.
The FTA — whose members include Amazon, PayPal and SoFi — is asking for expedited consideration of the complaint, which becomes effective at the start of 2027, the Banner explained.
“Tennesseans shouldn’t face new taxes when sending money to friends, family, business partners, or suppliers abroad, or when making charitable donations,” FTA President and CEO Penny Lee said in a statement after the law was passed. “This law raises taxes on Tennessee consumers, businesses, and non-profits, and contradicts recently passed federal law while also running afoul of the Foreign Commerce Clause in the U.S. Constitution.”
The Banner said House Speaker Cameron Sexton and Senate Finance Chair Bo Watson were lead sponsors of the legislation. The legislation was not formally part of Tennessee Republicans’ work with the White House on anti-immigrant legislation, but Watson noted multiple times that the largest group of international transactions originating in Tennessee go to Mexico, the report added.
