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Ext. PublicationThe Tax Navigator – IRS Shutdown Updates and 2026 Remittance Tax Changes Explained
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Join Sean Muller, The Tax Navigator, as he shares updates on the ongoing IRS shutdown and explains how the 2026 remittance tax could impact taxpayers.
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Detailed Description of The Tax Navigator – IRS Shutdown Updates and 2026 Remittance Tax Changes Explained
00:00:00
Sean: All right, so we are two weeks into the shutdown with no end in sight. Now they’re actually talking about this being the longest shutdown ever, which was 34 days.
So, in response, about half of the IRS has been furloughed. President Trump is going a completely different route of just furlough. He’s actually firing folks. So, he’s in the process of firing 1,400 agents and he’s fired 4,100 government employees to try to rework some things. And then he’s actually trying to pay the military first, which we’re not even sure if that’s legal. So, lots of fun stuff there.
00:00:38
Sean: We’re coming up on the 10/15 deadline. Just a quick reminder with the IRS shutdown right now. I would think long and hard about refunding your overpayment if you have to make a fourth-quarter payment or potentially even an extension payment next April, you may want to apply that amount, because there’s nothing worse than not getting your money back in the next three months and then having to cut a check in January to pay your taxes.
00:01:02
Sean: So just think about potentially applying your refund versus getting a refund and then making a January payment. In usual circumstances, you’d get a refund check in two to three weeks. Totally makes sense. In this case, there’s no telling when you’re going to get your refund check, so you may want to apply.
00:01:19
Sean: The only other thing from a legislative standpoint is there was a notice released a couple of weeks ago related to the new section 4475, which relates to a remittance tax on domestic transfers from a consumer to a foreign person. They were trying to cut out funding from folks in the U.S., sending money home to Mexico, foreign countries, whatever it may be. There is a 1% remittance tax on that and that comes into effect January 1st, 2026. It’s a charge on the person sending the money so if they send $100 overseas, they’ve got to pay $101 to the Western Union or whoever does it.
00:02:03
Sean: The IRS has come out and there’s penalties around not making those payments, and they’ve relieved the penalties for the first three quarters of 2026 because it’s sort of complicated how you remit the money. You’re supposed to remit it within two weeks of receiving it, and then you have to file a 720 every quarter to remit all the tax and file the form. So as long as you’ve remitted all the money by March 31st for the first quarter, you’re out of a penalty and they’re allowing you to do that for the first three quarters.
00:02:32
Sean: Other than that, not a whole lot is going on. Just fingers crossed we get the shutdown over with.
This episode of The Tax Navigator was recorded prior to publication. Some references or updates discussed may reflect information current as of the recording date.
