Compliance
Compliance Alert for U.S. Businesses: Reporting Obligations and Penalty Relief Under OBBB
New reporting rules under the OBBB impose new obligations for employers, lenders, and payors—but 2025 offers transition relief to ease into full compliance.
By NomadicTax Research Team • 6 min read • November 13, 2025
## Overview
With the implementation of the *One, Big, Beautiful Bill* in 2025, U.S. businesses face expanded reporting obligations for tips, overtime, car loan interest, and remittance transfers. These compliance requirements are new and complex. However, businesses have **transition relief** and guidance intended to help them adapt without penalty in 2025. If you manage payroll, lending, or payment platform operations, you’ll want to be aware of upcoming deadlines and documentation standards.
---
## Key Reporting Areas and Deadlines
| Reporting Type | Effective Year | What Businesses Must Report | Relief in 2025 | Where to Get Guidance |
|---|---|---|---|---|
| Car loan interest | Lenders must report interest received on qualified passenger vehicle loan obligations and furnish statements to borrowers. Vehicle must meet U.S. assembly and weight criteria. | For 2025, a statement available via online portal or monthly/annual statement suffices; no penalties if obligation met this way. | See IRS Notice 2025-57. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-transition-relief-for-2025-for-businesses-reporting-car-loan-interest-under-the-one-big-beautiful-bill?utm_source=openai)) |
| Tips & Overtime | Employers/payors must file returns & provide statements showing cash tips and qualified overtime, along with occupant codes. | Notice 2025-62 grants relief during 2025 for missing occupation code or separate tips/overtime reporting when otherwise correct return is filed. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-penalty-relief-for-tax-year-2025-for-information-reporting-on-tips-and-overtime-under-the-one-big-beautiful-bill?utm_source=openai)) |
| Remittance Transfer Tax | Providers must collect tax, make semimonthly deposits, file quarterly returns starting Jan 2026. | Penalty relief offered for remittance transfer providers failing to deposit timely in first three quarters of 2026. Notice 2025-55. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions?utm_source=openai)) |
| 1099-K Threshold | TPSOs must report transactions exceeding $20,000 with more than 200 transactions per the threshold retroactively reinstated. | Already in effect with FAQs published Oct 23, 2025. ([irs.gov](https://www.irs.gov/newsroom/irs-issues-faqs-on-form-1099-k-threshold-under-the-one-big-beautiful-bill-dollar-limit-reverts-to-20000?utm_source=openai)) |
---
## Practical Compliance Steps for 2025
- **Review internal systems**: Ensure payroll and accounts systems track “occupation codes”, tip data, qualified overtime hours, and form statements. Use 2025 as a test year under relief.
- **Communicate with third parties** such as lenders, portals, payment settlement entities to align reporting expectations.
- **Update customer or borrower communications**: For car loans, include VIN, final assembly status, interest details in regular statements.
- **Document everything**: If relying on relief, be ready to show that you made a good‐faith effort to meet requirements.
---
## Example Compliance Strategy
Let’s say your company, **FastPay Inc.**, is a third-party settlement organization which facilitated payment app transactions. Under the restored 1099-K rules, you must report a payee’s transactions only if they exceed $20,000 **and** 200 transactions in 2025. But you should also consider software changes to generate notices/statements to users even when reporting may not be triggered—this aids transparency and prepares for future lower thresholds.
Another example: Lender **AutoCredit Corp.** sells qualifying passenger vehicles. For 2025, if they provide interest statements on the annual statement or via their portal, they won’t be penalized—even if they don’t separately issue new forms right away. But starting 2026, stricter compliance will be required.
---
## Risks of Non-Compliance After Transition Period
- After 2025, penalties will apply for incorrect or missing reporting and payee statements.
- Improper vehicle classification (assembly location or vehicle weight) could invalidate car loan interest deductions for customers, harming both lender reputation and triggering post-audit risk.
- Inconsistent handling of occupation/tips data may lead to disputes or audits.
---
## Action Items Checklist for Businesses
- Audit current reporting systems for W-2, 1099 statements covering tips and overtime.
- Train payroll staff or outsourced payroll provider on new reporting fields (occupation, tip amounts, overtime breakdown).
- Engage IT or vendor support for VIN capture or assigning final assembly status for vehicles financed.
- Track AGI ranges to anticipate individual phase-out thresholds, and educate staff on what they will need.
Category: Compliance | taxHome: Global | author: NomadicTax Research Team | readTime: 6 min | published: true