Compliance
Compliance Alert: New Reporting & Relief Rules for Car Loan Interest under the One, Big, Beautiful Bill
The IRS issued transitional guidance for lenders and withholding penalties under Section 6050AA—learn what to do now to stay compliant and avoid fines.
By NomadicTax Research Team • 5-8 min read • November 19, 2025
## What Just Changed
In October 2025, the IRS issued **Notice 2025-57**, which provides transitional relief related to **Section 6050AA**, part of the One, Big, Beautiful Bill (OBBB).([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))
This new requirement imposes reporting obligations on entities that receive from individuals **interest on qualified passenger vehicle loans**. The key compliance focus: lenders must report certain interest amounts and provide statements to borrowers.([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))
## Transitional Relief for 2025
To ease into compliance, the IRS has provided temporary relief:
- For **calendar year 2025**, lenders can satisfy reporting obligations by making a statement available **online, monthly, annually**, or by similar means disclosing total interest received on qualified passenger vehicle loans.([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))
- **Penalties under sections 6721 and 6722** will **not** be imposed in 2025 if these transitional steps are followed.([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))
## Who’s Affected?
- Lenders, dealers, or financial institutions who receive **$600 or more** from an individual on a qualified passenger vehicle loan in a calendar year.([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))
- Vehicles are defined broadly: passenger cars, SUVs, pickups, minivans, even motorcycles, under 14,000 lbs, and with final assembly in the U.S.([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))
## Key Compliance Steps
1. **Identify qualifying loans**: Car, SUV, etc., under 14,000 lbs, final assembly U.S., personal use loans with interest payments from individuals.
2. **Track interest**: Gather interest data per borrower to determine if the $600 threshold is reached.
3. **Provide statements** hitting key criteria**:
- Via portal, monthly or annual statement, or similar means that is reasonably accessible.
4. **Make systems ready**: Adjust reporting software or billing statements to compile required data.
5. **Avoid penalties** in 2025 by following relief rules. After 2025, full enforcement likely kicks in.
## Examples
- **Scenario A**: Jane borrows $30,000 car loan; pays $700 interest in 2025. Lender must provide annual statement listing total interest, even if online.
- **Scenario B**: Car dealership working as intermediary receives interest payments of $1,000 from customer—also must comply.
## Risks of Non-Compliance
Post-2025, failing to report or provide statements as required could result in penalties under 6721 (failure to file correct return) or 6722 (failure to provide correct payee statement). Systems not ready could expose businesses to financial risk. This transitional relief expires after 2025.([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))
## Recommendations
- Begin systems audit now—ensure your software or accounting practices can log vehicle characteristics, interest amounts, borrower data.
- Train staff or vendors involved in loan servicing on the new definitions and responsibilities.
- Document methods of providing statements in 2025 to rely on relief.
- Consult tax counsel if loans cross categories—business vs personal use complicates reporting.
## Bottom Line
The new car loan interest reporting requirement under OBBB represents a compliance shift. Use the transitional relief period in 2025 to adjust operations, avoid penalties, and build processes. Starting January 1, 2026, full compliance becomes mandatory—preparation pays off.