Compliance
Compliance Checklist for Employees & Employers Under OBBB Rules
New deductions and reporting requirements for tips, overtime, car interest, and remittances demand updated compliance practices—for both workers and businesses.
By NomadicTax Research Team • 5-8 min read • November 22, 2025
## Key Compliance Changes Under OBBB
OBBB brings several new obligations for employers, payors, lenders, and employees:
- **Tips deduction & occupation codes**: Employers must furnish statements showing tips received, and record occupations listed in IRS guidance. Certain occupations qualify for the “no tax on tips” deduction. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-listing-occupations-where-workers-customarily-and-regularly-receive-tips-under-the-one-big-beautiful-bill?utm_source=openai))
- **Overtime deduction & reporting**: Qualified overtime (above regular rate under FLSA) becomes deductible, and employers/payors must report overtime compensation. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-guidance-for-individuals-who-received-tips-or-overtime-during-tax-year-2025?utm_source=openai))
- **Car loan interest reporting**: Lenders have new reporting responsibility for interest received on qualified vehicle loans; businesses must provide borrower statements or equivalent under guidance. Relief exists for penalties in 2025 if certain methods used. ([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))
- **Remittance transfer excise tax**: Providers must collect a 1% tax on specific remittance transfers, make semimonthly deposits starting Jan 1, 2026, and file quarterly returns. Penalty relief exists for first three quarters of 2026 under Notice 2025-55. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-penalty-relief-for-remittance-transfer-providers-who-fail-to-deposit-excise-tax-under-the-one-big-beautiful-bill?utm_source=openai))
## Employer & Employee Responsibilities
| Role | Must Do | Timing & Penalty Exposure |
|---|---|---|
| Employer / Payor | Adjust payroll/reporting systems to capture tips and overtime amounts, furnish to employees; ensure occupation codes are tracked per IRS guidance. Maintain records of overtime compensation. | For tax year 2025, forms remain largely unchanged—but systems need to be ready for 2026 changes. Penalties may apply if reporting is missing or inaccurate without reasonable cause. ([irs.gov](https://www.irs.gov/newsroom/irs-announces-no-changes-to-individual-information-returns-or-withholding-tables-for-2025-under-the-one-big-beautiful-bill-act?utm_source=openai))|
| Lender or Interest Recipient | Provide payee statements for qualified car loan interest using acceptable formats (online portal, monthly statement, etc.), and file information returns where required. | For 2025, transition relief means leniency if statement is made available via email/portal or regular statement. Penalties may apply after transition period. ([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))|
| Remittance Providers | Begin collecting tax from sender, make semimonthly deposits, file quarterly returns starting Jan 1, 2026. Be alert for penalty relief provisions. | First deposit due Jan 29, 2026. Under Notice 2025-55, providers may avoid deposit penalties for first three quarters provided correct payment is made and reasonable cause shown. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-penalty-relief-for-remittance-transfer-providers-who-fail-to-deposit-excise-tax-under-the-one-big-beautiful-bill?utm_source=openai))|
## Examples of Compliance in Action
- **Restaurant Owner Rita** adds code “110” for beverage and food service staff into payroll software so servers can benefit from tips deduction under OBBB.
- **Bank Loan Officer Leo** ensures that clients purchasing qualified vehicles receive annual statements showing interest paid. Leo’s bank sets up online portal to distribute statements—qualifies under transitional relief.
## Practical Steps to Avoid Audit Risk
1. Document everything: tips, overtime pay, qualifications. Keep logs for unreported tips.
2. Use clear written statements / disclosures to employees and borrowers.
3. Update payroll/lender policies now—not in 2026. Pilot systems early.
4. Consult regs and notices: Notice 2025-69 (tips, overtime); Notice 2025-57 (car loan interest); Notice 2025-71 (rural property interest) etc. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-guidance-for-individuals-who-received-tips-or-overtime-during-tax-year-2025?utm_source=openai))
By proactively aligning your processes with OBBB rules, employers and employees avoid penalties and make the most of the available deductions.