Compliance
Compliance Deep Dive: Navigating 1099-K, Car Loan Interest & Vehicle Reporting Requirements
New IRS rules under OBBB change thresholds for 1099-K reporting and introduce information reporting for vehicle loan interest. Learn what businesses, lenders, and payees need to do to stay compliant.
By NomadicTax Research Team • 5-8 min read • November 16, 2025
“## Understanding Key Changes Under the One, Big, Beautiful Bill (OBBB)
A few recent guidance items clarify compliance obligations businesses and lenders face:
- **Form 1099-K Threshold Reverts to $20,000**: The reporting trigger for third party settlement organizations has gone back to requiring *both* gross transactions over $20,000 *and* more than 200 transactions.([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))
- **Car Loan Interest Reporting (Section 6050AA)**: For specified passenger vehicle loans, businesses receiving at least $600 interest from an individual in a calendar year must report and provide a statement to the individual. Transitional relief for 2025 allows simplified statement methods and waives penalties if done correctly.([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))
## What Businesses & Lenders Must Do—Action Steps
| Entity | Obligation | What to Prepare Now |
|--------|------------|----------------------|
| Settlement Organizations | Report per 1099-K only if both conditions met (>$20,000 *and* >200 transactions) | Update payment processing systems & reporting triggers; notify vendors and partners of changes |
| Lenders / Interest Recipients | For qualified passenger vehicle loans in 2025, provide statements to payees showing interest paid; file returns in subsequent years under strict rules | Develop statement-making methods (online portal, statements); track interest by individual; avoid penalties during transition for correctly executed reporting |
## Example Case
**Dealer Auto Corp.** financed 1,500 SUVs in 2025, each with specified passenger vehicle loans. They receive interest payments individually that might exceed $600 annually. Under Section 6050AA, starting Jan 1, 2025, they must report interest from each buyer and issue statements. For 2025 only, they can use transitional relief (e.g., an annual statement by Jan 31, 2026) without being penalized, provided they comply. For 2026 onward, full information returns will be required.([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))
## Pitfalls & Practical Tips
- **Keep good records of number of transactions**, not just amounts (for 1099-K).
- **Use proper payee statements**: Format matters—must clearly show interest amounts, accessible to individual.
- **Watch effective dates**: Some changes apply to interest incurred after Dec. 31, 2024; full reporting starts in 2026. Missing deadlines (even under transitional relief) can trigger penalties.([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))
## Summary
These compliance shifts are substantial under OBBB. Businesses, lenders, and payees should act now to understand thresholds, implement systems for tracking and reporting, and avoid surprises or penalties. Getting ahead of these rules delivers cost savings and smoother audits.