Compliance
Compliance Essentials in 2025: Navigating Penalty Relief & Reporting Requirements Under OBBB
New relief provisions under the One, Big, Beautiful Bill give taxpayers and payors breathing room—but only if you understand the rules and how to act now.
By NomadicTax Research Team • 5-8 min read • November 14, 2025
## Key Compliance Updates from the IRS
Recent IRS guidance has introduced relief provisions tied to **information reporting changes** under the One, Big, Beautiful Bill (OBBB). These adjustments affect payroll, excise tax deposits, and remittance reporting. ([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))
Two standout updates:
1. **Penalty relief for tip and overtime reporting (Tax Year 2025)**: Employers won’t be penalized if they fail to separate cash tips or report qualified overtime on forms like W-2 appropriately for 2025, provided overall returns are accurate. ([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))
2. **Transition relief for remittance transfer tax deposits (Q1-Q3 2026)**: Remittance transfer providers get relief from deposit penalties for excise tax tied to certain money transfers under OBBB, if they make timely but potentially miscomputed deposits and pay any shortfalls when filing quarterly returns. ([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))
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## Implications for Employers, Businesses, & Providers
### Employers & Payors Handling Tips, Overtime, and Information Returns
- Review payroll systems: They may lack fields for reporting tip occupation codes or overtime separate accounting. Until 2026, strict compliance is eased—but gathering data now helps. ([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))
- Inform and train staff involved in payroll reporting about what information will soon be needed: occupation codes, cash tip breakdowns, overtime totals. This will ease the 2026 transition.
### Remittance Transfer Providers & Excise Tax
- Prepare to collect 1% tax on certain remittances involving cash, money orders, cashier’s checks, and similar instruments starting **January 1, 2026**. ([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))
- Even if you miscalculate early semimonthly deposits in 2026, you may avoid penalties if you’ve made timely deposits and pay the due amount by quarterly filing dates. Document your process as reasonable cause. ([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))
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## Action Steps for Compliance
- Audit your current reporting infrastructure: identify where data gaps exist for reporting occupation, tips, overtime, etc.
- Engage third-party payroll/HR providers now to upgrade software systems for 2026 compliance.
- Remittance transfer providers: map out point-of sale workflows to ensure tax collection from applicable senders begins on Jan 1, 2026.
- Document your compliance plan to support “reasonable cause” in case of missteps during the transition.
- Consult with tax counsel or professional advisors to understand which reporting thresholds apply—and monitor IRS proposed or final regulations closely.
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## Example Scenarios
**Scenario A: A restaurant chain**—Cash tips are being pooled without detailing individual occupations; overtime is merged into regular pay. For 2025, no penalties if total compensation info submitted is correct. But beginning 2026, employees will require separate statements to claim deductions—so start tracking roles now.
**Scenario B: Remittance business**—The provider uses semi-manual processes to track transfers. In early 2026, small calculation errors happen. If deposits are timely and underpayments made by Form 720 due date, penalties avoided for Q1-Q3. But compliance documentation is crucial for each quarter.
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These compliance amendments are offering grace but also building in new responsibilities. Take action now to stay ahead—tools, training, and documentation will carry you through the OBBB transition successfully.