Compliance
Compliance Tips Amid New Reporting Rules on Tips, Overtime, and Vehicle Loans
The OBBB Act introduces new reporting and information requirements that could catch many unprepared — here’s how to stay compliant with newly issued IRS guidance.
By NomadicTax Research Team • 5-8 min read • November 24, 2025
## What’s New in Reporting Requirements
Under the One, Big, Beautiful Bill, certain types of income and deductions that were previously offbuilt or informal now require formal reporting:
- **Tips and qualified tips** must be reported by employees, self-employed individuals, or via Forms W-2 / 1099 / Form 4137. The IRS has proposed regulations defining “qualified tips.” ([eitc.irs.gov](https://www.eitc.irs.gov/newsroom/topics-in-the-news?utm_source=openai))
- **Overtime premiums** now deductible: the portion of overtime beyond an employee’s regular rate must be separately reported. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-of-2025-provisions?utm_source=openai))
- **Interest on qualified auto loans** needs proper documentation, including VIN, lien documentation, and confirmation that the vehicle meets “final assembly in U.S.” standard. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-of-2025-provisions?utm_source=openai))
- **Remittance transfer tax**: Providers of eligible remittances must collect, deposit semi-monthly, and file quarterly returns beginning January 2026. Some deposit penalty relief has been granted for Q1-Q3 2026. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-of-2025-provisions?utm_source=openai))
## How to Audit Your Personal Compliance Procedures
1. **Review payroll systems** to ensure tip and overtime premium reporting aligns with IRS definitions. If not, make updates now.
2. **Loan and vehicle purchase documentation**: Ensure you have date-stamped VINs, lien statements, vehicle weight ratings, and proof of final assembly.
3. **Record keeping for income thresholds**: Several deductions are phased out above certain income levels—document modified AGI or MAGI clearly.
4. **Stay updated with IRS notices and proposed regs**: Items like “qualified tips” have comment periods. Submissions before deadlines (e.g. October 2025) impact final definitions. ([eitc.irs.gov](https://www.eitc.irs.gov/newsroom/topics-in-the-news?utm_source=openai))
## Penalties and Reliefs
- **Penalty relief** is available for those failing to deposit remittance-transfer excise tax in certain quarters of 2026, provided “reasonable cause” is shown. ([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai))
- **Transition relief** for businesses reporting car loan interest in 2025; the IRS issued guidance to ease the burden during implementation. ([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai))
## Example Compliance Scenarios
- An employer with tipped staff should collect data on occupations as defined in proposed IRS regs. If bartenders receive tips, ensure W-2s revenue includes proffered amounts; determine if fully deductible.
- A contractor who works many overtime hours with multiple employers must ensure the premium portion of pay is separately identified and reported, not simply lumped into base wage.
- Individuals financing a new vehicle must maintain records of the vehicle’s manufacture location, weight rating, purchase loan terms, and interest paid to claim the interest deduction properly.
## Timelines to Act
- **Now through early 2026**: collect documents and align systems with definitions being finalized. Propose changes prior to year end.
- **Jan 2026**: remittance transfer providers begin collecting and depositing remittance transfer tax. Ensure preparedness by Q4 2025.
- **2026 filing season**: New thresholds, expanded deductions, and updated definitions will be reflected in tax year 2025 returns filed in 2026.
By proactively aligning your reporting, maintaining clear documentation, and reviewing income thresholds, you’ll stay compliant with minimal risk of audit or penalty.