Compliance
Keeping Compliant: What Employers & Tax Professionals Must Do Under New IRS Reporting Duties
Recent IRS guidance under the OBBB law is creating new reporting obligations for employers and lenders—this article explains what’s required, due dates, and how to avoid penalties.
By NomadicTax Research Team • 5-8 min read • November 20, 2025
## New Reporting Duties from OBBB & IRS Guidance
Under the One, Big, Beautiful Bill, **three major new reporting requirements** were introduced, particularly affecting employers, lenders, and payors. These duties relate to tips, overtime compensation, and car loan interest. Notice 2025-57 provides transitional relief for car loan interest reporting for 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))
### Major Reporting Types
- **Tip Reporting**: Employers/payors must file information returns and furnish statements to employees who receive qualified tips, including the occupation that qualifies for tips under IRS’s predefined list.
- **Overtime Reporting**: Payors required to furnish statements showing qualified overtime compensation—again, based on relevant criteria (FLSA, etc.).
- **Car Loan Interest Reporting**: Lenders must report interest paid on qualified passenger vehicle loans, if $600 or more received in a year. Borrowers must be provided statements; however, for 2025, IRS allows flexibility in medium (online portal, monthly, annual, etc.) and offers penalty relief if data is provided appropriately. ([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))
## Deadlines & Transition Relief
| Requirement | Effective | Relaxed Rules Period | Penalties Abated If… |
|---|---|---|---|
| Car-loan interest reporting by lenders | For loans originated **after Dec 31, 2024**, with reporting to begin in 2025 | For calendar year 2025, lenders can satisfy reporting via statements on portals, monthly or annual statements. IRS won’t impose penalties if those are provided. ([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)) |
| List of tip-receiving occupations published | October 2, 2025 | One-time list requirement for occupations “customarily and regularly receiving tips”. |
| Statements to borrowers/employees | With tax returns covering 2025 | Clear statements where required—online, periodic, etc. |
## What Employers & Lenders Should Do Now
- **Audit payroll & HR systems** to identify job roles that likely fall in tip occupations. Track and store data accordingly.
- **Set up or confirm reporting infrastructure** for interest reporting. If you’re a lender, ensure you can generate statements or use portals.
- **Train staff** handling payroll and finance on these new reporting obligations.
- **Communicate with borrowers/employees** so they know what statements to expect and keep copies.
- **Monitor IRS releases**: IRS will publish further guidance and regulations, so stay updated.
## Avoiding Penalties
For 2025, thanks to transition relief, some leniency is provided. However, starting in tax year 2026:
- Failure to properly report interest or furnish statements may result in **penalties under Sections 6721 and 6722**.
- Incorrect occupation designation or failure to file correct tip/overtime statements can trigger penalties or audits.
- Not reporting the VIN when claiming car interest could invalidate the deduction.
## Example Scenarios
- **Scenario A**: A dealership finances new passenger vehicles. In 2025, it must start preparing statements to buyers showing car loan interest, but it can use an online portal or annual statement to comply without penalty. In 2026, full reporting and statement furnishing will be mandatory under stricter rules.
- **Scenario B**: A restaurant employs servers and bartenders. It needs to check whether those occupation titles are on the IRS list of tip occupations. If they are, the restaurant must issue statements to each eligible employee showing their tips, and must report them properly.
## Summary & Take-Home Points
- Reporting obligations under OBBB are new and multi-faceted—tips, overtime, car interest each have specific rules.
- Use 2025 as a transition year to build compliance systems—capitalize on the leniency but lay groundwork for stricter enforcement in 2026-2029.
- Documentation (occupation, statements, VINs) is your strongest defense during audits.
By staying informed and proactive, employers and tax professionals can navigate these new requirements with less risk and more confidence.