Entity Setup
What Entities Need to Know: Reporting Changes & Compliance in OBBB Era
Recent IRS policies change how businesses report car loan interest, remittances, and 1099-K thresholds — here’s what entities must do to stay compliant.
By NomadicTax Research Team • 5-8 min read • November 14, 2025
## Key Reporting Changes for Entities Under OBBB
If you're a business or other payor, several major changes under the One, Big, Beautiful Bill (OBBB) change how you report transactions and what penalties you may face.
- **Car Loan Interest Reporting**: Businesses must report new information related to car loan interest. IRS Notice 2025-57 provides transitional guidance for 2025 including penalty relief. ([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai))
- **Remittance Excise Tax Penalties**: Providers of remittance transfers are subject to a new excise tax; IRS Notice 2025-55 gives deposit penalty relief for the first three quarters of 2026 amid these changes. ([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai))
- **Form 1099-K Threshold**: The reporting threshold has reverted to **$20,000 & 200 transactions**. Entities issuing these forms (payment processors, marketplaces) must comply with the reinstated rule. ([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))
- **Transition Year for Tip & Overtime Reporting**: Employers/payors won't be penalized in 2025 for lacking occupation-codes or separate statements for tips and overtime; but systems should be in place for full compliance in future years. ([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))
## Action Plan for Entity Setup and Compliance
1. **Audit your reporting systems** — ensure W-2, 1099, remittance, and tip/overtime systems can collect occupation data, separate tip/overtime breakdowns, and interface with required codes.
2. **Update contracts and vendor relationships** — providers handling remittances should know about excise tax deposit requirements and whether they’ll be relieved for certain quarters.
3. **Train accounting/payroll staff** — new thresholds mean staff must know when to issue 1099-K, and steps to avoid reporting errors.
4. **Prepare for updated IRS forms** — though not updated yet for 2025, be ready for changes in 2026 documents related to tips/overtime.
## Example Cases
- A marketplace platform that used to issue Form 1099-K at $600 now only issues them if thresholds of $20,000 and 200 transactions are met. This reduces administrative burden but requires clear communication to sellers.
- A small car dealership must report interest income on vehicles loaned via in-house financing and follow Notice 2025-57 in 2025; set up systems to track interest payments.
- A remittance service provider must begin calculating new excise taxes but is safe from penalties for certain deposit errors in early 2026 if operating within the relief periods.
## Why It Matters for Entity Owners
These changes shift burden and risk: **non-compliance** can mean fines and lost deductions; **proper setup** can improve cash flow for employees, reduce withholding or over-reporting costs, and streamline tax preparation. Also, meeting the new detailed reporting requirements builds trust with workers and compliance under audit.