The Internal Revenue Service (IRS) released Notice 2025-57, offering temporary relief for businesses handling interest payments on specified passenger vehicle loans. This guidance stems from the One Big Beautiful Bill Act (OBBBA), which was signed into law on July 4, 2025, and addresses new reporting requirements under Internal Revenue Code Section 6050AA.
Background: The One Big Beautiful Bill Act & New Deduction Rules
The OBBBA introduced a temporary tax benefit for individuals by allowing a deduction for qualified passenger vehicle loan interest (QPVLI) on personal vehicles.
“As amended by the OBBBA, section 163(h)(4) provides that the term ‘personal interest’ … does not include ‘qualified passenger vehicle loan interest’ … for taxable years beginning after December 31, 2024, and before January 1, 2029.”
This means individuals can deduct interest paid on specified passenger vehicle loans, which are defined as loans taken out after December 31, 2024, secured by a first lien on a personal-use passenger vehicle, for tax years 2025 through 2028.
However, this deduction comes with a new reporting obligation for businesses.
New Reporting Requirements Under Section 6050AA
Businesses that receive $600 or more in interest from an individual on a specified passenger vehicle loan in a calendar year must now file an information return with the IRS. The notice states:
“Under section 6050AA(a), any person engaged in a trade or business … who … receives from any individual interest aggregating $600 or more for any calendar year on a specified passenger vehicle loan, must file an information return reporting the receipt of interest.”
Information Required On The Return:
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- Name and address of the borrower
- Total interest received during the year
- Outstanding principal balance at the start of the year
- Loan origination date
- Vehicle year, make, model, and VIN (or alternative description)
- Any additional information prescribed by the IRS
Businesses must also provide a written statement to the borrower by January 31 of the following year, including contact information and key loan details.
Transitional Relief For 2025: Simplified Reporting
Recognizing the challenges of implementing new systems mid-year, the IRS is providing transitional guidance for interest received in calendar year 2025.
“The recipient may satisfy the reporting obligations under section 6050AA for interest received in calendar year 2025 on a specified passenger vehicle loan by making a statement available to the individual on or before January 31, 2026, indicating the total amount of interest received in calendar year 2025 on a specified passenger vehicle loan.”
How Businesses Can Comply in 2025:
Provide the total interest amount via:
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- Online account portal.
- Monthly or annual statements.
- Other accessible, accurate methods.
- No penalties under Sections 6721 or 6722 will apply if this simplified statement is provided.
This relief gives businesses time to update systems while ensuring borrowers receive the information needed to claim their deduction.
Recordkeeping Requirements & Compliance Burden
The notice emphasizes the importance of maintaining accurate records. Recordkeeping requirements are critical to support both IRS compliance and taxpayer deductions.
Estimated Impact:
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- 35,800 respondents (primarily corporations and partnerships)
- 8 million responses annually
- Average time per response: 0.25 hours
- Total annual burden: 2 million hours
Businesses must retain records to support IRS filings for the same period that they retain records supporting Forms W-2 or 1098.
What This Means For Businesses
If your business finances passenger vehicles for personal use (such as auto dealers, financial institutions, or finance companies), you are likely subject to these rules. For 2025, focus on:
- Accurate tracking of interest received on specified passenger vehicle loans.
- Delivering a clear, accessible statement of total 2025 interest to borrowers by January 31, 2026.
- Preparing for full Form 1099-style reporting starting in 2026.
Failure to comply in future years could trigger penalties, unless reasonable cause is demonstrated.
Next Steps
The IRS is still developing forms and systems for full implementation in 2026. In the meantime, businesses should review loan portfolios, update accounting systems, and ensure recordkeeping requirements are met.
Contact GBQ today for expert guidance on compliance, system updates, or assistance with specified passenger vehicle loan reporting under the OBBBA. Our tax professionals can help you navigate this transition smoothly.
