The Internal Revenue Service (IRS) has issued Notice 2025-57, providing transitional guidance regarding the implementation of new information reporting requirements concerning interest received on specified passenger vehicle loans. This guidance is directed at those entities receiving such interest, referred to as “recipients,” and applies specifically to reporting obligations for the 2025 calendar year.

Purpose of Notice 2025-57

The notice addresses returns related to certain interest received in a trade or business from individuals on specified passenger vehicle loans, as mandated by the newly enacted section 6050AA of the Internal Revenue Code (Code). The underlying legislation establishing both the deduction and the corresponding reporting requirement is section 70203 of Public Law 119-21, 139 Stat. 72, 176 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act (OBBBA).

The Statutory Mandate for Qualified Passenger Vehicle Loan Interest

The OBBBA instituted changes affecting the deductibility of consumer interest. Specifically, the Act amended section 163(h)(4). This section now stipulates that the term “personal interest” (as defined in section 163(h)(2)) does not include “qualified passenger vehicle loan interest” (QPVLI) for taxable years beginning after December 31, 2024, and before January 1, 2029. Consequently, during these taxable years, section 163(h)(4) permits a deduction for QPVLI under section 163(a).

A “specified passenger vehicle loan” is defined as indebtedness described in section 163(h)(4)(B). This indebtedness must meet several criteria: it must be incurred by the taxpayer after December 31, 2024, for the purchase of, and be secured by a first lien on, an applicable passenger vehicle for personal use.

Reporting Requirements Under Section 6050AA

The potential deductibility of QPVLI necessitates information reporting, as required by the new section 6050AA.

Requirement to File Information Returns

Under section 6050AA(a), any recipient engaged in a trade or business who, in the course of that trade or business, receives interest aggregating $600 or more from any individual on a specified passenger vehicle loan during a calendar year must file an information return.

Required Contents of the Return and Statement

The information return required under section 6050AA(b) must be in the form prescribed by the Secretary and include several detailed items:

The name and address of the individual who paid the interest.
The total amount of interest received for the calendar year.
The amount of outstanding principal on the specified passenger vehicle loan as of the beginning of the calendar year.
The date the loan originated.
The year, make, model, and vehicle identification number (VIN) of the applicable passenger vehicle securing the loan (or alternative description prescribed by the Secretary).
Any other information the Secretary may prescribe.

Furthermore, section 6050AA(c) mandates that every person required to file an information return must also furnish a written payee statement to the individual whose name is on the return. This statement must include the recipient’s name, address, and phone number of the information contact, as well as the information required by section 6050AA(b)(2)(B) through (F). This statement must be furnished on or before January 31 of the year following the calendar year for which the return was required.

Rationale for Granting Transitional Relief

Notice 2025-57 provides transitional guidance for the period beginning after December 31, 2024, and ending on or before December 31, 2025. The underlying statutory changes, specifically the application of section 163(h)(4) and section 6050AA, apply to indebtedness incurred after December 31, 2024. However, the OBBBA was enacted mid-year on July 4, 2025.

The Treasury Department and the IRS recognize that recipients require additional time to make necessary changes to their systems to achieve full compliance with the extensive information reporting requirements under section 6050AA. The IRS also needs additional time for necessary programming and form updates to fully implement the new law. Recognizing that individuals need timely information regarding paid or accrued interest in 2025 to properly determine their deductible QPVLI amounts on their 2025 individual income tax returns, this transitional guidance is necessary. The transitional guidance provided does not, however, affect or delay the applicability of section 163(h)(4).

Steps for Recipients to Comply with Transitional Guidance

To take advantage of the relief provided by Notice 2025-57, recipients of interest on a specified passenger vehicle loan in calendar year 2025 may satisfy their reporting obligations under section 6050AA through simplified means.

Instead of adhering to the full detailed requirements of section 6050AA(b) and (c) for 2025, the recipient may satisfy the obligation by simply making a statement available to the individual indicating the total amount of interest received in calendar year 2025 on the specified passenger vehicle loan.

This statement must be made available to the individual on or before January 31, 2026. Acceptable methods for making this statement available include, but are not limited to:

An easily accessible online account portal.
A regular monthly statement.
An annual statement provided to the individual.
Other similar means designed to provide accurate information regarding the total amount of interest received.

Penalty Relief Implications

Recipients who adhere to the simplified transitional reporting obligations described in Notice 2025-57 will benefit from automatic penalty relief. The IRS states that it will not impose penalties under sections 6721 and 6722 on recipients who satisfy the reporting obligations for calendar 2025 as described in the notice.

Section 6721 imposes penalties for failures related to filing information returns, including late filing, or failure to include required information. An "information return" for this purpose is defined by section 6724(d)(1)(B)(xxix) to include a return required by section 6050AA(a).

Section 6722 imposes penalties for failures related to furnishing payee statements, including late furnishing or failures to include all required information. A "payee statement" for this purpose is defined by section 6724(d)(2)(MM) to include the statement required by section 6050AA(c).

While section 6724(a) generally permits waiver of penalties under sections 6721 and 6722 if a failure is shown to be due to reasonable cause and not willful neglect, the transitional guidance provides blanket relief for the 2025 calendar year reporting if the simplified statement is furnished.

This transitional guidance is effective for returns and statements related to interest received during calendar year 2025 on a specified passenger vehicle loan.

Prepared with assistance from NotebookLM.