03 June 2025 House-passed HR 1 contains new information reporting and withholding provisions - HR 1 (Bill), passed by the House, would require separate reporting for qualified tips and overtime compensation.
- Information-reporting thresholds would increase, including to $2,000 for Form 1099-MISC and -NEC.
- The Bill would restore the $20,000/200 transaction de minimis threshold for third-party network transactions reported on Form 1099-K.
- The Bill would impose new information return requirements on qualified opportunity funds to report on their investments.
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Below is a summary of the provisions in HR 1 (Bill) that would impact taxpayers' information reporting and withholding (IRW) obligations. While these provisions have passed the House of Representatives, the Bill now moves to the Senate, where it is expected to undergo further changes. It will then have to be approved by the Senate and House and signed by the President before becoming law. Bill Section | IRW Code Sections | Summary of IRW provisions | 110101 (No tax on tips) | 6041(a),(d)(3), 6041A(a), (e)(3), 6050W(a), (f)(2), 6051(a)(18) | - Would require separate information reporting of qualified tips, as defined under proposed IRC Section 224, and tips reported by employees under IRC Section 6053(a) on Forms 1099-MISC, -NEC, -K and W-2.
- Would be effective for tax years beginning after December 31, 2024.
- For additional details, see Tax Alert 2025-1120.
| 110102 (No tax on overtime) | 6051(a)(19) (new) | - Would require separate information reporting of qualified overtime compensation, as defined under proposed IRC Section 225(b), on Form W-2.
- Would be effective for tax years beginning after December 31, 2024.
- For additional details, see Tax Alert 2025-1120.
| 110104 (No tax on car loan interest) | 6050AA (new) | - Would require recipients of interest on specified passenger vehicle loan interest of $600 or more to be reported by January 31 of the following calendar year to document the deduction under proposed IRC Section 163(h)(4).
- Would require information reporting regardless of whether individual income limitations and phase-outs prevented the taxpayer from claiming the deduction.
- Would be effective for indebtedness incurred after December 31, 2024.
| 110115 (Trump Accounts) | 530A(k) (new), 6693 | - Would establish Trump Accounts as a new tax-advantaged savings product to be set up for children under eight years old.
- Would make the account a tax-exempt trust designed to grow tax-deferred and be used for qualified expenses such as higher education, first-time home purchases and certain small business needs.
- Would tax distributions attributable to earnings at long-term capital gain rates if used for qualifying reasons, otherwise at ordinary income rates plus an additional 10% tax.
- Would subject contributions to annual limits and apply excise taxes to contributions over the limit.
- Would authorize information reporting for contributions, distributions and the amount of the investment of the contract, possibly similar to Forms 1099-Q and 5498-ESA
- Would be effective for tax years beginning after December 31, 2024.
| 110201 (Treatment of health reimbursement arrangements integrated with individual market coverage) | 6051(a)(20) (new) | - Would require separate reporting on Form W-2 of "permitted benefits for enrolled individuals under a custom health option and individual care expense arrangement (as defined in [IRC] Section 9815(b)(2)."
- Would be effective for tax years beginning after December 31, 2025.
- For additional details, see Tax Alert 2025-1120.
| 110210 (FSA and HRA terminations or conversions to fund HSAs") | 6051(a)(21) (new) | - Would require separate reporting on Form W-2 of "the amount of any qualified HSA distribution (as defined in [IRC] Section 106(e)(2))."
- Would be effective for tax years beginning after December 31, 2025.
- For additional details, see Tax Alert 2025-1120.
| 111102 (Renewal and enhancement of opportunity zones) | 6039K (new), 6039L (new), 6724, 6726 (new) | - Would impose new information return requirement on qualified opportunity funds to report on their investments.
- Would require applicable qualified opportunity zone businesses to report to the qualified opportunity fund.
- Would impose penalties of $500 per day for failure to report under IRC Section 6039K, up to a $10,000 maximum (for small funds and businesses) and up to a $50,000 maximum for large funds and businesses; higher penalties would apply for intentionally disregarding the requirements.
- Would subject certain penalty amounts to inflation adjustment.
- Would amend IRC Section 6724 to include information returns under IRC Sections 6039K(c) and 6039L within the scope of the information return penalty under IRC Section 6721.
- Would be effective for tax years beginning after the date of enactment.
- For additional details, see Tax Alert 2025-1068.
| 111104 (Repeal of revision to de minimis rules for third party network transactions) | 6050W, 3406 | - Would restore the $20,000/200 transaction de minimis threshold for third-party network transactions reported on Form 1099-K (from $600 with no transaction minimum).
- Would modify backup withholding to apply only when the de minimis threshold is breached rather than from first dollar paid (with exception if third-party network transactions made in prior year to participating payee were reportable).
- Would make reporting provisions effective "as if included in section 9674 of the American Rescue Plan Act."
- Would make withholding provisions effective for calendar years beginning after December 31, 2024.
| 111105 (Increase in threshold for requiring information reporting with respect to certain payees") | 6041(a), 6041A(a)(2), 3406(b)(6) | - Would increase the Form 1099-MISC and -NEC reporting thresholds to $2,000 from $600.
- Would add inflation adjustments to threshold.
- Would make corresponding changes to backup withholding provisions.
- Would be effective for payments made after December 31, 2025.
| 112028 (Enforcement of remedies against unfair foreign taxes) | 899 (new) | - Would increase tax on residents of countries that impose unfair taxes in increments of 5 percentage points per year, up to 20 percentage points above the statutory rate.
- Would impact withholding rates and potentially impact W-forms/diligence when determining trusts and foreign corporations that are in scope.
- Would be effective upon enactment.
- For additional details, see Tax Alert 2025-1085.
| 112104 ("Excise tax on remittance transfers") | 4475, 6050BB (new), 6724 | - Would provide information reporting for proposed 3.5% excise tax on remittance transfers from an individual to a foreign person.
- Would allow individuals, in certain cases, to receive separate information returns, potentially on a new Form 1099.
- Would allow remittance transfer provider reports on an aggregate basis, in other cases.
- Would impose penalties under IRC Sections 6721 and 6722 for late or inaccurate information returns and payee statements.
- Would be effective for transfers made after December 31, 2025; tax credit would apply to tax years ending after December 31, 2025.
- For additional details see Tax Alerts 2025-1116 and 2025-1108.
| 110001 (Extension of modification of rates) | N/A | - Would make permanent the individual tax rates previously revised in IRC Section 1(j) (through 2025) under the Tax Cuts and Jobs Act.
- Would not change withholding tax rates tied to the individual tax brackets, including the IRC Section 3406 backup withholding tax rate (24%) and the IRC Section 1446(a) withholding tax rate (37%) on non-corporate partners.
- For additional details see Tax Alert 2025-1161,
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Information reporting and withholding is an integral part of the Code and often accompanies both revenue raisers (e.g., remittance excise tax, unfair foreign tax remedies) and new benefits for taxpayers (e.g., no tax on tips or overtime, deductions for personal vehicle interest). HR 1 includes many effective dates with short lead times, or no lead time at all. Taxpayers should begin considering the implications of these provisions right away. | * * * * * * * * * * | | Contact Information | For additional information concerning this Alert, please contact: Financial Services Organization | | Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor |
Document ID: 2025-1187 |
