The IRS has issued additional guidance on the new reporting requirement under the "One Big Beautiful Bill Act" (P.L. 119-21, OBBBA) for financial institutions, auto lenders and servicers that finance automobile purchases (i.e., persons receiving interest from borrowers and herein, lenders) (see Tax Alert 2025-1424).

The new guidance, issued in FS-2025-03 (July 14, 2025) (Fact Sheet), provides transition relief for tax year 2025 and gives details on determining the vehicle's place of final assembly.

OBBBA requirement

The OBBBA amended IRC Section163(h) to allow individuals to deduct interest on certain car loans for calendar years 2025 through 2028. To substantiate the deduction, the law requires lenders to report interest payments received totaling $600 or more during the calendar year. Reporting is required even if the deduction is phased out based on the borrower's adjusted gross income.

Transition relief

The Fact Sheet said the IRS will provide transition relief for 2025 for lenders subject to the new reporting requirements but did not give further details.

Determination of domestic assembly

To comply with this new reporting requirement, lenders need to determine if the loans are financing the purchase of vehicles that are final assembled in the United States. The Fact Sheet offers two alternative methods for determining the location of final assembly:

• The vehicle information label attached to each vehicle on a dealer's premises
• The vehicle identification number (VIN)

According to the Fact Sheet, the National Highway Traffic Safety Administration's VIN Decoder website gives the necessary information to determine the manufacturing plant and country of manufacture. For example, the first digit of a VIN signifies the country of manufacture; if the VIN begins with 1, 4 or 5, the vehicle was manufactured in the United States.