Industry win: IRS issues temporary guidance on reporting car loan interest

The Treasury Department and the Internal Revenue Service (IRS) Tuesday provided transitional guidance for businesses required to report car loan interest under H.R. 1, which was signed into law in July. America’s Credit Unions requested the guidance in a July letter to Treasury Secretary Scott Bessent to support effective implementation and provide needed clarity for credit unions.

The notice provides transitional relief for 2025 for lenders who are required to file information returns with the IRS and provide statements to borrowers showing the total amount of interest received on qualified passenger vehicle loans.

A qualified passenger vehicle is a car, minivan, van, SUV, pick-up truck, or motorcycle, with a gross vehicle weight rating of less than 14,000 pounds that has undergone final assembly in the United States.

Under the guidance, the IRS will consider that lenders have met their reporting obligations for interest received on a qualified passenger car loan in 2025 if they make a statement available to the buyer—via monthly statement, online portal, annual statement, or similar means—indicating the total amount of interest received.

The agency said it would not impose penalties on lenders who fail to file formal information returns about the loans if they take the steps outlined in the guidance.

Updates to annual forms that allow lenders to report loans directly to the agencies are forthcoming.

America’s Credit Unions’ compliance team will update the H.R. 1 FAQs available for members in its Compliance Library to incorporate the new transitional guidance.