Tips for navigating OBBBA’s new changes in U.S. tax reporting and withholding rules

Executive summary

The One Big Beautiful Bill Act (OBBBA) marks a significant shift in U.S. tax information reporting and withholding requirements for payments made to nonemployees and presents year-end planning opportunities for taxpayers who are gearing up for changes in the rules. These changes affect companies in all industries, but have significant operational implications for the financial services, technology, lending, e-commerce, casino/gaming and automotive industries in particular. Proactive planning, robust system readiness and ongoing monitoring of regulatory guidance will be essential in navigating this evolving landscape. Most significantly, the law:

• Raises Forms 1099-NEC and 1099-MISC reporting thresholds from $600 to $2,000 starting in 2026.
• Requires reporting of certain qualified tips and overtime paid to nonemployees starting in 2026 with penalty relief for those that do not report in 2025 (though payors are encouraged to provide information).
• Increases the Form 1099-K reporting threshold retroactively from $600 and no minimum number of transactions to $20,000 and 200 transactions for third-party settlement organizations.
• Requires lenders to report interest received on certain qualified auto loans starting in 2026.
• Requires reporting of information on new Trump accounts.
• Introduces a new 1% excise tax on certain remittances to foreign persons starting in 2026.  

In order to prepare for these changes, companies must act swiftly to modify their systems and processes to ensure sustained compliance going forward.

The One Big Beautiful Bill Act, signed into law on July 4, 2025, is a landmark budget reconciliation measure that consolidates multiple congressional proposals into a single, far-reaching statute. Now fully enacted, the law introduces sweeping changes to U.S. tax information reporting and withholding requirements that affect payors and withholding agents in all industries. As the IRS begins releasing more detailed guidance on the new provisions, the focus has shifted to interpreting the law’s final impact, planning and budgeting for implementation of changes, developing sustainable compliance programs and identifying strategic planning opportunities. 

While OBBBA does not include the highly controversial proposed section 899, which sought to impose a retaliatory tax on payments made to residents of certain non-U.S. jurisdictions assessing discriminatory taxes against U.S. persons, important changes in reporting and compliance requirements set forth under other provisions of OBBBA will still have significant impact on taxpayers and businesses across all industries. These new reporting requirements for payments made to nonemployees, which are summarized in Table 1 below, will undoubtedly require changes to systems, policies, and procedures as well as additional budget and resources for implementation of sustainable compliance programs to address them going forward.

Table 1. An Overview of OBBBA’s changes in U.S. tax information reporting and withholding requirements for payments to nonemployees

The table below summarizes key changes to information reporting and withholding provisions for payments to nonemployees introduced in the One Big Beautiful Bill Act (OBBBA) compared to prior law

Is your organization prepared to navigate the complexities of these new reporting and compliance obligations? Consider these tips:

Section 899 withholding

Interestingly, OBBBA does not include proposed section 899, a provision that had been a focal point of earlier legislative drafts and the subject of much public debate. Section 899 proposed a retaliatory withholding tax of 5%-20% on certain payments made to residents of jurisdictions that imposed allegedly discriminatory or extraterritorial taxes on U.S. persons or entities.

Looking ahead to 2026: The exclusion of section 899 from OBBBA provides temporary relief for U.S. companies with international operations—particularly those in technology, financial services, consumer goods and private equity—which would have faced the bulk of the increased exposure for the regime. As global tax frameworks continue to evolve, the potential for the reintroduction of section 899 may be a possibility. Organizations with global operations should actively monitor developments in Pillar Two enforcement, U.S. Treasury interpretations of discriminatory tax regimes and any emerging congressional responses to the shifting global tax frameworks. Heading into 2026, proactive monitoring, strategic planning and thorough cross-border tax risk assessments will be essential for navigating potential changes in U.S. withholding policy and maintaining compliance across jurisdictions. RSM US can assist by providing deep technical expertise, real-time insights and tailored advisory services to help organizations assess risk, interpret regulatory developments and implement effective cross-border tax strategies.

With the due date for 2025 Forms 1099 just around the corner and new provisions set to take effect on Jan. 1, 2026, withholding agents struggling to manage competing priorities face the daunting task of operationalizing changes and deciding what to do first. While filing tax year 2025 information returns timely is certainly of utmost importance, companies also need a strategy for implementing changes for 2026 and forward. In developing a strategy, it is important for companies to consider aligning their efforts with legislative priorities and initiatives identified by regulators.

In September 2025, the IRS and Treasury’s Office of Tax Policy released the text of its 2025-2026 priority guidance plan, which serves as a blueprint for upcoming regulatory efforts. The plan includes 105 projects that the Treasury and the IRS have identified as priorities for the July 2025 through June 2026 plan year. Interestingly, of the 105 items listed as priorities, four of the first five items listed relate to items with information reporting implications under OBBBA that the Treasury and the IRS says it will prioritize this year, including:

• Guidance under section 224 regarding deductions for qualified tips, including transition relief.
• Guidance under section 225 regarding deductions for qualified overtime compensation, including transition relief.
• Guidance under sections 163(h), 6050AA, 6721 and 6722 regarding deductions for qualified passenger vehicle loan interest, including information reporting and transition relief.
• Guidance under sections 128, 139J, 530A, 6434 and 6659 regarding Trump accounts.

The Treasury also listed a host of priorities for guidance on reporting of transactions involving digital assets along with the items below that have information reporting implications:

• Regulations under section 6050W regarding repeal of revision to de minimis rules for third-party network transactions.
• Regulations under sections 6041 and 6041A regarding the increase in threshold for requiring information reporting with respect to certain payees.
• Guidance under section 4475 regarding excise tax on certain remittance transfers.

Based on this list, there is likely a reasonable basis for concluding that developing systems and controls for timely and accurate reporting of qualified tips and overtime as well as interest on auto loans and reporting of data and transactions involving digital assets and Trump accounts should be prioritized. These provisions support deductions for taxpayers whose eligibility is determined based on what is reported on an information returns. Recognizably, in most instances, the IRS has indicated that it will not penalize taxpayers that make a good faith effort to comply with the rules during this first year of transition. For this reason, other regulations governing higher reporting thresholds, which are listed later on the IRS’ list of priorities, seem to suggest that implementing changes to systems and processes for tracking these thresholds can be secondary priorities as withholding agents can continue reporting based on lower thresholds without running afoul of the rules or risk of penalties.

Reporting qualified tips and overtime for payments to nonemployees

The OBBBA introduces significant changes to reporting requirements for qualified tips and overtime paid to nonemployees. Under the new regime, payors must report qualified tips and overtime separately to workers. Qualified tips are generally defined as cash tips paid voluntarily in occupations that customarily received tips as of Dec. 31, 2024, while qualified overtime refers to overtime compensation paid under the Fair Labor Standards Act beyond the regular rate. These amounts must be reported on updated IRS forms 1099-NEC for nonemployees and 1099-K for tips processed through third-party platforms. For more details on OBBBA’s general requirements for qualified tips and overtime payments, refer to RSM’s prior coverage of the issue available at the following link: No tax on tips and overtime: What employers should know.

Many have considered the implications of these changes for employers. However, this change in reporting requirements also has implications for compensation paid to nonemployees (including vendors and other payees), and compliance in this space will require significant operational adjustments. For these workers, the OBBBA provides an above-the-line deduction for qualified tips and qualified overtime, effective for tax years 2025 through 2028, provided that they are reported on an information return–which puts the onus on payors that engage workers as nonemployees to comply with reporting requirements. Payors face unique challenges in tracking and updating new reporting thresholds for 1099-NEC and 1099-K forms, which are discussed below in more detail. Additionally, thresholds for state equivalent forms 1099-NEC and 1099-K reporting may differ from federal thresholds and most states have not issued guidance on the issue yet, which makes it difficult to allocate budget and assign resources given the uncertainty of requirements.

Sections 70201(f) and 70202(c) of the OBBBA add new information reporting requirements to the Internal Revenue Code (Code) for Form 1099 reporting of qualified tips and qualified overtime to nonemployees by:

• Amending sections 6041(a) and 6041(A) of the Code to require payors to include a separate accounting of cash tips and qualified overtime on information returns filed and to list the occupation described in section 224(d)(1) of the person receiving such tips.
• Adding new paragraphs 6041(d)(3),6041A(e)(3), and 6041(d)(4) to the code to provide that in the case of compensation to non-employees, a payor is required to include on the written statement furnished to the payee, the portion of payments that are qualified overtime compensation, the portion of the payments reasonably designated as cash tips and the occupation (as described in section 224(d)(1)) of the person receiving such tips.
• Adding new paragraph 6050W(a)(3) to provide that in the case of a third-party settlement organization (TPSO), the TPSO is required to include the portion of reportable payment transactions that have been reasonably designated by payors as cash tips and the occupation described in section 224(d)(1) of the person receiving such tips on the information return filed.
• Amending section 6050W(f)(2) to require a TPSO to include a separate accounting of any such amounts that have been reasonably designated by payors as cash tips and the occupation described in section 224(d)(1) of the person receiving such tips on the written statement furnished to the payee.

Businesses were originally required to start reporting tips and overtime separately beginning in 2025, and to identify the occupation of the tip recipient. However, in response to industry comments, the IRS has recently announced in Notice 2025-62 that tax year 2025 will be a transition year for all payors. Specifically, for payors of compensation to nonemployees, this means that the IRS will not impose penalties for 2025 Forms 1099-NEC filed without a separate accounting of cash tips and the worker’s occupation, or without qualified overtime reported.  Likewise, for 2025 Forms 1099-K, penalties will not be imposed for those that do not include the portion of reportable transactions designated as qualified tips. Refer to RSM’s prior alert for details.

Full compliance—including mandatory separate reporting and inclusion of Treasury Tipped Occupation Codes (TTOCs)—will apply to amounts earned beginning in 2026. Draft 2026 Forms 1099-NEC and 1099-MISC are pending as of the date of this article. However, payors should review point-of-sale systems, tip-sharing policies, processes for engaging workers as well as payroll processes now to prepare for these changes and avoid compliance risks.

Looking ahead to 2026: As businesses prepare for the implementation of the qualified tip and overtime reporting regime, 2026 will be a pivotal year for transition and system readiness. For qualified tips and overtime paid to nonemployees that are reportable on Form 1099-NEC or that are settled on payment platforms and reportable on Form 1099-K, companies should focus on updating their processes and payment platforms to ensure proper flagging and accurate tracking and reporting of required information. . Internal policies and employee training programs will also need to be reviewed and updated to align with the new compliance standards, particularly for roles involving nonemployee compensation and third-party payment platforms. For more detailed information on the new qualified tip reporting requirements for employees and nonemployees, please refer to this RSM article.

As companies consider compensation planning strategies, engaging with RSM tax advisors early will be valuable for interpreting forthcoming IRS guidance and to prepare for the phased rollout of the simplified quarterly reporting option for small businesses in 2027. Additionally, businesses should begin efforts to cleanse and organize data to ensure proper classification of qualified tips and overtime. Proactive planning throughout 2026 will help mitigate compliance risks and position organizations for a smoother transition when the full reporting regime takes effect.

Reporting auto loan interest

OBBBA has introduced a new information return obligation under section 6050AA for certain auto loans originated after Dec 31, 2024. Effective Jan. 1, 2026, lenders that receive $600 or more in qualified auto loan interest on certain personal-use vehicles will be required to file Form 1098-VI with the IRS and to furnish a copy of the form to recipients. The IRS released a draft of Form 1098-VI on Oct. 17, 2025 for reporting vehicle interest to both the IRS and borrowers. This form will report the total interest paid, the vehicle identification number (VIN), the loan origination date and the outstanding principal balance. Lenders are also required to furnish a matching statement to borrowers by Jan. 31 of the following year.

The IRS has designated 2025 as a transitional year to ease implementation. During this period, lenders are not required to file with the IRS, but must provide borrowers with a statement listing qualified interest paid and key vehicle details, such as the VIN. This statement can be delivered through online portals, monthly or annual statements or similar methods. Penalties will not apply for failing to file with the IRS in 2025 as long as borrowers receive the required statement. Taxpayers should retain these statements for their records in 2025 and expect to receive Form 1098-VI starting in 2026 to claim the auto loan interest deduction. Lenders should use this time to prepare systems for capturing and reporting detailed loan and vehicle data to ensure full compliance when the new requirements take effect.

This expanded reporting framework introduces a more detailed and structured compliance regime. Lenders will need to capture and report not only interest amounts, but also vehicle-specific data, such as VINs and loan terms. This affects a broad range of organizations in the automotive, financial services and specialty finance sectors—including banks, credit unions, captive auto finance companies and independent finance providers—who must now furnish detailed loan and vehicle information to the IRS.

Looking ahead to 2026: OBBBA requires lenders to report interest on loans for specified passenger vehicles originating after Jan. 1, 2025. The 2026 tax year was expected to be the first full cycle of compliance requiring lenders to report interest starting in January 2026, along with key data like VINs, origination dates and principal balances. However, for loans that originated in 2025, Notice 2025-57 provides transitional relief, allowing lenders to report interest through alternative methods on new Form 1098-VI, and delays penalties associated with these information returns for the 2025 reporting year. This transitional relief is designed to provide impacted filers more time to update their systems and processes to ensure compliance with the new reporting rules. Regardless of the transitional relief, impacted organizations should be trained on updated rules and internal controls should be in place to verify accuracy before filing. Borrowers will begin receiving statements in 2026, likely increasing reliance on lender documentation. Lenders should be ready to provide timely, accurate reporting and responsive borrower support.

RSM can assist lenders with navigating these new requirements by providing guidance on system readiness, data integrity and compliance controls. Our teams can help implement reporting solutions, train staff and interpret IRS guidance to ensure accurate filings and minimize risk.

Increased Form 1099 reporting threshold for payments to nonemployees

The OBBBA includes an important change to Forms 1099-NEC and 1099-MISC, reporting thresholds for nonemployee compensation and other miscellaneous payments. Specifically, section 70433 of the OBBBA amends sections 6041(a) and 6041A(a)(2) to raise reporting thresholds for Forms 1099-NEC and 1099-MISC from $600 to $2,000, effective Jan. 1, 2026 and introduces annual inflation indexing beginning in 2027. Form 1099-NEC, Nonemployee Compensation, is used to report compensation paid to individuals and entities that are not employees—such as payments to freelancers, consultants, board members and subcontractors—making it is particularly relevant for industries with project-based or outsourced labor models. Meanwhile, Form 1099-MISC, Miscellaneous Information, covers a broader range of reportable payments, including rents, prizes and legal settlements, which are common across real estate, legal, insurance and various professional services companies.

The updated Forms 1099-NEC and 1099-MISC reporting thresholds affect virtually every industry as companies will have fewer forms to file as a result of the higher reporting threshold, but the impact is especially pronounced in sectors that frequently engage independent contractors, vendors and other nonemployee service providers. These companies must now reset systems and update policies to flag payments at the higher $2,000 federal reporting threshold and identify states that may not have adopted the federal threshold. Sectors facing potentially high impact include construction, business services, financial services, health care, retail, restaurant, manufacturing, consumer goods and food & beverage industries. Other industries, such as the casino and gaming industry, for example, that produce significant volumes of Forms 1099 should have lower volumes of forms as well with the higher reporting threshold.

Looking ahead to 2026: As businesses prepare for the 2026 reporting cycle, it will be critical to implement system updates that reflect the new $2,000 threshold for Forms 1099-NEC and 1099-MISC. Organizations should begin reviewing their systems and processes now to ensure that they reflect the increased threshold and future inflation adjustments in order to capture all reportable payments. Organizations with high volumes of nonemployee compensation should prioritize education for internal teams and outreach to external vendors to mitigate confusion and compliance risks.

Additionally, companies should monitor IRS guidance on the implementation of inflation indexing, which is set to begin in 2027. Understanding how these adjustments will be calculated and applied will be essential for long-term planning and budgeting. Proactive engagement with RSM tax advisors and technology providers will help ensure a smooth transition and continued compliance in the evolving regulatory landscape.

Increased 1099-K reporting threshold

The OBBBA repealed the long-anticipated $600 reporting threshold for Form 1099-K,which applies to payment card and third-party network transactions, and restored the previous threshold of $20,000 in aggregate payments and 200 transactions per year retroactively. This change reverses a controversial provision enacted under the American Rescue Plan Act of 2021 (P.L. 117-2, 135 Stat. 4 (March 11, 2021)), which had significantly lowered the threshold to $600 with no minimum transaction count. The reinstated threshold aligns with the pre-2022 standard and is expected to significantly reduce the number of Forms 1099-K issued in 2025 and beyond. Section 70432(a) of the OBBBA retroactively amended the de minimis reporting threshold rules of section 6050W(e) by specifying that the amendment ‘take effect as if included in section 9674 of the American Rescue Plan Act.’

While the reinstatement of the prior Forms 1099-K threshold offers welcome relief for small businesses, gig workers, casual sellers and others using third-party platforms, it does not eliminate the broader compliance challenges that many organizations continue to face. One of the most significant issues is the lack of consistent and clear guidance across states. Although the IRS has reverted to the higher federal threshold, several states still enforce lower thresholds, creating a patchwork of requirements that businesses must navigate. This inconsistency complicates reporting for companies operating in multiple jurisdictions who may need to track multiple reporting thresholds, especially when state-level guidance is unclear.

Another major challenge is the prevalence of Name/TIN mismatches, which can result in backup withholding or IRS notices. These mismatches often stem from informal naming practices on platforms with outdated records.

Additionally, many organizations struggle with decentralized systems and non-standard naming conventions for reportable fields, which can result in erroneous reportable data and trigger IRS notices and backup withholding requirements. When data is spread across multiple platforms, business units or acquired entities, inconsistencies in how fields like payer name or transaction type are labeled can hinder accurate reporting. This problem is exacerbated during mergers and acquisitions, where newly integrated systems may not align with existing tax reporting protocols.

Tracking thresholds across entities also remains difficult, even with the reinstated limits. Businesses must monitor transaction counts and dollar volumes across various payment processors, and without centralized tools or automated alerts, they risk missing filing obligations or duplicating reports.

Finally, the lack of formal, consistent guidance from the IRS and frequent changes to reporting rules have created confusion and uncertainty. Many businesses are unsure how to handle edge cases, such as partial-year acquisitions or platform-specific anomalies and the reactive nature of regulatory updates has made proactive compliance planning increasingly difficult.

Looking ahead to 2026: With the reinstated federal Form 1099-K threshold in place, 2026 is expected to ease reporting burdens for technology-driven payment platforms and platform-based services. However, reporting obligations may still arise under lower state-specific thresholds or in cases involving backup withholding.

Industry participants should proactively monitor state-level requirements and enhance their processes and systems to ensure compliance. Process and system updates should go beyond simply aligning with the federal threshold; they must also support robust TIN collection, validation and accommodate the varying state rules and withholding scenarios.

Importantly, this regulatory shift does not signal reduced IRS oversight. The agency continues to expand its use of data analytics and AI-driven audit selection, with a particular focus on gig economy income and digital payment activity. Third-party settlement organizations and payment card companies should remain vigilant and update their processes and systems accordingly in order to capture all required payments.

RSM is uniquely positioned to help organizations turn these regulatory changes into an opportunity for stronger compliance and operational efficiency. Beyond interpreting the reinstated federal threshold, RSM provides guidance on navigating the complex landscape of state-specific rules and withholding requirements. Our team brings deep experience in designing centralized tax reporting frameworks that integrate across platforms, business units, and acquired entities—reducing the risk of name/taxpayer identification number (TIN) mismatches and data inconsistencies.

We also help taxpayers implement advanced technology solutions for automated threshold monitoring, real-time TIN validation and streamlined reporting processes. With the IRS increasing its reliance on data analytics and AI-driven audit selection, RSM’s analytics capabilities and proactive risk assessments enable businesses to stay ahead of potential audit triggers. By combining regulatory insight, process optimization and technology enablement, RSM ensures organizations are not only compliant, but also resilient in a rapidly evolving digital payment ecosystem.

Excise tax on remittances

OBBBA adds new section 4475, which imposes a 1% federal excise tax on certain outbound remittance transfers from senders in the U.S. to persons or entities located in a non-U.S. jurisdiction, through a remittance transfer provider (RTP). Specifically, the law imposes a 1% excise tax on cross-border transfers funded with physical payment instruments, such as cash, money orders, cashier’s checks and similar non-digital methods. This provision represents a significant policy development aimed at improving tax compliance and oversight in the remittance sector, while balancing concerns about consumer access to liquidity and regulatory requirements. 

The law holds remittance transfer providers (RTPs) responsible for collecting the tax and is limited to remittances funded with cash and physical instruments, explicitly exempting transfers made via U.S. issued debit or credit cards or through regulated financial institutions subject to the Bank Secrecy Act. Please refer to our prior alert for details.

This provision has significant implications for financial institutions, financial technology (fintech) platforms, specialty finance providers and money transfer services, particularly those facilitating cash-based or non-digital cross-border transactions. Businesses operating in these sectors will face heightened compliance obligations, including the need to accurately identify, track and report taxable remittance activity under the new excise tax framework. The operational impact will be especially pronounced for RTPs that serve populations where cash-based transfers are more prevalent. As such, depending on your business model, it may be plausible to prohibit transfers to foreign persons or to implement policies requiring transfers with U.S. issued debit or credit cards or where funds transferred originate from U.S. banks.

The new 1% excise tax is effective for transfers starting Jan. 1, 2026. However, the IRS has recently announced that it will not impose failure to pay penalties on companies that fail to timely deposit the tax during the first three quarters of 2026. Refer to Notice 2025-55 and our recent alert available here for a more detailed discussion.

Looking ahead to 2026: As the IRS begins implementing the new excise tax framework, RTPs should anticipate further guidance and potential rulemaking that clarifies reporting obligations and enforcement mechanisms. Reporting will occur through the quarterly excise tax return, for which revisions and updated instructions are expected. Financial institutions and fintech platforms should work closely with RSM tax advisors, who are actively monitoring Treasury and IRS developments to help ensure their systems remain aligned with emerging requirements.

Additionally, businesses should prepare for increased scrutiny of remittance flows and potential audits focused on compliance with the new tax. This may include quarterly remittance schedules, enhanced due diligence procedures and integration of tax logic into transaction processing systems. Firms that act early to modernize their infrastructure and educate their customer base will be better positioned to navigate the evolving regulatory landscape and avoid penalties.

Trump accounts

Trump accounts, created under section 530A of the Code by OBBBA, are a new type of tax-advantaged savings account for children under age 18, effective for tax years beginning after Dec. 31, 2025. Financial institutions and other entities acting as trustees of such accounts, which will be designated by the Treasury Department in future guidance, will have new reporting obligations for Trump accounts starting in 2026.

These accounts operate similarly to traditional individual retirement accounts (IRAs) under section 408(a), but include special rules tailored for minors. While additional guidance from Treasury is pending, generally, distributions are prohibited until the beneficiary is 18, except for rollovers or for very limited reasons, but once made, they are expected to be reported by the trustee on Form 1099-R. The IRS recently published Notice 2025-68, with new guidance and clarification of key aspects for these accounts, which can be opened starting July 4, 2026, including account establishment, contribution limits, investment restrictions, and reporting requirements. While many details remain subject to future regulations, this guidance clarifies that each account is established via Form 4547, Trump Account Election(s), which is available in draft (along with draft instructions) or through the online tool or application expected to be available on trumpaccounts.gov in the middle of 2026. Accounts are established for the exclusive benefit of an eligible child under age 18 who has a Social Security Number at the time of account creation. Only one account per child is permitted and accounts may be opened by the Secretary of the Treasury or by another individual, such as a parent or guardian.

For each calendar year before the beneficiary turns 18, the aggregate annual contribution limit is $5,000 (excluding certain exempt contributions such as qualified rollovers, qualified general contributions or government pilot program contributions). The $5,000 limit is indexed for inflation for taxable years after 2027. Employer contributions (up to $2,500 per employee annually, indexed for inflation) and certain charitable or government contributions may also be made, subject to special rules.

Section 530A of the code imposes new detailed reporting obligations for Trump accounts. Under this section, the primary responsibility for reporting lies with the trustee of the Trump account. The trustee is the financial institution or entity that holds and administers the account on behalf of the beneficiary. The account trustee is responsible for reporting contributions (including source and amount), distributions, fair market value and investment in the contract, as well as any additional information required by the Treasury. Special rules apply for government and employer contributions, which must be identified separately, and for qualified rollovers, which require reporting within 30 days. Reporting generally occurs annually and ends after the calendar year in which the beneficiary turns 17, at which point standard IRA reporting rules apply. Failure to comply results in a $50 penalty per missed report unless reasonable cause is shown.

Looking ahead to 2026: Beginning in 2026, trustees (as identified by the Treasury Department) of Trump accounts will face a new and highly detailed reporting regime under section 530A of the Code. While modeled on existing frameworks for IRAs and Coverdell ESAs, these rules introduce unique requirements, including reporting contributions by source, distributions, fair market value and investment in the contract, as well as special treatment for government and employer contributions. Trustees must also comply with accelerated reporting for qualified rollovers within 30 days and ensure accurate reporting until the calendar year in which the beneficiary turns 17.

Treasury is expected to issue additional regulations and to finalize forms and instructions for Trump Accounts. Additionally, more information is expected on making elections to establish a Trump account either using Form 4547 or the online portal that is slated to launch in the first half of next year at www.trumpaccount.gov. These developments will likely include clarifications on data formats, submission timelines and integration with existing IRS reporting systems. Finally, state guidance on any state equivalent Form 1099-R reporting for Trump accounts is pending. Given the complexity and novelty of these requirements, trustees and financial institutions should continue monitoring guidance and must begin preparing now.

RSM is actively monitoring the Treasury and IRS guidance and will provide timely updates as new rules emerge. Our team can assist taxpayers by developing compliance frameworks tailored to Trump accounts, including automated reporting solutions, data validation processes and internal controls to minimize risk. RSM is also advising taxpayers on best practices for capturing contribution and distribution data and managing rollover reporting. For institutions managing large volumes of these accounts, RSM offers scalable electronic filing solutions designed to meet regulatory requirements and minimize risk. Early engagement is critical, especially with the anticipated high volume of accounts expected in the new year.

Discharged student loan debt reporting

The OBBBA excludes from gross income any student loan debt discharged due to death or total and permanent disability. This exclusion applies to both federal and private education loans and takes effect for discharges occurring on or after Jan. 1, 2026. The provision represents a significant tax relief measure for borrowers facing extraordinary life circumstances while introducing compliance safeguards to maintain the integrity of the tax system.

Taxpayers claiming the exclusion must provide a valid SSN on their individual income tax return. Failure to include the SSN will be treated as a mathematical or clerical error, allowing the IRS to reject or delay processing of the return. This requirement serves as a key compliance mechanism to ensure that only eligible taxpayers benefit from the exclusion.

The law also preserves reporting obligations for lenders and loan servicers. The IRS is expected to update Form 1099-C (Cancellation of Debt) instructions to reflect OBBBA rules beginning with 2026 tax year filings. These updates are expected to clarify how lenders and servicers report qualifying discharges under the new exclusion, align reporting fields with the new exclusion provisions and reinforce the critical requirement for lenders and servicers to capture and transmit borrower SSNs to facilitate IRS matching and compliance checks.

Looking ahead to 2026: As the student loan discharge exclusion becomes effective for discharges occurring on or after Jan. 1, 2026, stakeholders across the education finance ecosystem should prepare for operational and compliance changes. Taxpayers and preparers will need to ensure accurate SSN reporting to avoid delays in return processing or disallowed exclusions, while loan servicers and lenders must follow updated IRS reporting protocols and stay alert for regulatory updates. Organizations involved in student loan administration should evaluate their systems to ensure alignment with the updated compliance framework. RSM is uniquely positioned to support taxpayers through this transition, offering deep expertise in education finance, tax compliance and regulatory reporting.