Join us at TEI’s Midyear Conference! It is the premier event for in-house tax professionals and focuses on the policy, technology, and practical challenges shaping the corporate tax function in an election-year environment.
The conference will address leadership and ethical considerations, equipping in-house tax professionals with practical insights to manage risk, navigate uncertainty, and drive value in a complex global tax environment.
Register for the TEI Midyear Conference here, we hope to see you there!
Meeting Venue
Grand Hyatt Washington 1000 H St NW, Washington, DC 20001, United States
The IRS recently released its 2026 General Instructions for Forms W-2 and W-3, the comprehensive guide for wage and tax statement reporting. This publication is generally updated annually, with this year’s version dated January 29, 2026.
The most significant changes stem from Public Law 119-21, enacted July 4, 2025, which introduced three new reporting requirements to support employee tax deductions: cash tips reporting to support a qualified tips deduction, qualified overtime compensation reporting to support an overtime deduction, and employer contributions to Trump accounts. To accommodate these changes, box 14 was split into box 14a for general items and box 14b for Treasury Tipped Occupation Codes, and three new box 12 codes were added (TA, TP, and TT).
P.L. 119-21 also raised the wage reporting threshold from $600 to $2,000 when no taxes are withheld. The filing due date changed to February 1, 2027 for 2026 forms. Several amounts increased due to inflation, including the social security wage base from $176,100 to $184,500, health FSA limits from $3,300 to $3,400, adoption exclusions from $17,280 to $17,670, and QSEHRA maximums. Code P was expanded to include intelligence community employees, and State Paid Family and Medical Leave Act payments must now be included as wages. Maximum penalty amounts also increased across all categories due to inflation adjustments.
Established under the One Big Beautiful Bill Act (OBBBA), Trump accounts are a new type of traditional IRA established for the exclusive benefit of children under age 18, subject to special rules during a “growth period” that ends December 31st of the year before the child turns 18. The pilot program contribution is available for U.S. citizen children born after December 31, 2024, and before January 1, 2029, who have valid Social Security numbers.
Form 4547 can be filed immediately, including with 2025 e-filed individual income tax returns. The Treasury Department will begin sending account activation information in May 2026, with online election capability expected at http://trumpaccounts.gov by mid-2026. No contributions to Trump accounts may be deposited before July 4, 2026, including the $1,000 pilot program contribution.
The maximum number of records per CSV file upload has been increased from 100 to 250, which provides filers with greater flexibility when uploading bulk information return data through the IRIS Taxpayer Portal.
The Internal Revenue Service has released Instructions for Form 1098 (Rev. December 2026). These instructions apply to tax year 2026 information returns filed in early 2027. The instructions reflect legislative changes from the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025.
The notice that the $750,000 acquisition indebtedness limit was “set to expire” has been removed because OBBBA made this limit permanent. The Box 5 CAUTION directing filers to verify section 163(h)(3)(E) extension status was also removed because OBBBA made mortgage insurance premiums permanently deductible starting in 2026.
Maryland recently released a tax alert detailing how the federal One Big Beautiful Bill Act (PL 119-21), affects tax in the state. On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (PL 119-21) into law. Maryland has automatically decoupled from several business provisions of the Act and clarified that certain individual deductions do not flow through to Maryland returns.
For tax years 2025 through 2028, PL 119-21 allows federal deductions for income from tips, overtime pay, interest on automobile loans, and an additional deduction for individuals aged 65 or older. However, these deductions do not affect federal adjusted gross income (FAGI), which is Maryland’s starting point for calculating state income tax.
For income tax withholding purposes, while these provisions may reduce federal tax liability and affect federal withholding, they provide no Maryland tax benefit. Employees will still owe Maryland income tax on the full amounts of tips, overtime pay, and other income despite the federal deductions. Maryland withholding calculations should not be adjusted for these federal benefits.
Maryland has also decoupled from three business-related provisions affecting research expenditures, business interest deductions, and production property depreciation. These provisions require taxpayers to make adjustments on their Maryland returns but generally do not affect individual wage withholding.
The IRS has released form W-2 for tax year 2026, which is used for employment-related payments including income, and withholding.
A new box has been added to the form. Box 14b is for reporting the “Treasury Tipped Occupation Code,” used to indicate tips and occupation codes qualifying for tax exemption on tips.
New box 12 codes have been added. Code “TA” is used for section 128 account contributions, code “TP” reports the cash tips reported to the employer, and code “TT” indicates the total amount of qualified overtime compensation. Code “TP” may also be useful in the new box 14b.
The IRS has not yet released the 2026 instructions for form W-2. The instructions for the form are likely to provide additional direction on the use of the new box and codes.
Join us in Santa Clara for the SJSU Blockchain Tax Conference! This conference is a specialized professional development event that blends technical education with practical insights into blockchain tax compliance and emerging digital asset trends.
There are expected to be 100 attendees at this year’s conference. Attendees include a wide range of people involved with digital assets from law and CPA firms, academia and tax agencies.
Reserve your ticket today!
To review the agenda and registration details click here.
Meeting Venue
Delta Hotels Santa Clara Silicon Valley 2151 Laurelwood Road Santa Clara, California, USA, 95054
The North American Finance Executive Summit – Spring Edition is a premier gathering of industry leaders, finance executives, and experts dedicated to exploring innovative strategies, emerging trends, and best practices in the dynamic world of finance management.
Dive into a thoughtfully curated environment that brings together thought leaders, allowing you to explore new ideas and engage in meaningful discussions.
Reserve your ticket today!
To review the agenda and registration details click here.
Meeting Venue
JW Marriott Tampa 510 Water Street, Tampa FL 33602
The IRS added a new webpage explaining that 1099-DA will be excluded from the Combined Federal/State Filing Program for Tax Year 2025. The IRS previously announced this in various other communications, like IRIS working group meetings.
The IRS explicitly notes: filers are responsible for meeting state 1099-DA reporting obligations outside of the CF/SF program.
The IRS updated the 2025 Instructions for Form 1099-DA to include a new section, “De minimis rules for certain sales.” The new section provides information on de minimis reporting rules for PDAP (Processor of digital asset payment) sales and optional reporting methods.
These rules are not new; the previous version of the instructions omitted them.
De minimis rule for PDAP sales. A broker that is a processor of digital asset payments is not required to report PDAP sales effected for a customer if those PDAP sales are less than or equal to $600 for the year.
De minimis rule for qualifying stablecoin sales. A broker using the optional reporting method for qualifying stablecoins is not required to report Form 1099-DA if the customer’s aggregate gross proceeds from all designated sales of qualifying stablecoins do not exceed $10,000 for the year.
De minimis rule for specified NFTs. A broker using the optional reporting method to report sales of specified NFTs is not required to report Form 1099-Da if the customer’s aggregate gross proceeds from all specified NFT sales do not exceed $600 for the year.
Rather than officially correct the instructions, the IRS released information about the correction in an update, here.
The New Mexico Taxation and Revenue Department has released new Form TRD-41431 (Workers’ Compensation Fee Return and Employees’ Quarterly Wage and Withholding Report).
Effective for reporting periods beginning January 1, 2026, all taxpayers who withhold New Mexico tax from wages, pensions, and annuities are required to file Form TRD-41431. Previously, only employers with more than 50 employees who did not file unemployment insurance taxes with the Workforce Solutions Department were required to file this information quarterly.
The due date is on the 25th of the month following the close of each calendar quarter. The form must be filed electronically with the department. Form TRD-41414 (Wage Withholding Tax Return) is still required to report and pay associated wage withholding.
Join Sovos at the 19th Group Indirect Tax Exchange to gain expert insights into the industry adoption of e-invoicing and the challenges of e-reporting. We will also be hosting a dedicated session with Kelly Muniz, Senior Regulatory Counsel, Sovos, on Keeping Up with Legislative Changes and Shifting Local Reporting Requirements, covering:
Dealing with increased demand on transactional and master data in near real time
Stay ahead of the latest e-invoicing conversations and make the most of this leading conference and networking event. Reserve your ticket today!.
To review the agenda and registration details click here
Meeting Venue
Marriott Hotel Leidseplein, Stadhouderskade 12, 1054 ES Amsterdam, Netherlands
The Treasury and IRS have begun implementing a new car loan interest deduction that allows many individual taxpayers to deduct interest paid on qualifying vehicle loans. While the policy has drawn headlines, the real work sits with auto finance lenders and financial services companies that must operationalize the rules, support borrowers, and meet new information reporting requirements.
This is not a “wait and see” moment. But it is also not a moment to start building bespoke systems for a regulation that is temporary and still evolving.
Car Loan Interest Deduction 2026: What Lenders Must do to Avoid Tech Debt
The deduction was created by the One Big Beautiful Bill Act of 2025, which added IRC section 163(h)(4). That new section carved out a limited exception to the long-standing rule that personal auto loan interest is not deductible.
To implement the statute, the IRS and Treasury issued:
Notice 2025-57, providing transitional relief for the tax year 2025 and acknowledging that reporting infrastructure would not be immediately available.
Proposed regulations (REG-113515-25), published in December 2025, defining qualified passenger vehicle loan interest and the scope of covered loans.
Industry comments on the proposed regulations are due February 2, 2026. That matters because until the comment period closes and Treasury reviews feedback, the regulations cannot be finalized. As a result, the Form 1098-VLI cannot be finalized either.
Even in a smooth process with no major changes, a spring 2026 final form release is the earliest realistic outcome. That leaves lenders in a long interim period where data must be captured, but reporting rules are not final.
This timing reality makes one thing clear: building to a draft form is a mistake.
Eligibility Rules and What Qualifies as Interest
Under the proposed regulations:
The deduction applies to new loans originated after December 31, 2024.
Vehicles must be for personal use and have final assembly in the United States.
The deduction is above the line and available to most individual taxpayers.
The regulations state that qualified passenger vehicle loan interest includes all interest payable with respect to the amount financed under a specified passenger vehicle loan. That language indicates that when a prior vehicle loan balance is rolled into a new qualifying loan and included in the amount financed, the amount of interest attributable to that rolled-over amount is included.
While future guidance may refine boundaries, lenders should assume this interest is in scope and ensure it is captured at the data level.
Lender Action Plan: How to Prepare for Car Loan Interest Deduction Reporting
Focus on Data Capture, Not Form Design
With the comment period still open on these Proposed Regulations and the final version of Form 1098-VLI months away from finalization, now is the worst possible time to hard-code reporting logic.
What lenders should be doing instead is ensuring they can reliably capture:
Borrower name and TIN
Loan origination date and qualification status
Amount financed, including rolled-over balances
Interest paid by calendar year
A more practical approach is to avoid locking reporting logic to a draft form altogether. With the regulations still open for comment and the form unlikely to be finalized until at least spring 2026, hard-coding 1098-VLI reporting workflows now creates unnecessary rework risk.
Instead, lenders should focus on ensuring that core systems can consistently capture and retain the underlying data elements required for reporting, while relying on an external reporting layer that can adapt as requirements evolve. Separating data capture from reporting execution reduces the likelihood that changes in form layout, instructions, or definitions force downstream system redesigns.
The form will evolve. The obligation to produce accurate, defensible data will not.
Consolidate Reporting Under Your IRW Strategy
Auto finance lenders are already subject to information reporting and withholding (IRW) rules. Many issue other information returns, such as Form 1099-INT or Form 1099-NEC, and any lender that files information returns is exposed to penalties under IRC sections 6721 and 6722 for incorrect or late reporting. The car loan interest deduction adds another reporting obligation to that existing footprint.
This is the moment to consolidate information reporting and withholding into a single outsourced solution, so that turning requirements on and off is configuration, not engineering. Without that separation, internal IT resources are inevitably pulled into designing and supporting a reporting build that will be retired when the deduction sunsets.
That risk is compounded by the fact that Form 1098-VLI must be transmitted through the IRS’s new IRIS platform via API, meaning this is not just a one-off form build but part of a broader technical shift in how information returns are filed. Even lenders that already issue other 1099s must now account for IRIS connectivity, authentication, schema management, and ongoing change, making a narrow, form-specific build particularly inefficient in the context of the wider IRIS transition.
Anticipate States to Follow Federal 1098-VLI Rules
Lenders should also expect state reporting considerations to follow federal implementation. Several states already require or accept Forms 1098 for mortgage interest and Forms 1098-E for student loan interest.
While no states have yet issued guidance specific to Form 1098-VLI, state conformity historically lags federal action. When it does arrive, it often expands reporting scope rather than narrows it. Planning solely for federal reporting increases the risk of having to revisit design decisions once state requirements emerge.
That does not reduce the risk, but it does shift where the control must live.
For vehicle loan interest reporting, best practice is to collect a valid Form W-9 at onboarding and to ensure that the name and TIN used for tax reporting align precisely with the customer identity information already collected for AML and KYC purposes. This is not only a tax law requirement for W-9 information to be treated as valid, but also an operational consistency issue.
Lenders should have an operational process in place to:
Collect a Form W-9 or valid Substitute version at time of originating the loan.
Validate that the legal name and TIN submitted on Form W-9 exactly match internal customer records.
Reconcile discrepancies between tax forms and AML/KYC documentation before reporting.
Correct data upstream, rather than waiting for the IRS to notify of name/TIN mismatches after forms are filed.
Getting tax identity right at the front end reduces penalty exposure, limits post-filing remediation, and avoids unnecessary borrower outreach after forms are issued.
Prepare Borrowers Without Giving Tax Advice
Borrowers have never received a Form 1098-VLI before. Many will not recognize it, and lenders should expect questions unless expectations are set in advance. At the same time, lenders are not in the business of providing tax advice and should not be placed in that position.
The goal is not to explain how the deduction works. It is to reduce confusion and avoid unnecessary call volume.
Practical steps lenders should consider in 2026 include:
Showing borrowers an example of what the 1098-VLI will look like, so the form itself is not a surprise when it arrives.
Standing up a simple FAQ page that explains what the form is, why it is being provided, and where borrowers should go for tax questions.
Promoting electronic delivery early, including advance communication that the form will be available electronically and encouraging borrowers to opt in. This helps reduce print and mail costs and avoids last-minute outreach tied to statutory mail delivery requirements.
Clear, proactive communication can prevent confusion without crossing into tax advice and can materially reduce downstream customer service impact during the first filing season.
Open Questions Reinforce the Case for Outsourcing
Some technical questions remain unresolved, and they are not academic. They go directly to how interest must be calculated, categorized, and reported on the new Form 1098-VLI.
Other IRS interest reporting regimes make clear that “interest” is not always limited to stated periodic interest. For example, in the student loan context, Treasury regulations under section 1.221-1(f) treat certain capitalized interest and related charges as interest for reporting purposes. Similarly, mortgage interest reporting under section 1.6050H-1 can include amounts beyond simple stated interest, depending on how charges are structured and assessed, including certain late charges and loan-related fees.
The proposed vehicle loan interest rules are still unclear, especially regarding late fees, deferred interest, and origination charges as reportable interest for Form 1098-VLI. Until Treasury issues final regulations, lenders should expect possible changes and avoid relying on interpretations that may not be permanent.
Lender Action Plan: Car Loan Interest Deduction Reporting
Again, The rules are not final. The form is not final. But the reporting obligation is clearly coming. Lenders need to act without hard-coding assumptions that may change.
That means focusing on durable data, clean tax identity, and a reporting approach that can adapt as guidance evolves and eventually sunsets. How this is handled now will determine whether 1098-VLI becomes a manageable compliance exercise or another cycle of unnecessary rework.
The Canada Revenue Agency (CRA) has released the 2025 edition of Guide T4061(E), NR4 – Non-Resident Tax Withholding, Remitting, and Reporting. The primary change for tax year 2025 is the launch of the Non-Resident Withholding Tax online portal services. In October 2025, the CRA expanded its secure portal services to include online access to non-resident tax accounts, allowing users to view account balances, make payments, and update contact and representative information.
Canada’s tax year 2025 NR4 guide can be found here.
More information on Non-Resident Withholding Tax accounts can be found here.
The New Mexico Taxation and Revenue Department has released FYI-330, updating guidance on income and withholding information returns and filing methods.
Beginning January 1, 2026, all employers must submit annual income and withholding statements (Forms W-2, W-2G, and 1099-R) electronically, regardless of employee count. Filers should note that the Department no longer requires notification that a payer is filing through the Combined Federal and State Filing Program.
The Department also announced a new quarterly reporting requirement: taxpayers who withhold New Mexico tax from wages, pensions, and annuities must file Form TRD-41431, Workers Compensation Fee Return and Employees Quarterly Wage and Withholding Report, beginning with reporting periods starting January 1, 2026.
The IRS has updated Form 8809, used to request filing extensions for information returns including Forms W-2, 1099, 1042-S, and 1095.
The most notable update is the addition of the Information Return Intake System (IRIS) as a filing option for automatic 30-day extensions. IRIS will fully replace the FIRE system in January 2027. The IRS also removed Forms 1099-QA and 5498-QA from the list requiring paper submission. The revised form also clarifies the difference between “automatic” and “nonautomatic” extensions.
The IRS has released Publication 4163 (Rev. 12-2025) for Modernized e-File (MeF) business returns processed in 2026. This publication outlines electronic filing requirements and guidance for returns filed through the IRS Modernized e-File (MeF) platform. There were several key changes in this recent update to the publication, which include the following:
Puerto Rico form discontinuation: Forms 940-PR, 941-PR, 941-SS, and 943-PR have been removed from MeF. Filers must now use Forms 940, 941, 943, or 944 (or Spanish versions 940-SP, 941-SP, 943-SP).
Expanded form support: MeF now accepts Forms 1120-H, 1139, 709, and 709-NA, with Forms 1120-RIC, 1120-REIT, 1120-L, and 1120-PC planned for later in 2026.
Responsible Party reporting: A new section emphasizes the 60-day requirement to file Form 8822-B when a responsible party changes, addressing fraud and identity theft concerns.
Technical updates: The IRS extended SOR mailbox retention from 30 to 60 days and adjusted the Sunday maintenance window to 12:00 a.m.–8:00 a.m. Eastern time.
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