We previously sent an announcement regarding the One Big Beautiful Bill Act and the provision “No Tax on Car Loan Interest” paid by borrowers. We’ve heard from a few of you, asking us to include this along with all our other tax forms. Earlier this week we received the IRS Publication 1220 and unfortunately there is no mention of this new requirement, nor any instructions on how information should be reported, either to members or to the IRS. We cannot attempt any integrated solution without technical specs from the IRS.
It’s likely those instructions might not come until much later in the year or possibly even after the first of the year. We’ll keep you posted as we learn more, but a completely automated solution for this year is looking very unlikely. However, we will be reaching out to our tax forms vendor to see what other options we have to assist. For example, if your CU has a large number of eligible loans, we might be able to make arrangements for printing from a file of member data you provide. We’ll keep you posted as we learn more!
What we do know, is that we still anticipate that lenders will be expected to identify and manage loans where the new rule applies.
We recommend credit unions flag loans accordingly, with a Due Diligence code, a Tracker, or a Custom Field. To determine which of your loans qualify, it is possible to query the VIN from the table that holds collateral records (CML, field CLID). While there are no defined parameters in the ACT for VIN numbers, you may elect to search for VIN numbers that indicate the vehicle was assembled in the United States. The loans must also match the additional requirements laid forth in the bill.
Our Asterisk Intelligence team is available to assist with developing a query that fits your requested parameters, if needed.
We encourage you to begin planning how you will be evaluating and tracking your accounts for eligible loans, so you’re ready to act quickly once additional guidance becomes available.
For additional questions or comments/suggestions, please continue to contact info@auditlinksuite.com.
