On Nov. 5, 2025, the Department of the Treasury and the Internal Revenue Service (IRS) issued guidance providing penalty relief to employers for tax year 2025 regarding new reporting requirements for cash tips (deduction of qualified tips) and overtime compensation (deduction of qualified overtime) added by the One, Big, Beautiful Bill (OBBB). Specifically, employers will not face penalties for failure to file correct information returns or for failure to furnish correct payee statements, since employers may not currently have the information required to be reported, or the systems or procedures in place to be able to correctly file the additional information with IRS and furnish such information to employees. Moreover, the IRS has already announced that Forms W-2 and 1099 for tax year 2025 will not be updated to account for the OBBB-related changes. This relief applies only to tax year 2025, which will be treated as a transition period for the IRS.
See the IRS press release or see the IRS Notice 2025-62