Letter to the Treasury and IRS on the Car Loan Interest Deduction, REG-113515-25

To Whom it May Concern:

The American Bankers Association (ABA) submits these comments in response to the request for comments in REG-113515-25 (the "Proposed Regulations,") issued by the Department of the Treasury ("Treasury") and the Internal Revenue Service (IRS) concerning the deduction from federal income tax for certain interest on qualifying passenger vehicles (the "Car Loan Interest Deduction") under Sections 163(h) and corresponding information reporting requirement under Section 6050AA.

ABA acknowledges and appreciates Treasury and the IRS's efforts in publishing the Proposed Regulations. Still, as discussed below in more detail, ABA recommends Treasury and the IRS make several changes to the regulations prior to finalization to minimize the compliance burden for taxpayers and the IRS, and to ensure the IRS and individuals receive timely and accurate data.

Most notably, ABA recommends:

1. Extending the transition relief provided in Notice 2025-57 through tax year 2027 to align with a feasible information reporting implementation timeline;
2. Amending reporting definitions to align to the reporting requirements in Section 6050AA in the forthcoming Final Regulations to align with Section 6050AA;
3. Extending the penalty relief provided in Notice 2025-57 through 2027 for good-faith efforts made by lenders; and
4. Providing clarity on several miscellaneous issues.

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