The IRS issued Notice 2024-85, providing guidance on the final transition period for IRS enforcement of the minimum reporting threshold for Form 1099-K for third-party settlement organizations (TPSOs). Platforms like Venmo and PayPal will need to report transactions via Form 1099-K when total payments exceed $2,500 in 2025, down from the $5,000 threshold for 2024, and the $20,000 threshold for 2023 and earlier. The statutory reporting threshold of $600 will be fully phased in for 2026. The threshold was lowered to $600 by the 2021 American Rescue Plan Act but implementation was delayed due to concerns from taxpayers and the IRS alike. The notice also provides relief for TPSOs that failed to withhold and pay backup withholding tax in calendar year 2024. The IRS will not impose civil penalties under IRC Secs. 6651 or 6656 for these failures. However, penalties will be imposed on TPSOs for these failures in 2025 and later. The transitional period provided in the notice applies only to payments made in settlement of third-party network transactions.