SECTION 1. PURPOSE

This notice announces that calendar years 2024 and 2025 will be regarded as the final transition period for purposes of Internal Revenue Service (IRS) enforcement and administration with respect to the implementation of the amendments made to the minimum threshold for reporting by third party settlement organizations (TPSO) under section 6050W(e) of the Internal Revenue Code (Code) ¹ by the American Rescue Plan Act of 2021 (ARP), Public Law 117-2, 135 Stat. 4 (March 11, 2021). In addition, this notice provides transitional relief from certain penalties for a TPSO making payments to a participating payee in settlement of third party network transactions who fails to pay backup withholding tax required to be withheld under section 3406 and its accompanying regulations during calendar year 2024. The transition period described in this notice is intended to facilitate an orderly transition for TPSO compliance with section 6050W(e) and participating payee compliance with income tax reporting.