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S. Michael Chittenden

Michael Chittenden practices in the areas of tax and employee benefits with a focus on the Foreign Account Tax Compliance Act (FATCA), information reporting (e.g., Forms 1095, 1096, 1098, 1099, W-2, 1042, and 1042-S) and withholding, payroll taxes, and fringe benefits. Michael advises companies on their obligations under FATCA and assists in the development of comprehensive FATCA and Chapter 3 (nonresident alien reporting and withholding) compliance programs.

Michael advises large employers on their employment tax obligations, including the special FICA and FUTA rules for nonqualified deferred compensation, the successor employer rules, the voluntary correction of employment tax mistakes, and the abatement of late deposit and information reporting penalties. In addition, he has also advised large insurance companies and employers on the Affordable Care Act reporting requirements in Sections 6055 and 6056, and advised clients on the application of section 6050W (Form 1099-K reporting), including its application to third-party payment networks.

Michael counsels clients on mobile workforce issues including state income tax withholding for mobile employees and expatriate and inpatriate taxation and reporting.

Michael is a frequent commentator on information withholding, payroll taxes, and fringe benefits and regularly gives presentations on the compliance burdens for companies.

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On September 19, 2025, the IRS published proposed regulations to implement and provide guidance regarding new Section 224, enacted as part of the One Big Beautiful Bill Act (P.L. 119-21).  The proposed regulations define qualifying payment methods, jobs that customarily receive tips, and exclusions from the deduction.

Section 224 would allow single filers who earn up to $150,000 annually or married couples who earn up to $300,000, to deduct up to $25,000 in qualified tips received during the tax year in an occupation that customarily and regularly received tips on or before December 31, 2024.  The deduction phases out for taxpayers with modified adjusted gross income over $150,000, and over $300,000 for joint filers.  The proposed regulations clarify that the maximum deduction is reduced (but now below zero) by $100 for each $1,000 by which the taxpayer’s modified adjusted gross income exceeds the $150,000 (or $300,000) limit.  To be deductible, tips must be included on reporting statements, such as the Form W-2 or Form 1099.  No deduction is allowed under section 224 for any year beginning after December 31, 2028.Continue Reading No Tax on “Qualified” Tips:  IRS Issues Proposed Regulations on Tipped Income Deduction

Signed into law by President Trump on July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) (H.R. 1) adds section 6050AA to the Internal Revenue Code to adopt new information reporting requirement requiring businesses receiving interest on car loans from individuals to report specified information to the IRS (presumably on a new form in the 1098 series) and to provide a written statement to the payers.  The requirement is similar to those under section 6050H for businesses receiving payments of mortgage interest.  The requirement was adopted in conjunction with a new tax deduction for up to $10,000 in interest paid on loans used for the purchase of passenger vehicles assembled in the United States.  (The deduction is subject to a phaseout for individuals with adjusted gross incomes above $100,000 ($200,000 for married filing jointly.)Continue Reading Auto Loan Interest Deduction Comes with New Information Reporting Requirement for Lenders

The House today passed the Senate-passed version of the One Big Beautiful Bill Act (H.R. 1) (“OBBBA”), which includes a number of major tax provisions, including a number of provisions that would affect withholding and information reporting obligations (see prior coverage here, here, here, here, here, and here—note that earlier coverage of some other provisions in the original House bill were dropped or modified from the legislation that was ultimately enacted).

One provision that was in the original House-proposed legislation but then removed before it passed the House found its way back into the final legislation that ultimately passed the House and Senate. Section 112205 of OBBBA includes enforcement provisions related to COVID-Related Employee Retention Credits. That credit was originally enacted as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020 and then extended and expanded in 2021. The credit, which was modeled on a credit previously used for physical disasters such as hurricanes and wildfires, was intended to cover a portion of employer’s payroll costs to encourage them to keep employees on payroll and was similar to programs enacted in other countries during the COVID-19 pandemic.

Unfortunately, the credit became mired in IRS delays as the IRS struggled to process the influx of claims amid staffing shortages of its own. The IRS released guidance in the form of FAQs, which this blogged detailed, and then later in more formal notices, which became more restrictive over time. (See our earlier three-part series on IRS guidance: here, here, and here.) In the face of this guidance, a cottage industry began advising employers on the credit, some of whom took increasingly aggressive positions in the view of the IRS—and in the views of some tax professionals. Section 112205 of OBBBA is a response to those perceived abuses.

OBBBA (1) retroactively suspends some pending claims for the employee retention credit; (2) extends the limitation period on assessments for some employee retention credit claims; (3) extends the penalty on excess refunds to employment taxes; and (4) adds a new of enforcement provisions targeting “COVID-ERTC Promoters.”Continue Reading Reconciliation Bill Affects Pending ERC Claims; Cracks Down on ERC Promoters

After being passed by the House of Representatives, this year’s reconciliation bill (H.R. 1) moved to the Senate, which passed its own version of the legislation today, July 1.  The Senate bill would preserve without significant change many tax-related items from the House bill.  There are several provisions, however, where the Senate bill varies from the version the passed the House earlier.  The Senate-passed legislation will now head back to the House, where its fate is somewhat uncertain.

We previously covered several of the relevant tax provisions when House passed its version of the reconciliation bill.  This article is part of a series of articles examining how those provisions would change under the Senate’s legislation.

The Senate-passed bill contains a new edition of the No Tax On Tips provision, adopting aspects of the provision included in both the House reconciliation bill passed by the House of Representatives (the “House Bill”) (see prior coverage) and in the previous standalone Senate bill on No Tax On Tips (“S. 129”) (see prior coverage).Continue Reading Senate Reconciliation Bill Retains No Tax on Tips Provision with Some Changes

After being passed by the House of Representatives, this year’s reconciliation bill (H.R. 1) moved to the Senate, which passed its own version of the legislation today, July 1.  The Senate bill would preserve without significant change many tax-related items from the House bill.  There are several provisions…

Continue Reading Senate Reconciliation Bill Drops Unpopular UBTI Proposal for Transportation Fringes

After being passed by the House of Representatives, this year’s reconciliation bill (H.R. 1) moved to the Senate, which passed its own version of the legislation today, July 1.  The Senate bill would preserve without significant change many tax-related items from the House bill.  There are several provisions, however, where the Senate bill varies from the version the passed the House earlier.  The Senate-passed legislation will now head back to the House, where its fate is somewhat uncertain.

We previously covered several of the relevant tax provisions when House passed its version of the reconciliation bill.  This article is part of a series of articles examining how those provisions would change under the Senate’s legislation.

As discussed in our prior post, the House bill would provide a new deduction for “qualified overtime compensation” under a new section 225 of the Code.  The Senate bill preserves the deduction for qualified overtime compensation but makes some changes.  To begin, the Senate bill would limit the annual deduction for qualified overtime to compensation to $12,500 ($25,000 for taxpayers filing a joint return).  The House bill did not include a cap.Continue Reading Senate Reconciliation Bill Would Retain Tax Deduction for Overtime Pay, Subject to Certain Restrictions

On May 20, 2025, the Senate unanimously passed S. 129, the No Tax on Tips Act (the “Senate Bill”) which differs in several substantive ways from the “No Tax on Tips” provision included the House reconciliation bill (H.R. 1) passed by the House of Representatives (the “House Bill”) (see prior coverage).  As with the House Bill, the Senate Bill provides a below-the-line deduction for “qualified tips” received by an individual in the course of such individual’s employment in an occupation in which tips are customary.  It also extends availability of the FICA tip tax credit under section 45B of the Internal Revenue Code to employers within the beauty service industry.  Below, we summarize the major substantive differences between the Senate Bill and the House Bill.Continue Reading Senate Passes Stand-Alone Bill to Enact “No Tax on Tips”

Early this morning, the House of Representatives passed a reconciliation bill that would enact significant tax provisions and spending cuts.  The House Bill now heads to the Senate, where changes are likely before passage.  This article is one of a series of articles discussing various proposals in the legislation that touch on tax withholding, reporting, and fringe benefits.

The House bill would expand the application of tax on excess compensation for tax-exempt organizations by redefining a covered employee as one who receives income in excess of $1 million annually.  Continue Reading House Reconciliation Bill Would Expand the Employees Covered by Excess Remuneration Rules for Nonprofit Organizations

Early this morning, the House of Representatives passed a reconciliation bill that would enact significant tax provisions and spending cuts.  The House Bill (H.R. 1) now heads to the Senate, where changes are likely before passage.  This article is one of a series of articles discussing various proposals in the legislation that touch on tax withholding, reporting, and fringe benefits.

The House Bill expands two credits designed to help employers cover the cost of employer-provided child care and paid family and medical leave.Continue Reading House Reconciliation Bill Would Extend Tax Credits for Family and Medical Leave and Child Care

The House of Representatives continues work on a reconciliation bill that would enact significant tax provisions and spending cuts.  The various legislative committees have completed work on the areas of the bill within their jurisdiction, including the Ways and Means Committee, which proposed language that would enact $3.8 trillion in tax cuts over the next ten years.  Over the weekend, the House Budget Committee consolidated the legislation, and the House Bill is now before the Rules Committee, where a managers’ amendment may be considered before it heads to the House floor.  This article is one of a series of articles discussing various proposals in the legislation that touch on tax withholding, reporting, and fringe benefits.

The House Bill proposes to increase the thresholds under current law for information returns required under sections 6041 and section 6050W, as described in more detail below, as well as to modify section 3406 (requiring backup withholding) to align with this proposed change.  Continue Reading House Reconciliation Bill Would Increase Thresholds for Reporting Obligations under Sections 6041 and 6050W