S. Michael Chittenden

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. Mr. Chittenden 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.

Mr. Chittenden 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.

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

Mr. Chittenden 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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IRS Releases Guidance on Coronavirus-Related Payroll Tax Credits

By S. Michael Chittenden and Marianna G. Dyson on Posted in Employment Taxes, IRS
On March 31, the IRS released multiple pieces of guidance regarding provisions of the Families First Coronavirus Response Act (“FFCRA”) and the Coronavirus, Aid, Relief, and Economic Stability (“CARES”) Act.  The FFCRA includes two employer social security tax credits for employers of 500 or fewer employees equal to the amount of paid leave that the … Continue Reading

Senate-Passed COVID-19 Legislation Includes Payroll Tax Provisions

By S. Michael Chittenden on Posted in Employment Taxes
Late Wednesday night, the Senate passed (96-0) the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, the third Coronavirus-related piece of legislation. Early Wednesday, the Senate announced that an agreement had been reached among Senate Republicans, Senate Democrats, and the Trump Administration on the package, but late concerns from a quartet of Republican senators stalled … Continue Reading

IRS Offers Informal Guidance on New Paid Leave Tax Credits; More to Come Next Week

By S. Michael Chittenden on Posted in Employment Taxes, IRS
Earlier this evening, the IRS offered informal guidance in IR-2020-57 regarding its administration of the payroll tax credits enacted as part of the Families First Coronavirus Response Act (the “Act”) earlier this week.  The Act mandates two forms of paid leave for employees of employers of 500 or fewer employees.  Employers of more than 500 … Continue Reading

COVID-19 Emergency Declaration: Notice 2020-17 Suggests Code § 139 is Available to Provide Tax-Free Payments for Certain Expenses

By S. Michael Chittenden and Marianna G. Dyson on Posted in Employment Taxes, IRS
In an earlier alert, we expressed concern about the applicability of Section 139.  Our concern was based on the fact that the President’s declaration of an emergency on March 13, 2020, with respect to the COVID-19 pandemic was under Section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the “Stafford Act”) … Continue Reading

Paid Leave Measure Enacted in Response to COVID-19 Outbreak

By S. Michael Chittenden and Jack Lund on Posted in Employment Taxes, IRS
UPDATE: President Trump signed the bill into law this evening. This afternoon, the Senate voted 90-8 to approve the House-backed Families First Coronavirus Response Act.  The legislation will provide up to ten weeks of paid FMLA leave and two weeks of paid sick leave to certain employees affected by COVID-19.  Details on the legislation, which … Continue Reading

House-Passed Coronavirus Relief Bill Leaves Many with More Questions than Answers

By Jack Lund and S. Michael Chittenden on Posted in Employment Taxes, IRS
This weekend, the House of Representatives passed the Families First Coronavirus Response Act, a relief bill negotiated with the agencies and supported by the President.  On Monday night, the House of Representatives substantively modified that bill in a follow-on resolution, H. Res. 904, referred to as technical corrections.  Despite the changes, concerns have been expressed … Continue Reading

COVID-19 Emergency Declaration: Code § 139 Uncertain; Leave-Sharing Policies Permitted

By Sarah Friedman, Marianna G. Dyson and S. Michael Chittenden on Posted in Employee Benefits, Employment Taxes, Fringe Benefits, Information Reporting, IRS
UPDATE: We have provided an updated analysis of the issues surrounding the availability of Section 139.  Our original post is below. On March 13, 2020, the President declared the COVID-19 pandemic to be an emergency under Section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the “Stafford Act”).  The decision to … Continue Reading

New Treasury Regulations Ease Payroll Administration Related to Employer-Provided Vehicles

By Marianna G. Dyson and S. Michael Chittenden on Posted in Employment Taxes, Fringe Benefits, IRS, Tax Reform
For decades, employers and employees have been effectively precluded from using two of the handiest special valuation rules—the fleet-average and vehicle cents-per-mile valuation rules—to value employees’ personal use of employer-provided vehicles.  The 1989 fringe benefit regulations imposed modest maximum vehicle values ($16,500 and $12,800, respectively, as adjusted for inflation) to limit the use of the … Continue Reading

IRS Releases Proposed Regulations on the Mechanics of Income Tax Withholding

By Sarah Friedman, S. Michael Chittenden and Marianna G. Dyson on Posted in Employment Taxes, IRS, Tax Reform
Today, the IRS published proposed regulations addressing changes made by the Tax Cuts and Jobs Act of 2017 (the “TCJA”) to how an employee instructs an employer to withhold income taxes on his or her Form W-4 (Employee’s Withholding Certificate). The Form W-4 was redesigned for 2020 to reflect the TCJA changes to how income … Continue Reading

Justice Department Continues Criminal Prosecutions in Employment Tax Cases

By Michael M. Lloyd and S. Michael Chittenden on Posted in Backup withholding, Chapter 3, Employment Taxes, FATCA, IRS, Justice Department, Trust fund taxes
Over the last few years, the Justice Department has worked with the IRS to more aggressively prosecute cases involving employment tax noncompliance and the failure to remit trust fund taxes to the U.S. Treasury.  Trust fund taxes are taxes withheld from the wages of employees such as federal income tax withholding and FICA tax withholding.  … Continue Reading

IRS Launches New Tax Withholding Estimator

By Michael M. Lloyd and S. Michael Chittenden on Posted in Employment Taxes, IRS, Tax Reform
Earlier this year, the IRS issued IR-2020-09, in which it announced the launch of a new and improved Tax Withholding Estimator. The Tax Withholding Estimator (the “Estimator”) is designed to help employees adjust their federal income tax withholdings by performing a “Paycheck Checkup.”  The process also helps employees  target the refund they want by adjusting … Continue Reading

IRS Issues Interim Guidance on Income Tax Withholding from Deferred Income Distributions

By Sarah Friedman and S. Michael Chittenden on Posted in Employment Taxes
The IRS recently released Notice 2020-3, which provides interim guidance on default federal income tax withholding rates applicable to certain periodic payments of deferred income.  The Notice also provides clarity as to how the IRS will accommodate a change that affects the form used to elect federal income tax withholding from wages, but not the … Continue Reading

Treasury Finalizes Section 871(m) Regulations and Further Extends Transitory Relief

By Xueshu ("Shae") Qian and S. Michael Chittenden on Posted in Chapter 3, IRS
On December 16, 2019, the Treasury and the IRS released final regulations under section 871(m) of the Internal Revenue Code.  The regulations finalize the 2017 temporary and proposed section 871(m) regulations without any substantive change.  On the same day, the Treasury and the IRS released Notice 2020-2 to extend through 2022 the relief provided in … Continue Reading

Proposed 162(m) Regulations are a “Lump of Coal”

By S. Michael Chittenden, Marianna G. Dyson and Michael M. Lloyd on Posted in Executive Compensation, IRS, Tax Reform
To corporations hoping for a holiday reprieve from the IRS’s narrow interpretation of the grandfathering rules included in the Tax Cut and Jobs Act (“TCJA”) amendment of section 162(m), the IRS has said “Bah… Humbug!”  To those foreign private issuers, publicly traded partnerships, and issuers of public debt hoping for relief from the expanded definition … Continue Reading

Notice 2019-63 Delivers Relief for Providers of Minimum Essential Coverage

By Molly Ramsden, Michael M. Lloyd and S. Michael Chittenden on Posted in Affordable Care Act, Employee Benefits, Information Reporting, IRS, Legislation, Tax Reform
Holding true to its holiday tradition, the IRS yet again decided to extend the deadline by which providers of minimum essential coverage (including certain applicable large employers (“ALEs”)) must furnish information statements to individuals regarding their 2019 insurance coverage. However, due to the effective elimination of the ACA’s individual mandate penalty through the Tax Cuts … Continue Reading

The IRS Introduces More Informative Backup Withholding Notices for Payers

By Jeffrey Zink, Michael M. Lloyd and S. Michael Chittenden on Posted in Backup withholding, Information Reporting, IRS
On November 14, 2019, the IRS announced that it has redesigned Notices CP2100 and CP2100A with the goal of providing more information to affected payers. These Notices are used to alert payers that the IRS received Forms 1099 containing incorrect or missing Taxpayer Identification Numbers (TINs) for payees and that the payer may need to contact … Continue Reading

Significant TCJA Guidance Due Before End of Year, Kautter Says

By Joseph Sullivan, Michael M. Lloyd and S. Michael Chittenden on Posted in Employment Taxes, Executive Compensation, IRS, Legislation, Tax Reform
Treasury Assistant Secretary for Tax Policy David Kautter attended the AICPA National Tax Conference on November 13, 2019, and commented that significant TCJA-related guidance should be expected to be released before the end of 2019.  Such guidance is likely to include proposed regulations addressing (1) federal income tax withholding under section 3402, (2) the executive … Continue Reading

November 15 Deadline Approaching for 2019 Qualified Intermediary Applications

By Michael M. Lloyd, S. Michael Chittenden and Jeffrey Lash on Posted in Chapter 3, FATCA, IRS
On November 6, the IRS issued its final reminder alert that the deadline for all Qualified Intermediary (“QI”) (including Qualified Derivatives Dealer (“QDD”)), Withholding Foreign Partnership (“WP”) and Withholding Foreign Trust (“WT”) applications for the 2019 year is November 15, 2019.… Continue Reading

Proposed Regulations Provide Guidance for Classification of Digital Content Transactions and Cloud Transactions

By Michael M. Lloyd, S. Michael Chittenden and Jeffrey Lash on Posted in Chapter 3, Information Reporting, IRS
On August 9, 2019, Treasury and the IRS issued proposed regulations under section 861 of the Code to clarify how transactions involving digital content and cloud computing are classified for tax purposes.  The new rules propose to revise and expand upon Treasury Regulation § 1.861-18 regarding digital content transactions and establish new Treasury Regulation § … Continue Reading

MyPayrollHR Scandal Serves as Reminder to Verify Employment Tax Deposits

By S. Michael Chittenden and Marianna G. Dyson on Posted in Employment Taxes
Although the facts are still unfolding, recent developments surrounding the collapse of payroll firm MyPayrollHR serve as a reminder to employers to regularly verify the actions of payroll service providers.  This should be a routine practice, regardless of the provider’s reputation and the longevity of the relationship.  In particular, employers should open their own EFTPS … Continue Reading

IRS Releases Updated Tax Withholding Estimator

By S. Michael Chittenden and Marianna G. Dyson on Posted in Employment Taxes, IRS, Tax Reform
Today, the IRS unveiled its new Tax Withholding Estimator to help employees complete the Form W-4 and ensure that withholdings are sufficient to cover their income tax liability.  The new calculator was previewed in the draft 2020 Form W-4.  (See earlier coverage.)  A near-final draft 2020 Form W-4 is expected to be released soon.  Currently, … Continue Reading

IRS Rules 23andMe’s Home DNA Kit Eligible for Partial FSA Reimbursement

By S. Michael Chittenden and Marianna G. Dyson on Posted in Employee Benefits, Fringe Benefits, IRS
In May, the IRS issued a private letter ruling to an individual taxpayer regarding the deductibility of 23andMe’s at-home DNA test kits under section 213(d) of the Code, which permits the deduction of medical expenses.  In the ruling, the IRS determined that an allocable portion of the purchase price may be treated as a deductible medical … Continue Reading
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