Michael M. Lloyd

Michael M. Lloyd

Michael Lloyd practices in the areas of tax and employee benefits with a focus on information reporting and withholding on cross-border payments (e.g., Forms 1042 and 1042-S) and Foreign Account Tax Compliance Act (FATCA), backup withholding, employment taxation, the treatment of fringe benefits, cross-border compensation, domestic information reporting (e.g., Forms W-2, 1099, 1095 series returns), penalty abatement, and general tax planning and controversy matters. Mr. Lloyd advises large U.S. and foreign multinationals regarding compliance with information reporting and withholding issues, as well as a range of other federal and state tax issues.

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DAC 6 Implementation Imminent in Finland and Germany Despite Delays in Other EU Countries and the UK Due to COVID-19

At the end of June, the European Union (“EU”) amended EU Council Directive 2011/16/EU and its cumulative amendments (referred to in the aggregate, as the Directive on Administrative Cooperation “DAC 6” or the “Directive”) to give EU Member States the option to defer imminent DAC 6 reporting deadlines by up to six months due to … Continue Reading

Some Employers Must Act Immediately to Take Advantage of CARES Act Social Security Tax Deferral for Deposits Made Early in the Second Quarter

The IRS recently released a second set of draft instructions for Form 941, Employer’s Quarterly Federal Tax Return.  The IRS also released the final Form 941, which was revised significantly from the prior form to accommodate the employer social security tax deferral and employer social security tax credits enacted as part of the Coronavirus Aid, … Continue Reading

IRS Adds Employment Tax Corrections to Expanding List of Postponed Time-Sensitive Actions Due to COVID-19

On May 28, 2020, the IRS issued Notice 2020-35, postponing deadlines for more time-sensitive actions until July 15, 2020.  Notice 2020-35 is the latest in a series of IRS notices issued since mid-March providing for delays under the authority of section 7508A due to the COVID-19 emergency declaration.  Specifically, the relief relates to employment tax … Continue Reading

IRS Provides COVID-19 Emergency Relief for Individuals Planning to Claim the Foreign Earned Income Exclusion

Prompted by the COVID-19 global health emergency (the “COVID-19 Emergency”), Treasury and the IRS recently issued Rev. Proc. 2020-27 to provide relief for U.S. citizens and residents planning to take advantage of the foreign earned income exclusion under section 911 of the Internal Revenue Code whose expatriate assignments were interrupted due to the pandemic.  The … Continue Reading

IRS Provides Relief for Nonresidents Unable to Depart U.S. Due to Pandemic

On March 13, 2020, the President issued a proclamation declaring a national emergency regarding the global outbreak of the COVID-19 virus (the “COVID-19 Emergency”).  Subsequently, FEMA approved all states and the District of Columbia for major disaster declarations to provide federal emergency assistance.  The Federal Government and state governments have also taken unprecedented preventative and … Continue Reading

State Approaches to Telework and Withholding Taxes Differ During COVID-19 Pandemic

The COVID-19 pandemic has caused turmoil throughout the economy as states have issued stay-at-home, shelter-in-place, and other orders closing offices and forcing employees who traditionally go to work each morning to work from their dining room tables or spare bedrooms of their own homes or from alternative locations such as rentals away from COVID-19 hotspots … Continue Reading

IRS Releases FAQs on Federal Tax Consequences of Payroll Support for Air Carriers and Contractors under CARES Act

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) authorizes the Treasury Department to provide payments to passenger air carriers, cargo air carriers, and certain contractors that must be exclusively used for the continuation of payment of employee wages, salaries, and benefits.  The Payroll Support to Air Carriers and Contractors Program provides a total … Continue Reading

Justice Department Continues Criminal Prosecutions in Employment Tax Cases

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

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

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

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

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

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

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

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

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

IRS Updates Country-by-Country Reporting Instructions

On July 10, the IRS updated the Instructions for Form 8975 and Schedule A (Form 8975).  Form 8975 (Country-by-Country Report) is used by taxpayers that are the parent entity of a U.S. multinational enterprise (“U.S. MNE”) with annual revenue of $850 million or more.  Taxpayers must file Form 8975 to report information related to the taxpayer’s … Continue Reading

IRS Proposes Regulations under Section 1446(f) — Reporting Requirements and the “Backstop Withholding” Rules (Post 3 of 3)

In our first post regarding the proposed section 1446(f) regulations, we addressed the rules regarding which party is the withholding agent for purposes of section 1446(f). Sections 864(c)(8) and 1446(f) were adopted as part of tax reform. Section 864(c)(8) was enacted to reverse the holding of the Tax Court in Grecian Magnesite Mining v. Commissioner, which was affirmed by … Continue Reading

IRS Proposes Regulations under Section 1446(f) — Determining the Withholding Amount (Post 2 of 3)

In our first post on the proposed regulation under section 1446(f), we discussed which party is the withholding agent and outlined the various exceptions to withholding that could apply. Sections 864(c)(8) and 1446(f) were adopted as part of tax reform. Section 864(c)(8) was enacted to reverse the holding of the Tax Court in Grecian Magnesite Mining v. Commissioner, which … Continue Reading

IRS Proposes Regulations under Section 1446(f) — Which Party is Required to Withhold? (Post 1 of 3)

This post is the first of three installments providing an overview of recent proposed regulations under section 1446(f) that address withholding on certain sales of partnership interests by foreign partners of a partnerships engaged in the conduct of a U.S. trade or business (a “U.S. trade or business”). Sections 864(c)(8) and 1446(f) were adopted as part … Continue Reading

IRS to Launch FATCA Compliance Campaign for FFIs

Last week, the Acting Director of IRS of Field Operations for the LB&I Foreign Payments Practice (“FPP”) announced that the IRS will launch a compliance campaign this summer focused on foreign financial institutions (“FFIs”) that are not satisfying their reporting obligations under the Foreign Account Tax Compliance Act (“FATCA”).  Speaking at a tax controversy forum … Continue Reading

IRS Warns Withholding Agents to Consider FPP Correction Program to Avoid Penalties

Last week, Kimberly Schoenbacher, the Acting Director of Field Operations for the LB&I Foreign Payments Practice (“FPP”), sent a message to taxpayers who may be noncompliant with Chapter 3 and FATCA withholding and reporting: the IRS is actively honing in on Form 1042 nonfilers, Form 1042 failures, and Forms 1042 and 1042-S that do not … Continue Reading

Draft 2020 Form W-4 Addresses Some Privacy Concerns

On May 31, the IRS released a draft 2020 Form W-4 that addresses some, but not all, of the privacy concerns that led the IRS to abandon the redesigned form for 2019.  According to an accompanying news release, the IRS anticipates releasing a near-final form in July to allow payroll processors and employers to begin … Continue Reading

IRS Legal Memo Addresses Payroll Compliance when Employer Appoints Agent in the Middle of Calendar Year

On May 31, the IRS released a legal memorandum, ILM 201922026, regarding the information return obligations of a common law employer when it appoints a pay agent in the middle of a calendar year.  In general, an employer may appoint a pay agent under section 3504 by using IRS Form 2678 (Employer/Payer Appointment of Agent) … Continue Reading

Proposed 3405 Withholding Regulations Three Decades in the Making

In 1987, the IRS released Notice 87-7 providing guidance on whether certain recipients of payments from employer deferred compensation plans, individual retirement plans, and commercial annuities are subject to federal income tax withholding under section 3405.  The notice provided that: payors must withhold on periodic and nonperiodic payments under section 3405(a) or 3405(b), respectively, to payees … Continue Reading
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