S. Michael Chittenden

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S. Michael Chittenden

Special Counsel

Washington +1 202 662 5295 mchittenden@cov.com Download V-card

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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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Advised a large multinational retailer on the development of a comprehensive Chapter 3 and Chapter 4 (FATCA) compliance program, registration of foreign financial institutions within its expanded affiliated group, and the application of FATCA regulations and intergovernmental agreements to entities and retirement plans located in several foreign countries.
Advised several large insurance companies on Form 1095-B reporting, including TIN solicitation requirements, error correction, identification of the employer sponsoring a group health plan, association plan reporting, VEBA reporting, multiemployer plan reporting, and other aspects of the regulations, and drafted extensive comments for submission to and testified before the IRS and Treasury Department regarding the challenges faced by insurers in soliciting and reporting the TINs of covered individuals.
Represented a large energy company in a multifaceted dispute with the IRS related to numerous alleged information reporting and withholding failures, including the imposition of intentional disregard penalties.
Advised a large financial company on the proper tax treatment of more than 200 different types of earnings and deductions for federal income tax withholding, FICA taxes and Federal Unemployment Tax Act (FUTA) tax purposes, as well as state income tax withholding and state unemployment insurance tax treatment in more than 20 states and numerous counties, school districts and cities.

Advised an auction service provider on the application of Section 6050W reporting to its business with a focus on whether it operates a third-party payment network.
Advised large employers on Form 1095-C and Form 1094-C reporting, including issues related to self-insured coverage, multiemployer plan reporting, reporting for nonemployee directors, retirees, and part-time employees, and TIN solicitation requirements.

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American Bar Association, Section of Taxation
The District of Columbia Bar, Taxation Section

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

Last week, Kimberly Schoenbacher, the Acting Director of 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 reconcile. Schoenbacher remarked...… Continue ...

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 ...

Final CPEO Rules Signal Loosened Bond Requirements, Clarify Other Provisions

On May 23, the IRS and Treasury released final regulations governing certified professional employer organizations (“CPEOs”). CPEOs were created by the Tax Increase Prevention Act of 2014, P.L. 113-295, which added new Code sections 3511 and 7705 that contain certification requirements for, and the federal employment tax consequences of, being a CPEO. The ...

Tax Court Reverses Course on TFRP after Remand from Eleventh Circuit

On remand from the Eleventh Circuit, the Tax Court, in Romano-Murphy v. Comm’r, determined that the failure of the IRS to provide a pre-assessment appeals hearing invalidated the IRS’s assessment of trust fund recovery penalty under section 6672 and proposed levy to collect the same. In July 2006, the IRS sent a letter to the...… Continue Reading

TIGTA Chides IRS for Lax Non-Payroll Withholding Enforcement

The Treasury Inspector General for Tax Administration released a partially redacted report on May 20 asserting that the IRS has failed to take steps to address nearly $2 billion in discrepancies between withholding reported on withholding tax returns and withholding reported on information returns. The TIGTA report found that 7,265 taxpayers reported nearly ...

Justice Department Announces Employment Tax Enforcement Actions

Consistent with its ongoing employment tax enforcement efforts, the Justice Department recently announced developments in two cases involving the failure to properly withhold and remit federal employment taxes from employee wages. On April 25, the Justice Department announced that Kae Wook Lee, the sole owner and CEO of Mona Lisa 7 Corporation, was sentenced ...

IRS Again Addresses De Minimis Standard for Third Party Network Transactions

For the second time in the past year, the IRS Office of Chief Counsel issued a ruling addressing how transactions are counted for purposes of applying the de minimis threshold applicable to third party settlement organizations (“TPSOs”) under section 6050W. In recently released PLR 201907006, the IRS considered the facts related to a payment processing...… ...

IRS Targets Backup Withholding Compliance

Dan Lauer, an IRS executive for SBSE, told an audience at the American Payroll Association’s Capital Summit on March 25 that the Service is launching a program in the summer of 2019 to pursue backup withholding failures. Backup withholding is required under section 3406, and the current backup withholding rate is 24%. Generally, backup withholding...… Continue ...

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Representative Matters

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News and Insights (Showing 5 of 11) (Showing 11 of 11)

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

Draft 2020 Form W-4 Addresses Some Privacy Concerns

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

Proposed 3405 Withholding Regulations Three Decades in the Making

Final CPEO Rules Signal Loosened Bond Requirements, Clarify Other Provisions

Tax Court Reverses Course on TFRP after Remand from Eleventh Circuit

TIGTA Chides IRS for Lax Non-Payroll Withholding Enforcement

Justice Department Announces Employment Tax Enforcement Actions

IRS Again Addresses De Minimis Standard for Third Party Network Transactions

IRS Targets Backup Withholding Compliance

Supreme Court Overturns Quill and Broadens Businesses’ Tax Collection Obligations

Accolades

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Education

Georgetown University Law Center, J.D., 2009

Johns Hopkins University, B.A., 2000

Bar Admissions