Penalties and Interest on Taxable Unemployment Benefits Waived by Treasury



Last week, the Michigan Department of Treasury announced an automatic “waiver of all penalties and interest related to underpaid estimated tax payments” owed by recipients of 2020 unemployment benefits. Unemployment benefits are not tax exempt, and typically taxpayers need to pay quarterly estimated tax payments when the annual tax due exceeds $500. These tax payments are usually subject to penalty fees and interest.

Considering extenuating circumstances caused by the pandemic, State Treasurer Rachael Eubanks explained the need for leniency as the right thing to do. “COVID has disrupted our lives in numerous ways – and many Michiganders are depending on unemployment benefits to get them by during this extraordinary time. Having to pay penalties and interest on unemployment benefits is the last thing individuals should be worried about when they go to pay their taxes.”

 The MICPA has remained diligent in advocating for taxpayer relief in response to the COVID-19 pandemic. After hearing that taxpayers could be penalized based on their unemployment benefits for 2020, the team reached out to the Department of Treasury to request guidance on the matter. The automatic waiver was issued less than a week after our team reached out for guidance. "I couldn't be happier with the advocacy team at the MICPA,” said MICPA board member and Capocore Professional Advisors founder and member Jamie Lopiccolo. “I was able to reach out regarding a very big issue for our clients who received unemployment and may see substantial under withholding penalties.  The team jumped into action and contacted the State of Michigan to express the concerns.  It is great to know as a small firm, I have these types of resources through MICPA at my disposal. "

Source: MICPA

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