Sec. 2.5. (a) When an individual files an initial claim, the individual shall be advised of the following:
(1) Unemployment compensation is subject to federal, state, and local income taxes.
(2) Requirements exist concerning estimated tax payments.
(3) The individual may elect to have income taxes withheld from the individual's payment of unemployment compensation. If an election is made, the department shall withhold federal income tax at the applicable rate provided in the Internal Revenue Code.
(4) After December 31, 2011, the individual may elect to have state adjusted gross income tax imposed under IC 6-3 and the local income tax imposed under IC 6-3.6 deducted and withheld from the individual's payment of unemployment compensation. If an election is made, the department shall withhold state adjusted gross income tax imposed under IC 6-3 and the local income tax imposed under IC 6-3.6 at the applicable rate prescribed in withholding instructions issued by the department of state revenue.
(5) An individual is allowed to change an election made under this section.
(b) Money withheld from unemployment compensation under this section shall remain in the unemployment fund until transferred to the federal taxing authority or the state (as appropriate) for payment of income taxes.
(c) The commissioner shall follow all procedures of the United States Department of Labor, the Internal Revenue Service, and the department of state revenue concerning the withholding of income taxes.
(d) Money shall be deducted and withheld in accordance with the priorities established in regulations developed by the commissioner.
As added by P.L.166-1996, SEC.4. Amended by P.L.3-2008, SEC.159; P.L.2-2011, SEC.15; P.L.197-2016, SEC.118.
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