IRS – EXTENDS TRANSITION PERIOD FOR PAID FAMILY MEDICAL LEAVE TAX REQUIREMENTS

In January 2025, the IRS issued additional guidance regarding federal tax and reporting requirements associated with Paid Family and Medical Leave for all participating states. After several states requested an extension in order to implement required changes, the IRS officially extended the transition period to cover all of 2026. Beginning in 2027, states will be required to comply and implement updated federal tax withholding and reporting requirements for paid medical leave—requiring these payments to be treated as “third party sick pay.”

Many states had already begun the process of implementing these changes but have now reverted back to the previous practices. Check with the impacted states directly to verify how they are handling this extension.

Additional information can be found on the IRS website, including details on the extension via Notice 2026-6 and the original guidance.

MICHIGAN – ANNOUNCES NEW GO LIVE DATE FOR MiUI

After a brief delay, the Michigan Unemployment Insurance Agency (UIA) announced this week that the rollout of the new MiUI tax functions for employers and TPAs will now take place in February with a go live date of Monday, February 23, 2026.

Downtime of the current MiWAM system will occur from Wednesday, February 18 at 4:30PM ET through Sunday, February 22. Access to the MiWAM system will be completely unavailable during this time. It is recommended to complete any necessary unemployment actions prior to this time.

On Monday, February 23, MiUI will debut, and MiWAM will once again be available but with limited access to benefits functions only.

As a reminder, additional information, including a dedicated Learning Center, MiUI University, is available on Michigan’s website to ensure employers understand the new resource and are aware of the updated timeline and important action items during this transition period.

VOLUNTARY CONTRIBUTIONS – REMINDER OF UPCOMING DEADLINES

A voluntary contribution (VC) is a payment an employer can make to reduce their unemployment tax rate. By making a voluntary contribution to the state’s unemployment insurance fund, an employer can lower their experience rating and, as a result, reduce future unemployment tax liability.

In states where voluntary contributions are permitted, Thomas & Company performs an analysis to determine whether a voluntary contribution would be beneficial for each SUI account. As a reminder, several states have upcoming deadlines for voluntary contribution submissions. In order to take advantage of these potential savings, please review the below deadlines and ensure appropriate payment is made prior to the cutoff.