Sinn Féin claims the Government 'rewound the clock' on parts of the Pandemic Unemployment Payment (PUP) to make it tax-payable.
The party's finance spokesperson, Pearse Doherty, says PUP payments from March to August last year were legally tax exempt.
But he told Newstalk Breakfast the Government has made a u-turn on this.
"For one of these payments for a portion of the year last year, from March to August, the PUP under law was tax exempt.
"What the Government did was they rewound the clock - they did something that was never done before in the history of tax legislation - and that is they retrospectively taxed it".
He said this means some people will be getting bills for up to €1,400.
"It's not about the type of tax, it's about the principle: do you decide to go back in time, and say that something is now taxable that wasn't taxable under law?"
While people will be taxed on supports they have been on since August, this will not be collected for a number of years.
'Absolutely inappropriate'
Deputy Doherty explained: "One of the things that we've seen with the Temporary Wage Subsidy Scheme, and other supports, is that there was no tax going to be gathered at that time due to emergency nature of them and a tax liability would accrue.
"Nobody knew at that time how long, obviously, the pandemic was going to last - and what we've got now is a large build up of tax arrears for certain individuals".
"I think it's important for your listeners as they'll start to get the letters from Revenue showing that they may have anything up to €1,000 or more of a tax liability, that they need to be assured that that isn't going to be collected this year".
It will be collected over a period of four years, which will begin in 2022 via a reduction of tax credits.
Deputy Doherty added: "You don't actually necessarily have to write a cheque or pay it back, but that option is available to you if you want".
"The Pandemic Unemployment Payment... is under law taxable since August, we hadn't an issue with that.
"But where we do have an issue is that when something is not taxable under law - because it is an exceptional needs payment - then it is absolutely inappropriate to go back in time and then say 'we're now going to tax it'".
On Tuesday, the Department of Social Protection said 335,600 people would receive the PUP this week - amounting to over €99m.
Some 23,000 payments were made between December 24th and 30th to people who became unemployed in the week before Christmas.
While more than €5bn in total has now been paid out in PUP payments since March 2020.
