The disciplinary action follows a hearing by the Northern Ireland Public Service Ombudsman earlier this month.
Acting commissioner Katrin Shaw decided Mr Collins had breached the councillor’s code of conduct by posting a tweet on November 18, 2019, and a retweet the following day, which included reference to North Belfast MP Mr Finucane, Sinn Fein’s Westminster election candidate for the constituency at the time.
Mr Collins’ tweet claimed without foundation that Mr Finucane "supports and promotes the IRA” and “isn’t innocent by any means”.
His retweet was of a message promoting banners erected in the Shankill area of Belfast which contained allegations against several members of the Finucane family.
The sanction was imposed following a complaint to the local government standards watchdog, and an investigation report was sent to the acting commissioner for her consideration.
Ms Shaw concluded that the councillor’s Twitter activity went beyond the acceptable bounds of proper political debate and was unnecessary and personally abusive.
In failing to show respect for Mr Finucane and his family, she found that Mr Collins had failed to comply with the respect principle that underpins the code.
The adjudication hearing to determine a sanction was re-scheduled on two occasions as a result of Mr Collins’ unavailability.
He was reminded of the hearing date of June 24, and was again asked to confirm whether he intended to make any submissions. No response was received from Mr Collins and he did not attend the sanctions hearing.
The acting commissioner considered the mitigating factors in this case, including that Mr Collins had no previous record of breaching the code, a letter written by him saying that he did not intend to harm Mr Finucane or his family, and his apology for not engaging with the investigation and adjudication process.
However, Ms Shaw considered that it was a serious aggravating factor that Mr Collins’ tweets contributed towards a toxic atmosphere in North Belfast at the time of the general election.
They also resulted in Mr Finucane believing that his own and his family’s safety were in jeopardy. She further noted that the councillor’s failure to engage in the investigation and adjudication process had resulted in unnecessary costs to the public purse.
Having regard to previous decisions and the seriousness of the breaches, Ms Shaw considered that a period of suspension of eight months was a necessary and proportionate response.
In 2019, Mr Collins’ Twitter account was deactivated after he shared a message supporting the controversial banners targeting Mr Finucane.
He previously faced a backlash over comments about asylum seekers staying at a Carrickfergus hotel.
Last year, the DUP councillor said he was “concerned” about the housing of asylum seekers by the Home Office at the Loughshore Hotel and had contacted the health and communities ministers, the Home Office, the local council and the police about the issue.
Mr Collins said there was “plenty within our own communities who need help first and foremost”.
"I can already see the claims of racism that are going to come my way but that's not what this is about at all,” he said.
"I am all for helping those who need help when they truly need it but there are questions that need to be asked around this situation.”
The Belfast Telegraph contacted Mr Collins on Wednesday.
A DUP spokesman said: "The investigation outcome has just been published. We will consider the finding."
Sinn Fein and Mr Finucane have also been contacted for comment.