Bill Text: IL HB3812 | 2017-2018 | 100th General Assembly | Introduced

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Bill Title: Amends the Illinois Income Tax Act. Provides that the amount of compensation allocated to this State for nonresident individuals (other than professional athletes) shall be the portion of the individual's total compensation for services performed for his or her employer during the taxable year which the number of working days spent within this State performing services for the employer in any manner during the taxable year bears to the total number of working days spent both within and without this State during the taxable year (currently, all items of compensation paid in the State are allocated to the State). Effective immediately.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2019-01-08 - Session Sine Die [HB3812 Detail]

Download: Illinois-2017-HB3812-Introduced.html

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100TH GENERAL ASSEMBLY State of Illinois 2017 and 2018 HB3812 Introduced , by Rep. Natalie A. Manley SYNOPSIS AS INTRODUCED:
35 ILCS 5/302 from Ch. 120, par. 3-302
35 ILCS 5/701 from Ch. 120, par. 7-701
Amends the Illinois Income Tax Act. Provides that the amount of compensation allocated to this State for nonresident individuals (other than professional athletes) shall be the portion of the individual's total compensation for services performed for his or her employer during the taxable year which the number of working days spent within this State performing services for the employer in any manner during the taxable year bears to the total number of working days spent both within and without this State during the taxable year (currently, all items of compensation paid in the State are allocated to the State). Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Income Tax Act is amended by
changing Sections 302 and 701 as follows:
(35 ILCS 5/302) (from Ch. 120, par. 3-302)
Sec. 302. Compensation paid to nonresidents.
(a) In general. For taxable years beginning prior to
January 1, 2017, all All items of compensation paid in this
State (as determined under Section 304(a)(2)(B)) to an
individual who is a nonresident at the time of such payment and
all items of deduction directly allocable thereto, shall be
allocated to this State.
For taxable years beginning on or after January 1, 2017:
(1) all items of compensation of a nonresident
individual who is a member of a professional athletic team,
and all items of deduction directly allocable thereto,
shall be allocated to this State as determined under
Section 304(a)(2)(B)(iv); and
(2) the amount of all items of compensation of all
other nonresident individuals, and of all items of
deduction directly allocable thereto, allocated to this
State shall be the portion of the individual's total

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compensation for services performed for his or her employer
during the taxable year which the number of working days
spent within this State performing services for the
employer in any manner during the taxable year bears to the
total number of working days spent both within and without
this State during the taxable year. For purposes of this
paragraph:
(A) A "working day" is any day on which the
employee performs duties on behalf of the employer.
Weekends, vacation days, sick days, and holidays
(whether or not paid) are not working days unless the
employee is required by the employer to perform some
duties on that day.
(B) A working day is spent in this State if:
(i) a greater amount of time is spent by the
employee in this State during that day performing
duties on behalf of the employer (other than
travelling) than is spent performing duties in any
other State; or
(ii) the only work performed by the employee on
behalf of the employer on that day is travelling to
a destination within this State, and the employee
arrives on that day.
(C) A working day is not spent in this State if the
only activity engaged in by the employee on behalf of
the employer in this State on that day is travelling

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from or through this State to a destination outside
this State.
(b) Reciprocal exemption. The Director may enter into an
agreement with the taxing authorities of any state which
imposes a tax on or measured by income to provide that
compensation paid in such state to residents of this State
shall be exempt from such tax; in such case, any compensation
paid in this State to residents of such state shall not be
allocated to this State. All reciprocal agreements shall be
subject to the requirements of Section 2505-575 of the
Department of Revenue Law (20 ILCS 2505/2505-575).
(c) Cross references.
(1) For allocation of amounts received by nonresidents
from certain employee trusts, see Section 301(b)(2).
(2) For allocation of compensation by residents, see
Section 301(a).
(Source: P.A. 90-491, eff. 1-1-98; 91-239, eff. 1-1-00.)
(35 ILCS 5/701) (from Ch. 120, par. 7-701)
Sec. 701. Requirement and Amount of Withholding.
(a) In General. Every employer maintaining an office or
transacting business within this State and required under the
provisions of the Internal Revenue Code to withhold a tax on:
(1) compensation allocated to this State under
subsection (a) of Section 302 paid in this State (as
determined under Section 304(a)(2)(B) to an individual; or

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(2) payments described in subsection (b) shall deduct
and withhold from such compensation for each payroll period
(as defined in Section 3401 of the Internal Revenue Code)
an amount equal to the amount by which such individual's
compensation exceeds the proportionate part of this
withholding exemption (computed as provided in Section
702) attributable to the payroll period for which such
compensation is payable multiplied by a percentage equal to
the percentage tax rate for individuals provided in
subsection (b) of Section 201.
(b) Payment to Residents. Any payment (including
compensation, but not including a payment from which
withholding is required under Section 710 of this Act) to a
resident by a payor maintaining an office or transacting
business within this State (including any agency, officer, or
employee of this State or of any political subdivision of this
State) and on which withholding of tax is required under the
provisions of the Internal Revenue Code shall be deemed to be
compensation paid in this State by an employer to an employee
for the purposes of Article 7 and Section 601(b)(1) to the
extent such payment is included in the recipient's base income
and not subjected to withholding by another state.
Notwithstanding any other provision to the contrary, no amount
shall be withheld from unemployment insurance benefit payments
made to an individual pursuant to the Unemployment Insurance
Act unless the individual has voluntarily elected the

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withholding pursuant to rules promulgated by the Director of
Employment Security.
(c) Special Definitions. Withholding shall be considered
required under the provisions of the Internal Revenue Code to
the extent the Internal Revenue Code either requires
withholding or allows for voluntary withholding the payor and
recipient have entered into such a voluntary withholding
agreement. For the purposes of Article 7 and Section 1002(c)
the term "employer" includes any payor who is required to
withhold tax pursuant to this Section.
(d) Reciprocal Exemption. The Director may enter into an
agreement with the taxing authorities of any state which
imposes a tax on or measured by income to provide that
compensation paid in such state to residents of this State
shall be exempt from withholding of such tax; in such case, any
compensation paid in this State to residents of such state
shall be exempt from withholding. All reciprocal agreements
shall be subject to the requirements of Section 2505-575 of the
Department of Revenue Law (20 ILCS 2505/2505-575).
(e) Notwithstanding subsection (a)(2) of this Section, no
withholding is required on payments for which withholding is
required under Section 3405 or 3406 of the Internal Revenue
Code.
(Source: P.A. 97-507, eff. 8-23-11; 98-496, eff. 1-1-14.)
Section 99. Effective date. This Act takes effect upon
becoming law.