Illinois Administrative Code › Title 86 - REVENUE › Part 100 - INCOME TAX › Subpart P - COMPOSITE RETURNS › Section 100.5100 - Composite Returns: Eligibility (IITA Section 502(f))

Current through Register Vol. 48, No. 28, July 12, 2024
a) In General. A composite return may be
				filed on behalf of nonresident individuals, trusts, and estates who derive
				income from Illinois and who are partners, or subchapter S corporation
				shareholders, or who transact insurance business under a Lloyds plan of
				operation (for a definition of an "subchapter S corporation" see IITA Section
				1501(a)(28); for a definition of a "Lloyd's plan of operation" see Section
				100.5170
				). The respective partnership, subchapter S corporation or insurance business
				shall file the composite return and shall make composite income tax payments.
				The composite return may include income and tax of Illinois residents if the
				petition described in subsection (c) is granted. The right to file a composite
				return is applicable to taxable years ending on or after December 31, 1987 and
				prior to December 31, 2014, except for Lloyd's plans of operation, which may
				file composite returns for any tax year ending on or after December 31, 1999.
				(See IITA Section 502(f).) Also, partnerships and subchapter S corporations may
				continue to report changes to the Illinois income tax liabilities of their
				partners and shareholders, and pay any additional tax owed by the partners or
				shareholders for any tax year ending on or after December 31, 2008, as provided
				in Section
				100.5180(b).
b) Eligibility. The right to be included in a
				composite return is limited to nonresident and resident individuals, trusts and
				estates who are partners of the same partnership, shareholders of the same
				subchapter S corporation, and to resident or nonresident taxpayers transacting
				an insurance business in Illinois under a Lloyd's plan of operation. The
				eligibility of resident individuals, trusts and estates who are not transacting
				an insurance business under a Lloyd's plan of operation is conditioned upon
				compliance with subsection (c).
EXAMPLE: The Acme partnership consists of a general partner
				  and 50 limited partners. The general partner is a regular corporation, and the
				  limited partners consist of 26 nonresident individuals, 20 resident
				  individuals, a subchapter S corporation, a partnership, a nonresident trust and
				  an estate. The 26 nonresident individuals, the nonresident trust and the
				  nonresident estate are automatically eligible to be included in a composite
				  return. The 20 resident individuals may be included in the composite return
				  with the nonresidents if the Department grants their petition. None of the
				  other entities may be included in the composite return.
c) Petition for Residents. Individuals,
				trusts and estates that are residents of Illinois may be included in a
				composite return if the authorized agent files a petition with the Department
				of Revenue and the petition is granted. The Department shall grant the petition
				if the authorized agent clearly demonstrates that no other method of filing
				would achieve the same degree of compliance and administrative ease for both
				the Department and the taxpayers. Factors to be considered in granting the
				petition include: the quantity of partners or shareholders involved; the
				inability of the authorized agent to file the composite return except in this
				manner; and the availability of a reliable method for claiming credit on the
				separate returns pursuant to Section
				100.5160.
				The petition must be filed prior to the end of the authorized agent's taxable
				year, and the petition must be granted or denied prior to the due date of the
				return without regard to extensions. Petitions should be mailed to:
Illinois Department of Revenue
Attn: Document Perfection Section
Post Office Box 19014
Springfield, Illinois 62794-9014
d) Inclusion of Eligible Members. A composite
				return does not have to include all of the individuals who are eligible to be
				included in the return. Whether an individual is included in a composite return
				is a matter that should be decided by the individual and the entity. Persons
				not included in composite returns are required to meet their Illinois filing
				and payment obligations separately, and failure to do so could mean the
				imposition of civil and criminal penalties.
e) Nonresidents With Other Illinois Source
				Income. Nonresident individuals, trusts and estates with Illinois source income
				other than from a partnership, subchapter S corporation, or Lloyd's plan of
				operation may, but need not, be included in a composite return. If those
				nonresidents are included in a composite return for a taxable year ending on or
				after December 31, 2008 (December 31, 1999, in the case of a composite return
				filed by a Lloyd's plan of operation), they may claim a credit against their
				Illinois income tax liability for their share of the tax paid on their behalf
				on the composite return. If nonresidents are included in a composite return for
				an earlier taxable year, they will not be permitted to claim credits on their
				individual returns for their shares of the composite tax payments unless the
				authorized agent files a petition with the Department of Revenue requesting
				permission for the nonresidents to claim the credit and the petition is
				granted. The Department shall grant the petition if the authorized agent
				clearly demonstrates that no other method of filing would achieve the same
				degree of compliance and administrative ease for both the Department and the
				taxpayers. Factors to be considered will be the same as for petitions pursuant
				to subsection (c). The petition must be filed prior to the end of the
				authorized agent's taxable year, and the petition must be granted or denied
				prior to the due date of the return without regard to extensions. If the
				petition is granted, credit will be claimed by the nonresidents for their share
				of the composite payments in the same manner and amount as permitted resident
				individuals under Section 100.5160. Petitions should be mailed to:
Illinois Department of Revenue
Attn: Document Perfection Section
Post Office Box 19014
Springfield, Illinois 62794-9014