Illinois Administrative Code › Title 86 - REVENUE › Part 100 - INCOME TAX › Subpart K - COMPENSATION › Section 100.3120 - Allocation of Compensation Paid to Nonresidents (IITA Section 302)

Current through Register Vol. 48, No. 28, July 12, 2024
a) Compensation
				Paid in This State - General Rule
1) In order
				for items of compensation paid to an individual who is a nonresident of
				Illinois at the time of payment to be allocated to Illinois, the compensation
				must constitute "compensation paid in this State". If the test is met, then all
				items of the compensation, and all items of deduction directly allocable
				thereto, are allocated to Illinois under IITA Section 302(a) (except items
				allocated under IITA Section 301(c)(2), as to which see subsection (d)).
				Compensation paid to a nonresident, which is allocated to Illinois, enters into
				the computation of the individual's net income under IITA Section 202 and is
				generally subject to withholding under IITA Section 701 (see Sections
				100.7000,
				100.7010
				and
				100.7020
				). The tests for determining whether compensation is paid in Illinois appear in
				IITA Section 304(a)(2)(B) and are substantially the same as those used to
				define "employment" in the Illinois Unemployment Insurance Act [820 ILCS 405]
				(and similar unemployment compensation acts of other states). Except as
				provided in this Section, compensation is paid in Illinois if:
A) The individual's service is localized in
				Illinois because it is performed entirely within Illinois (IITA Section
				304(a)(2)(B)(i));
B) The
				individual's service is localized in Illinois although it is performed both
				within and without Illinois, because the service performed without Illinois is
				incidental to the individual's service performed within Illinois (see IITA
				Section 304(a)(2)(B)(ii)); or
C)
				For taxable years ending prior to December 31, 2020, the individual's service
				is not localized in any state under subsections (a)(1)(A) and (B), but some of
				the service is performed within Illinois and either:
i) the base of operations, or if there is no
				base of operations, the place from which the service is directed or controlled
				is within Illinois; or
ii) the base
				of operations or the place from which the service is directed or controlled is
				not in any state in which some part of the service is performed, but the
				individual's residence is in Illinois. (See IITA Section
				304(a)(2)(B)(iii).)
D)
				The rules in subsections (a)(1)(A) through (C) are to be applied in a manner so
				that, if they were in effect in other states, an item of compensation would
				constitute compensation "paid in" only one state. Thus, if an item would, under
				these rules, constitute compensation paid in a state other than Illinois
				because the individual's service was localized in that other state under
				subsection (a)(1)(B), it could not also be compensation paid in
				Illinois.
E) For taxable years
				ending on or after December 31, 2020, the individual's service is not localized
				in any state under subsection (a)(1)(A) or (B), but
some of the
				individual's service is performed within this State and the individual's
				service is performed within this State for more than 30 working days during the
				taxable year, the amount of compensation paid in this State shall include the
				portion of the individual's total compensation for services performed on behalf
				of his or her employer during the taxable year that the number of working days
				spent within this State during the taxable year bears to the total number of
				working days spent both within and without this State during the taxable
				year.
(IITA Section 304(a)(2)(B)(iii)) For purposes of this subsection
				(a)(1)(E):
i) "Working day" means
each
				day during the taxable year in which the individual performs duties on behalf
				of his or her employer. All days in which the individual performs no duties on
				behalf of his or her employer (e.g., weekends, vacation days, sick days, and
				holidays) are not working days.
(IITA Section
				304(a)(2)(B)(iii)(a))
ii) A working
				day is "spent within this State" if:
*
the individual performs service on behalf of the
				  employer and a greater amount of time on that day is spent by the individual
				  performing duties on behalf of the employer within this State, without regard
				  to time spent traveling, than is spent performing duties on behalf of the
				  employer without this State; or
*
the only service the individual performs on behalf
				  of the employer on that day is traveling to a destination within this State,
				  and the individual arrives on that day.
(IITA Section
				  304(a)(2)(B)(iii)(b))
iii)
				Working days "spent within this State" do not include
any day in which
				the employee is performing services in this State during a disaster period
				solely in response to a request made to his or her employer by the government
				of this State, by any political subdivision of this State, or by a person
				conducting business in this State to perform disaster or emergency-related
				services in this State.
(IITA Section 304(a)(2)(B)(iii)(c)) For
				purposes of this subsection (a)(1)(E)(iii):
* "Declared State disaster or emergency" means
a
				  disaster or emergency event for which a Governor's proclamation of a state of
				  emergency has been issued or for which a Presidential declaration of a federal
				  major disaster or emergency has been issued.
* "Disaster period" means
a period that begins 10
				  days prior to the date of the Governor's proclamation or the President's
				  declaration (whichever is earlier) and extends for a period of 60 calendar days
				  after the end of the declared disaster or emergency period.
* "Disaster or emergency-related services" means
repairing, renovating, installing, building, or rendering services or
				  conducting other business activities that relate to infrastructure that has
				  been damaged, impaired, or destroyed by the declared State disaster or
				  emergency.
* "Infrastructure" means
property and equipment owned
				  or used by a public utility, communications network, broadband and internet
				  service provider, cable and video service provider, electric or gas
				  distribution system, or water pipeline that provides service to more than one
				  customer or person, including related support facilities.
"Infrastructure" includes, but is not limited to,
real and personal
				  property such as buildings, offices, power lines, cable lines, poles,
				  communications lines, pipes, structures, and equipment.
(IITA Section
				  304(a)(2)(B)(iii)(c))