Illinois – Composite returns eliminated, non-resident withholding required, alternative apportionment updated

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On August 16, 2013, Illinois Governor Pat Quinn signed H.B. 3157, which, effective for tax years ending on or after December 31, 2014, (1) eliminates composite returns and (2) requires partnerships, S-corporations, and trusts to withhold tax on nonbusiness income distributable to their respective non-resident partners, shareholders, and beneficiaries. Additionally, Illinois’ alternative apportionment provision is updated to reflect market-based sourcing language. Illinois pass-through entities should be aware of the significant compliance changes that will be in effect for the 2014 tax year.


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