On August 16, 2013, Gov. Pat Quinn signed into law legislation (H.B. 3157) containing important changes to Illinois treatment of nonresident taxpayers and how to apportion income by corporate income taxpayers to the state.
Nonresident S corporation shareholders, members of pass-through entities classified as partnerships for federal income tax purposes, trust beneficiaries, and certain insurance underwriters will only be permitted to file composite income and replacement tax returns for taxable years ending prior to December 31, 2014.
Thereafter, Illinois will no longer be accepting composite returns from pass-through entities. Pass-through entities computing the amount of income tax to withhold on behalf of nonresident owners are also required to include all nonbusiness income and distributable credits effective for taxable years ending on or after December 31, 2014.
The new law also clarifies the availability of an alternative apportionment method if the rules for determining a corporate income taxpayer’s single sales apportionment formula do not fairly represent the taxpayer’s market for goods, services, or other sources of business income attributable to Illinois.
This "alternative apportionment method" will be available to both the taxpayer, with permission of the Illinois Department of Revenue, and the Illinois Department of Revenue. This clarification is available for taxable years ending on or after December 31, 2008.
The link to H.B. 3157 can be found by clicking here.
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