2005 Illinois Code - 35 ILCS 5/ Illinois Income Tax Act. Article 7 - Withholding Tax
(35 ILCS 5/Art. 7 heading)
ARTICLE 7.
WITHHOLDING TAX.
(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 paid in this State (as determined |
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under Section 304(a)(2)(B) to an individual; or
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(2) payments described in subsection (b) shall deduct
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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.
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(b) Payment to Residents. Any payment (including compensation) 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 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 of 1954.
(Source: P.A. 92‑846, eff. 8‑23‑02; 93‑634, eff. 1‑1‑04.)
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(35 ILCS 5/702) (from Ch. 120, par. 7‑702)
Sec. 702.
Amount Exempt from Withholding.
For purposes of this Section
an employee shall be entitled to a withholding exemption in an amount equal
to the basic amount in Section 204(b) for each personal or
dependent exemption which he is
entitled to claim on his federal return pursuant to Section 151 of the
Internal Revenue Code of 1986; plus an allowance equal to $1,000 for each
$1,000 he is entitled to deduct from gross income in arriving at adjusted
gross income pursuant to Section 62 of the Internal Revenue Code of 1986;
plus an additional allowance equal to $1,000 for each $1,000 eligible for
subtraction on
his Illinois income tax return as Illinois real estate taxes paid during
the taxable year; or in any lesser amount claimed
by him. Every employee shall furnish to his employer such information as
is required for the employer to make an accurate withholding under this
Act. The employer may rely on this information for withholding purposes.
If any employee fails or refuses to furnish such information, the employer
shall withhold the full rate of tax from the employee's total compensation.
(Source: P.A. 90‑613, eff. 7‑9‑98.)
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(35 ILCS 5/703) (from Ch. 120, par. 7‑703)
Sec. 703.
Information statement.
Every employer required to deduct and withhold tax under this Act from
compensation of an employee, or who would have been required so to deduct
and withhold tax if the employee's withholding exemption were not in excess
of the basic amount in Section 204(b), shall furnish in
duplicate to each such employee in respect of
the compensation paid by such employer to such employee during the calendar
year on or before January 31 of the succeeding year, or, if his employment
is terminated before the close of such calendar year, on the date on which
the last payment of compensation is made, a written statement in such form
as the Department may by regulation prescribe showing the amount of
compensation paid by the employer to the employee, the amount deducted and
withheld as tax, the tax‑exempt amount contributed to a medical savings
account, and such other information as the Department shall
prescribe. A copy of such statement shall be filed by the employee with his
return for his taxable year to which it relates (as determined under
Section 601(b)(1)).
(Source: P.A. 91‑841, eff. 6‑22‑00; 92‑16, eff. 6‑28‑01.)
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(35 ILCS 5/704) (from Ch. 120, par. 7‑704)
Sec. 704.
Employer's Return and Payment of Tax Withheld.
(a) In general, every employer who deducts and withholds or is required
to deduct and withhold tax under this Act shall make such payments and
returns as hereinafter provided.
(b) Quarter Monthly Payments: Returns. Every employer who deducts
and withholds or is required to deduct and withhold tax under this Act
shall, on or before the third banking day following the close of a quarter
monthly period, pay to the Department or to a depositary designated by the
Department, pursuant to regulations prescribed by the Department, the taxes
so required to be deducted and withheld, whenever the aggregate amount
withheld by such employer (together with amounts previously withheld and
not paid to the Department) exceeds $1,000. For purposes of this Section,
Saturdays, Sundays, legal holidays and local bank holidays are not banking
days. A quarter monthly period, for purposes of this subsection, ends on
the 7th, 15th, 22nd and last day of each calendar month. Every such
employer shall for each calendar quarter, on or before the last day of the
first month following the close of such quarter, and for the calendar year,
on or before January 31 of the succeeding calendar year, make a return with
respect to such taxes in such form and manner as the Department may by
regulations prescribe, and pay to the Department or to a depositary
designated by the Department all withheld taxes not previously paid to
the Department.
(c) Monthly Payments: Returns. Every employer required to deduct and
withhold tax under this Act shall, on or before the 15th day of the second
and third months of each calendar quarter, and on or before the last day of
the month following the last month of each such quarter, pay to the
Department or to a depositary designated by the Department, pursuant to
regulations prescribed by the Department, the taxes so required to be
deducted and withheld, whenever the aggregate amount withheld by such employer
(together with amounts previously withheld and not paid to the
Department) exceeds $500 but does not exceed $1,000. Every such employer
shall for each calendar quarter, on or before the last day of the first
month following the close of such quarter, and for the calendar year, on or
before January 31 of the succeeding calendar year, make a return with
respect to such taxes in such form and manner as the Department may by
regulations prescribe, and pay to the Department or to a depositary
designated by the Department all withheld taxes not previously paid to
the Department.
(d) Annual Payments: Returns. Where the amount of compensation paid
by an employer is not sufficient to require the withholding of tax from the
compensation of any of its employees (or where the aggregate amount
withheld is less than $500), the Department may by regulation permit such
employer to file only an annual return and to pay the taxes required to be
deducted and withheld at the time of filing such annual return.
(e) Annual Return. The Department may, as it deems appropriate, prescribe
by regulation for the filing of annual returns in lieu of quarterly returns
described in subsections (b) and (c).
(e‑5) Annual Return and Payment. On and after January 1, 1998,
notwithstanding subsections (b) through (d) of this Section, every employer who
deducts and withholds or is required to deduct and withhold tax from a person
engaged in domestic service employment, as that term is defined in Section 3510
of the Internal Revenue Code, may comply with the requirements of this Section
by filing an annual return and paying the taxes required to be deducted and
withheld on or before the 15th day of the fourth month following the close of
the employer's taxable year. The annual return may be submitted with the
employer's individual income tax return.
(f) Magnetic Media Filing. Forms W‑2 that, pursuant to
the Internal Revenue Code and regulations promulgated thereunder, are
required to be submitted to the Internal Revenue Service on magnetic media,
must also be submitted to the Department on magnetic media for Illinois
purposes, if required by the Department.
(Source: P.A. 90‑374, eff. 8‑14‑97; 90‑562, eff. 12‑16‑97.)
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(35 ILCS 5/705) (from Ch. 120, par. 7‑705)
Sec. 705.
Employer's Liability for Withheld Taxes.
Every employer who deducts and withholds or is required to deduct and withhold
tax under this Act is
liable for such tax. For purposes of assessment and collection, any amount withheld or
required to be withheld and paid over to the Department, and any penalties
and interest with respect thereto, shall be considered the tax of the
employer. Any amount of tax actually deducted and withheld under this Act
shall be held to be a special fund in trust for the Department. No employee
shall have any right of action against his employer in respect of any money
deducted and withheld from his wages and paid over to the Department in
compliance or in intended compliance with this Act.
(Source: P.A. 82‑1009.)
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(35 ILCS 5/706) (from Ch. 120, par. 7‑706)
Sec. 706.
Employer's Failure to Withhold.
If an employer fails to deduct and withhold any amount of tax as
required under this Act, and thereafter the tax on account of which such
amount was required to be deducted and withheld is paid, such amount of tax
shall not be collected from the employer, but the employer shall not be
relieved from liability for penalties or interest otherwise applicable in
respect of such failure to deduct and withhold.
(Source: P. A. 76‑261.)
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(35 ILCS 5/707) (from Ch. 120, par. 7‑707)
Sec. 707.
Governmental Employers.
If the employer is the United States, or a state, Territory, or
political subdivision thereof, or the District of Columbia, or any agency
or instrumentality of any one or more of the foregoing, the return of the
amount deducted and withheld upon any compensation may be made by any
officer or employee of the United States, or of such state, Territory, or
political subdivision, or of the District of Columbia, or of such agency or
instrumentality, as the case may be, having control of the payment of such
compensation, or appropriately designated for that purpose.
(Source: P. A. 76‑261.)
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(35 ILCS 5/710) (from Ch. 120, par. 7‑710)
Sec. 710.
Withholding from lottery winnings.
(a) In General. Any person
making a payment to a resident or nonresident of winnings under the Illinois
Lottery Law and not required to withhold Illinois income tax from such payment
under Subsection (b) of Section 701 of this Act because those winnings are
not subject to Federal income tax withholding, must withhold Illinois income
tax from such payment at a rate equal to the percentage tax rate for individuals
provided in subsection (b) of Section 201, provided that withholding is
not required if such payment of winnings is less than $1,000.
(b) Credit for taxes withheld. Any amount withheld under Subsection (a)
shall be a credit against the Illinois income tax liability of the person
to whom the payment of winnings was made for the taxable year in which that
person incurred an Illinois income tax liability with respect to those winnings.
(Source: P.A. 85‑731.)
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(35 ILCS 5/711) (from Ch. 120, par. 7‑711)
Sec. 711.
Payor's Return and Payment of Tax Withheld.
(a) In general. Every
payor required to deduct and withhold tax under Section 710 (and until
January 1, 1989, Sections 708 and 709)
shall be subject to the same reporting requirements regarding taxes
withheld and the same monthly and quarter monthly (weekly) payment requirements as
an employer subject to the provisions of Section 701. For purposes of
monthly and quarter monthly (weekly) payments, the total tax withheld
under Sections 701, 708, 709 and 710 shall be considered in the
aggregate.
(b) Information statement. Every payor required to deduct and withhold
tax under Section 710 (and until January 1, 1989, Sections 708 and 709)
shall furnish in
duplicate to each party
entitled to the credit for such withholding under subsection (c) of
Section 708, subsection (c) of Section 709, and subsection (b) of Section
710, respectively, on or before January 31 of the succeeding calendar
year, a written statement
in such form as the Department may by regulation prescribe showing the amount
of the payments, the amount deducted and withheld as tax, and such other
information as the
Department may prescribe. A copy of such statement shall be filed by the
party entitled to the credit for the withholding under subsection (c) of
Section 708, subsection (c) of Section 709, or subsection (b) of Section
710 with his return for the taxable year to which it relates.
(Source: P.A. 85‑299; 85‑982.)
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(35 ILCS 5/712) (from Ch. 120, par. 7‑712)
Sec. 712.
Payor's Liability For Withheld Taxes.
Every payor who deducts
and withholds or is required to deduct and withhold tax under Section
710 (and until January 1, 1989, Sections 708 and 709) is liable for such
tax. For purposes of assessment and
collection, any amount withheld or required to be withheld and paid
over to the Department, and any penalties and interest
with respect thereto, shall be considered the tax of the payor. Any amount
of tax actually deducted and withheld under Section 710 (and until
January 1, 1989, Sections 708 and 709) shall
be held to be a special fund in trust for the Department. No payee shall have
any right of action against his payor in respect of any money deducted and
withheld and paid over to the Department in compliance or in intended compliance
with Section 710 (and until January 1, 1989, Sections 708 and 709).
(Source: P.A. 85‑299; 85‑982.)
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(35 ILCS 5/713) (from Ch. 120, par. 7‑713)
Sec. 713.
Payor's Failure To Withhold.
If a payor fails to deduct and
withhold any amount of tax as required under Section 710 (and until
January 1, 1989, Sections 708 and 709) and
thereafter the tax on account of which such amount was required to be deducted and
withheld is paid, such amount of tax shall not be collected from the payor,
but the payor shall not be relieved from liability for penalties or interest
otherwise applicable in respect of such failure to deduct and withhold.
For purposes of this Section, the tax on account of which an amount is required
to be deducted and withheld is the tax of the individual or individuals
who are entitled to a credit under subsection (c) of Section 708,
subsection (c) of Section 709, or subsection (b) of Section 710 for the withheld tax.
(Source: P.A. 85‑299; 85‑982.)
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