Who is required to withhold Illinois Income Tax?

Who is required to withhold Illinois Income Tax and register as an Illinois withholding agent?

As an employer or a withholding agent, you must withhold Illinois Income Tax if you are required to withhold (or have a voluntary agreement to withhold) federal income tax from payments you make for

• employee compensation (i.e., wages and salaries) paid in Illinois,
• gambling or lottery winnings in Illinois paid to an Illinois resident.

You must register with us to withhold Illinois Income Tax. A return is due for each period even if you did not pay any wages or have any withholding. If you discontinue your business, you must file a final return. If you do not, we may take collection action against you.

As a withholding agent, you are liable for the taxes that you are required to withhold.  Because we are required to collect taxes (and issue assessments when these taxes are not paid), Illinois law states that the amounts required to be withheld and paid to us (and any penalties and interest) are considered to be a tax on you.  As the withholding agent, you must pay the tax even if you failed to withhold the tax from your employee.

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