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Ezel / Tax Rulings / IL
IL IT 10-0012-GIL Illinois Income Tax 2010-05-28

Did a state university still need a contractor residence certification under former IITA Section 708?

Short answer: No. The contract clause referred to former IITA Section 708, which had required withholding from certain personal-service contract payments unless the contract certified that the individuals performing the services were Illinois residents. Public Act 85-299 repealed that section in 1989. Because the statute no longer applied and its residency certification had covered individuals rather than business entities, the university's question about which state to list for an out-of-state-incorporated company with an Illinois location was moot.

Apply this to your situation

This page answers the general question as of 2010. Ezel answers yours, under current Illinois tax law, with citations.

Currency note: this ruling is from 2010
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official 2010 Illinois Department of Revenue General Information Letter explaining that former IITA Section 708 had been repealed in 1989. A GIL is NOT a statement of Department policy and is NOT binding on the Department. Contract language, payee type, services and workers involved, other withholding statutes, procurement rules, tax year, and current federal, Illinois, and local requirements can change the result.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

The university did not need to determine a business contractor's residence under former Section 708 because that provision had been repealed in 1989. Before repeal, it required withholding from certain personal-service contract payments unless the contract certified that the individuals performing the services were Illinois residents.

The former certification applied to individuals, not business entities. IDOR therefore said the question of whether to list the incorporation state or Illinois for a company with locations in both states was moot under that repealed provision.

What this means for you

Remove or update legacy contract clauses that cite former IITA Section 708. Separately review any current withholding or procurement requirements that apply to the actual payee and services.

Common questions

Q: When was Section 708 repealed?
A: In 1989 by Public Act 85-299.

Q: Had the former residence certification applied to companies?
A: No. IDOR said it applied only to individuals performing services.

Citations and references

  • Former Ill. Rev. Stat. ch. 120, ¶ 7-708
  • Public Act 85-299

Subject

Withholding – Personal Service Contracts

Source

Original ruling text

IT 10-0012-GIL 05/28/2010 WITHHOLDING – PERSONAL SERVICE CONTRACTS
General Information Letter: Withholding requirement for personal service contracts
involving nonresident individuals under IITA Section 708 was repealed in 1989.
May 28, 2010
Dear:
This is in response to your inquiry posted on the State of Illinois Business Portal on May 25, 2010,
which has been forwarded to me for consideration. The nature of your request and the information
you have provided require that we respond with a General Information Letter, which is designed to
provide general information, is not a statement of Department policy and is not binding on the
Department. See 86 Ill. Adm. Code 1200.120(b) and (c), which may be found on the Department's
web site at www. tax.illinois.gov.
In your inquiry you have stated the following:
I am a purchasing agent with UNIVERSITY, a State University in CITY. One of the
provisions of the Two Part Contracts that are executed between the University and a
given contractor is: IN ACCORDANCE WITH THE ILLINOIS TAX ACT, SECTION 708,
Contractor Declares the s/he/it is a resident of the State of _. I have been all of
the web trying to find a reference to section 708 and have not been able to locate it. My
question is this. Most of the companies I deal with are residents of Illinois and were
incorporated in Illinois. However some companies were incorporated elsewhere yet
have locations in Illinois. In an instance where a company was incorporated in STATE
yet also has residency in Illinois – which is the proper State to record as resident of?
Also where can I secure a copy of Section 708 of the Illinois Tax Act?
Response
It appears that the contract is referring to former Section 708 of the Illinois Income Tax Act (Ill. Rev.
Stat., ch. 120, ¶ 7-708), which was repealed in 1989 by Public Act 85-299. Prior to its repeal, Section
708 required withholding from payments made on certain contracts for personal services, unless the
contract certified that the individuals performing the services were Illinois residents.
Because this statute has been repealed, and the certification of residency applied only to individuals,
questions about the application of the statute to business entities are moot.
As stated above, this is a general information letter which does not constitute a statement of policy
that applies, interprets or prescribes the tax laws, and it is not binding on the Department. If you are
not under audit and you wish to obtain a binding Private Letter Ruling regarding your factual situation,
please submit all of the information set out in items 1 through 8 of Section 1200.110(b). If you have
any further questions, you may contact me at (217) 782-7055.
Sincerely,

Paul S. Caselton
Deputy General Counsel – Income Tax

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