Generally, the State of Illinois may tax the worldwide income of a person who is domiciled, that is, a resident of Illinois. Recently, the Illinois Department of Revenue (“IDOR”) adopted administrative rules providing clarification on factors that are considered when determining residence for income tax purposes. The rules also incorporate the holdings in an Appellate Court decision.
Once residency has been established in Illinois, it can be difficult to lose. The IDOR is getting much more aggressive in conducting residency audits. This is due, in part, to the increase in Illinois income tax rates and the available resources and tools at the IDOR auditor’s disposal. For example, auditors are “Googling” taxpayers and using commercial databases, such as Experian and Westlaw, for taxpayers who claim a change of residency from Illinois.
Although a person may have multiple residences, a person can have only one domicile.
