The tax landscape in Illinois has changed over the last few months. Income taxes for individuals and for corporations have increased, and the newly passed affiliate tax (otherwise known as the “Amazon Tax”) has added a new set of rules to consider. This has gotten people wondering if it wouldn’t make sense to change the residency of themselves or their business, to try to become non-residents of Illinois and thus avoid the new or increased Illinois taxes.
While it is certainly possible that for some individuals or businesses such a move would create an overall tax benefit (it’s impossible to make an overall statement since every tax situation is unique) it’s important to know that becoming a non-resident is not as simple as just renting out a P.O. box across state lines. Despite popular c0nceptions to the contrary, government is not dumb.
California tends to lead the pack in this area. They institute a policy and before long most of the rest of the country has done so as well. In California there’s an entire agency dedicated to finding people claiming to be non-residents who don’t actually make the cut. Illinois doesn’t have a counterpart agency, but it still nevertheless likewise has specific rules for what does and does not qualify as non-residency. As a general rule, it’s much easier to go from being a non-resident to a resident than it is to go the other direction.
The exact process necessary varies because every situation is unique. For more information on how residency or non-residency could affect your tax situation or for other tax concerns, contact the Illinois tax attorneys at Howoritz & Weisntein.