The Illinois Department of Revenue issued a personal income tax general information letter stating that deferred compensation received by a nonresident for past services performed in Illinois is subject to withholding tax. The amounts paid to the nonresident were reported on federal Form W-2. Illinois withholding is required with respect to any item of compensation paid in Illinois for which federal withholding is required. Further, where compensation is paid to a nonresident for past services, such compensation will be presumed to have been earned ratably over the employee's last five years of service with the employer, for the purpose of determining whether and to what extent such compensation is paid in Illinois and is allocated to Illinois. Compensation for past services performed solely within Illinois is allocable to Illinois.
General Information Letter IT 12-0031-GIL, Illinois Department of Revenue, November 13, 2012