# 86 Ill. Adm. Code 1000.100.3360: Section 100.3360 Payroll Factor (IITA Section 304)

> Illinois · Regulations · In force

URL: https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P1000_S100_3360

## Section

- **Citation:** 86 Ill. Adm. Code 1000.100.3360
- **Heading:** Section 100.3360 Payroll Factor (IITA Section 304)
- **Jurisdiction:** Illinois
- **Kind:** Regulations
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** Illinois Administrative Code / Title 86  /  / Part 1000  / Section 100.3360 Payroll Factor (IITA Section 304)

## Text

Section 100
TITLE 86: REVENUE
CHAPTER I: DEPARTMENT OF REVENUE
PART 100 INCOME TAX
SECTION 100.3360 PAYROLL FACTOR (IITA SECTION 304)
Section 100.3360 Payroll
Factor (IITA Section 304)
a)         In
general
1)         The payroll factor of the apportionment formula for each trade
or business of an employer shall include the total amount paid by the employer
in the regular course of its trade or business for compensation during the tax
period.
2)         The total amount "paid" to employees is determined
upon the basis of the employer's accounting method. If the employer has adopted
the accrual method of accounting, all compensation properly accrued shall be
deemed to have been paid. The compensation of any employee on account of
activities which are connected with the production of nonbusiness income shall be
excluded from the factor.
A)        Example A: A corporation uses some of its employees in the
construction of a storage building which, upon completion, is used in the regular
course of the corporation's trade or business. The wages paid to those
employees are treated as a capital expenditure by the corporation. The amount
of such wages is included in the payroll factor.
B)        Example B: A corporation owns various securities which it holds
as an investment separate and apart from its trade or business. The management
of the corporation's investment portfolio is the only duty of Mr. X, an employee.
The salary paid to Mr. X is excluded from the payroll factor.
3)         The term "compensation" is defined in Section
100.3100 of this Part.
4)         The term "employee" is defined in Section 100.3100
of this Part.
5)         In filing returns with this state, if the employer departs from
or modifies the treatment of compensation paid used in returns for prior years,
the employer shall disclose in the return for the current year the nature and
extent of the modification
"compensation" is defined in Section
100.3100 of this Part.
4)         The term "employee" is defined in Section 100.3100
of this Part.
5)         In filing returns with this state, if the employer departs from
or modifies the treatment of compensation paid used in returns for prior years,
the employer shall disclose in the return for the current year the nature and
extent of the modification. If the returns or reports filed by the employer with
all states to which the employer reports under Article IV of the Multistate Tax
Compact or the Uniform Division of Income for Tax Purposes Act are not uniform
in the treatment of compensation paid, the employer shall disclose in its return
to this state the nature and extent of the variance.
b)         Denominator. The denominator of the payroll factor is the
total compensation paid everywhere during the tax period. Accordingly,
compensation paid to employees whose services are performed entirely in a state
where the employer is immune from taxation, by Public Law 86-272 for example,
is included in the denominator of the payroll factor. Example: A corporation
has employees in its state of legal domicile (State A) and is taxable in State
B. In addition the corporation has other employees whose services are performed
entirely in State C where the corporation is immune from taxation by Public Law
86-272. As to these latter employees, the compensation will be assigned to State
C where their services are performed (i.e., included in the denominator – but
not the numerator – of the payroll factor) even though the corporation is not
taxable in State C.
c)         Numerator. The numerator of the payroll factor is the total
amount paid in this State during the tax period by the employer for compensation.
The tests in IITA Section 304(a)(2) to be applied in determining whether
compensation is paid in this State are derived from the Model Unemployment
Compensation Act.
d)         Compensation paid in this State
ration is not
taxable in State C.
c)         Numerator. The numerator of the payroll factor is the total
amount paid in this State during the tax period by the employer for compensation.
The tests in IITA Section 304(a)(2) to be applied in determining whether
compensation is paid in this State are derived from the Model Unemployment
Compensation Act.
d)         Compensation paid in this State. The term "compensation
paid in this State" is explained in Section 100.3120 of this Part.

## Nearby sections

- [86 Ill. Adm. Code 1000.100.3300 Section 100.3300  Allocation and Apportionment of Base Income (IITA Section 304)](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P1000_S100_3300.md)
- [86 Ill. Adm. Code 1000.100.3310 Section 100.3310  Business Income of Persons Other Than Residents (IITA Section 304) – In General](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P1000_S100_3310.md)
- [86 Ill. Adm. Code 1000.100.3320 Section 100.3320  Business Income of Persons Other Than Residents(IITA Section 304) -- Apportionment (Repealed)](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P1000_S100_3320.md)
- [86 Ill. Adm. Code 1000.100.3330 Section 100.3330  Business Income of Persons Other Than Residents (IITA Section 304 – Allocation](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P1000_S100_3330.md)
- [86 Ill. Adm. Code 1000.100.3340 Section 100.3340  Business Income of Persons Other Than Residents (IITA Section 304)](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P1000_S100_3340.md)
- [86 Ill. Adm. Code 1000.100.3350 Section 100.3350  Property Factor (IITA Section 304)](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P1000_S100_3350.md)
- [86 Ill. Adm. Code 1000.100.3360 Section 100.3360  Payroll Factor (IITA Section 304)](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P1000_S100_3360.md)
- [86 Ill. Adm. Code 1000.100.3370 Section 100.3370  Sales Factor (IITA Section 304)](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P1000_S100_3370.md)
- [86 Ill. Adm. Code 1000.100.3371 Section 100.3371  Sales Factor for Telecommunications Services](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P1000_S100_3371.md)
- [86 Ill. Adm. Code 1000.100.3375 Section 100.3375  Combined Apportionment (IITA Section 304(e))](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P1000_S100_3375.md)
- [86 Ill. Adm. Code 1000.100.3390 Section 100.3390  Petitions for Alternative Allocation or Apportionment (IITA Section 304(f))](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P1000_S100_3390.md)
- [86 Ill. Adm. Code 1000.100.3400 Section 100.3400  Apportionment of Business Income of Financial Organizations for Taxable Years Ending Prior to December 31, 2008 (IITA Section 304(c))](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P1000_S100_3400.md)
- [86 Ill. Adm. Code 1000.100.3405 Section 100.3405  Apportionment of Business Income of Financial Organizations for Taxable Years Ending on or after December 31, 2008 (IITA Section 304(c))](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P1000_S100_3405.md)
- [86 Ill. Adm. Code 1000.100.3420 Section 100.3420  Apportionment of Business Income of Insurance Companies (IITA Section 304(b))](https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P1000_S100_3420.md)

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/STATE_IL_IAC_T86_P1000_S100_3360. Check the current official text before relying on it. Not legal advice.