Although there's no state law in Illinois that allows rent withholding, judges have allowed it in the past. The situation is more clear-cut in Chicago, however.You must submit Form ST-201, Rental Purchase Agreement Occupation Tax Return, to report and pay the Rental Purchase Agreement Occupation Tax. In Chicago, tenants have a legal right to withhold rent from landlords who fail to maintain their buildings. Since you work in Illinois, they should be withholding Illinois state income tax and not Ohio state tax. Complete this worksheet to figure your total withholding allowances. Everyone must complete Step 1. This form is essential for businesses that need to update income tax withheld information due to errors or adjustments in previous reports.