Illinois Statutes Chapter 20. Executive Branch § 2505/2505-575. Income tax reciprocal agreements

(a) Reciprocal agreement cost study. The Department shall study the use and cost effectiveness of all reciprocal agreements entered into under the authority of Sections 302 and 701 of the Illinois Income Tax Act.  1 The Department shall report to the General Assembly as to the fiscal impact on Illinois income tax collections of each of the reciprocal agreements by January 1, 1999 and every 5 years thereafter. The Department has the authority to require that employers provide all information necessary to complete the study on income tax withholding returns filed with the Department under Section 704 of the Illinois Income Tax Act.  2 The Department has the authority to require that employees provide all information necessary to complete the study on individual income tax returns filed under Section 502 of the Illinois Income Tax Act.  3

(b) Revocation of reciprocal agreements. Upon receipt of the cost study or at any time thereafter, the General Assembly may adopt a joint resolution by an affirmative vote of a majority of each house directing the Director of Revenue to revoke any reciprocal agreement with any other state that results in a loss of revenue to the State of Illinois. Any joint resolution shall specify the date upon which the reciprocal agreement is to be revoked. That date shall be no sooner than the beginning of the next subsequent calendar year that is at least 6 months after the adoption of the joint resolution.

(c) Authority to enter into compensation agreements. Before any revocation by joint resolution adopted by the General Assembly under subsection (b), the Director of Revenue has the authority to enter into a compensation or rebating agreement with any reciprocal state. Any compensation agreement shall provide that the reciprocal state shall provide a rebate to the State of Illinois to compensate for the loss of revenue. The Director has the authority to enter into agreements with reciprocal states to contract with any third party mutually agreed to by the Director and the reciprocal state to establish a rebate or compensation amount.