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Reciprocal Agreement on Exchange of Information

What is a reciprocal agreement on exchange of information?

A Reciprocal Agreement on Exchange of Information is an agreement between a municipality or county and the Illinois Department of Revenue to share financial information that was obtained pursuant to the Illinois Retailers’ Occupation Tax Act, the Service Occupation Tax Act, the Use Tax Act, and the Service Use Tax Act or the Simplified Municipal Telecommunications Tax Act on taxpayers or telecommunications providers doing business within their taxing jurisdiction.

The financial information is limited to the net revenue distributed to the requesting municipality that is directly related to their local share of tax received under the Simplified Municipal Telecommunications Tax Act, the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, the Retailers’ Occupation Tax Act, and, if applicable, any locally-imposed retailers’ occupation tax or service occupation tax that the Illinois Department of Revenue administers.

Who is eligible to enter into an agreement?

Effective January 1, 2015, Illinois law expanded eligibility to allow all municipalities in the state to enter into an agreement with the Department to request confidential information on retail sales made within their taxing jurisdictions. Prior to the law change, generally only those municipalities that had imposed a Home Rule Sales Tax or Non-Home Rule Sales Tax were eligible to enter into such an agreement.

Effective June 30, 2016, Illinois law expanded eligibility to allow counties in the state to enter into an agreement with the Department to request confidential information on retail sales made within their taxing jurisdictions.

How does a municipality or county enter into an agreement?

The Reciprocal Agreement on Exchange of Information for Sales Tax and the Reciprocal Agreement on Exchange of Information for Simplified Municipal Telecommunications Tax are available on the Illinois Department of Revenue website at tax.illinois.gov. The reciprocal agreement, along with Attachment A, Minimum Standards Required to Safeguard Information, must be signed by the chief executive officer of the municipality or county. The chief executive officer must provide a list of names and official titles of persons designated by him or her as persons exclusively authorized to request, receive or view financial information on his or her behalf. The list must be restricted to only persons who are directly involved in the financial operations of the municipality or county, including municipal or county employees, and persons, such as attorneys or accountants, retained by the municipality or county. The list cannot include those who are compensated by the municipality or county for services rendered on a contingent basis or any other similar method that may impair that person’s independence or the perception of that person’s independence. Each person authorized to request, view, or receive financial information will be required to complete and sign Attachment B, Acknowledgement of Restrictions on Use and Disclosure of Confidential Financial Information.

Agreements for sales tax must be mailed to the Department’s Local Tax Allocation Division. The submission must include (i) the original Agreement, (ii) Attachment A, (iii) the list of authorized persons, and (iv) a signed Attachment B for each person included on the authorized list.

Agreements for telecommunications tax must be mailed to the Department’s Local Tax Allocation Division. The submission must include (i) the original Agreement, (ii) Attachment A, (iii) the list of authorized persons, and (iv) a signed Attachment B for each person included on the authorized list.

What information can a municipality or county request and receive under the agreement?

The sales tax agreement entitles a municipality or county to request information regarding the amount of sales tax they received from a taxpayer registered to report sales tax within the municipality’s or county’s taxing jurisdiction.

The telecommunications tax agreement entitles a municipality to request information regarding the amount of telecommunications tax they received from a telecommunications provider registered to report telecommunications tax within the municipality’s taxing jurisdiction.

The most common type of request is for the tri-annual remittance reports for sales tax and telecommunications tax.

The tri-annual report for sales tax lists, in four-month increments, the amount of sales tax allocations the municipality or county received from each taxpayer. The report also includes the name, address, Illinois Account ID, site number, and SIC code of each taxpayer listed on the report.

The tri-annual report for telecommunications tax lists, in four-month increments, the amount of allocations the municipality received from each telecommunications provider, the account number, and site number. Along with the tri-annual remittance report for telecommunications tax, the municipality receives a list of telecommunications providers that report tax within the municipality’s jurisdiction.

Tri-annual remittance reports for sales tax and telecommunications tax must be requested annually. The reports are sent to requesting municipalities or counties during the following months.

How does a municipality or county request information under the agreement?

Requests for confidential information must (i) be submitted on the municipality’s or county’s letterhead, (ii) indicate that the information is being requested under the reciprocal agreement, (iii) indicate the time period for the requested information, (iv) indicate the tax type, and (v) be signed by an authorized person. The requests can be mailed, faxed, or sent by email as an attachment to the Local Tax Allocation Division.

What is the responsibility of the municipality or county to keep the information confidential?

The information received by the municipality or county under the agreement is confidential and shall only be shared with authorized persons designated by the chief executive officer of the municipality or county. Confidential information must be kept in a locked storage facility or be password protected if stored in an electronic format. The municipality or county must inform the Illinois Department of Revenue if either of the following occur:

Where do you send agreements, requests, and questions?

The original reciprocal agreement on exchange of information must be mailed to the Department and can be sent to the address below. Once the Department receives and processes the agreement, requests for confidential information, as well as questions concerning the agreement and the confidential requests, can be made using any of the following:

Local Tax Allocation Division (3-500)
Illinois Department of Revenue
101 W Jefferson St
Springfield IL 62702

Email: rev.localtax@illinois.gov
Phone: 217 785-6518
Fax: 217 524-0526

Statutory references:
35 ILCS 120/11
55 ILCS 5/2-1001 et seq. (identifies the types of chief executives of counties)
65 ILCS 5/3.1-15-10 (chief executive officer defined)