Illinois Allows Local Contingent Fee Audits — With Poison Pill

The Local Government Revenue Recapture Act, signed into law January 24, 2020, allows local governments in Illinois to hire third-party auditors, on a contingency fee basis, to review sales tax information and taxpayer data from the Department of Revenue to confirm that the locality has received the correct tax disbursement from the Department. This article reviews and analyzes the Act, considering whether it will have its intended impact of effectively redistributing misallocated or underpaid municipal tax revenues, or whether the outsourcing of a government function to third-party auditors may result in significant unintended consequences.