Illinois CPA commission rules: what to check before accepting a referral fee

The short answer for Illinois CPAs

Whether an Illinois CPA may accept a commission or referral fee turns on three things: which Illinois credential you hold and whether you practise public accounting, what services your firm provides the client, and whether you disclose the payment properly. For AICPA members, the Code's commission rule is the floor; Illinois law and the regulator's rules are what your license answers to.

This guide sets out the AICPA baseline with its source, the Illinois documents to read and a disclosure routine. It does not quote the Illinois provisions, so open the current text before you rely on any answer here.

What the AICPA commission rule says

The AICPA Code of Professional Conduct covers this in the Commissions and Referral Fees Rule, ET 1.520 (see the copy of the Code hosted by the Minnesota Board of Accountancy; the AICPA's online Code is the current version). Three points matter for a referral reward:

• A member in public practice may not accept a commission for recommending a product or service to a client when the member or the firm also performs an audit, a review, certain compilations or an examination of prospective financial information for that client.
• Where a commission is permitted, it must be disclosed to the client.
• Referral fees must be disclosed as well.

A SourceX reward is paid by a third party for introducing a company to its service, so it is worth analyzing as a possible commission. Confirm the classification with IDFPR or your ethics counsel, because the Code's definitions decide which paragraph applies.

Where the Illinois rules live

Licensing and discipline for Illinois public accounting sit with the Illinois Department of Financial and Professional Regulation (IDFPR), under the Illinois Public Accounting Act (225 ILCS 450) and the rules adopted under it. The Illinois CPA Society publishes ethics resources, but it is a professional association; the Act and IDFPR's rules are what your license answers to.

Adoption by reference is a real pattern. Kansas, for example, requires every CPA and firm to comply with the AICPA Code's provisions on commissions and referral fees, including interpretations, under K.A.R. 74-5-103. When you read the Illinois text, note whether it follows that model, writes its own standard or combines the two.

The LCD screen: license, client, disclosure

Run these three groups of questions for each company before you mention SourceX.

License

• Do you hold an Illinois license to practise public accounting, or a certificate or registration that does not authorize public practice? Ask how the rules treat each status.
• Will the reward be paid to you personally or to your firm, and is the firm licensed in Illinois?
• Do you also practise in Indiana, Wisconsin, Missouri or another state, by license or mobility, and does the client operate there?

Client

• During the period the rule covers, does anyone at the firm perform an audit, review, certain compilations or an examination of prospective financial information for the company?
• Does a network or affiliated firm perform attest work for it?
• Is the company a client at all, or a contact from your wider network?

Disclosure

• Will the disclosure be written and delivered before you make the introduction?
• Does it say who pays, how the amount is calculated, when it becomes payable and that it does not reduce the client's proceeds?
• Where will the client's acknowledgment be filed?

How the screen plays out in common Illinois settings

A disclosure routine for Illinois CPAs

1. Run the attest check across the whole firm, including affiliates, for the period the rule covers.
2. Pull the current Act and IDFPR rules, and note the sections you relied on and the date you read them.
3. Classify the payment with ethics counsel: commission, referral fee or neither.
4. Draft a written disclosure covering who pays, the basis of the reward, the payout trigger and the cap, and confirming that it never reduces the client's proceeds.
5. Deliver it before the introduction and keep the client's acknowledgment in the engagement file.
6. Decide whether the firm keeps, declines or passes the payment through; the page on passing a referral fee through to your client covers the trade-offs.
7. Plan the tax side: a business that pays an independent contractor may have to report the payment, as the IRS explains in its guidance on reporting payments to independent contractors.
8. Make the introduction with your partner referral link or the referral form, and leave the records to the company and SourceX.

Sample disclosure wording

Adapt this to the Illinois text and your engagement letter style.

How the reward works and when it is paid

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company; rewards become payable only after the buyer pays and SourceX receives its fee, and no reward is guaranteed. The guide on calculating an illustrative referral commission from a platform fee shows how to explain the formula to a client without promising a figure.

After your introduction, SourceX checks the company's size, history, data breadth and rights; the company inventories its systems; price and terms are agreed with the company; AI labs and data buyers review the opportunity; the deal closes, the data is delivered and the company is paid; only then does the partner reward follow. The paperwork is only worth doing for a company that could qualify: based in the US, 50+ full-time employees at peak (contractors excluded), a documented operating history of several years, clear rights to its own records and an owner or officer prepared to sponsor a license.

Questions for IDFPR or your ethics counsel

• Does Illinois treat a payment from a data licensing platform as a commission, a referral fee or neither?
• Does the Illinois text restrict commissions for clients that receive no attest services?
• Must disclosure be in writing, and must it come before the recommendation?
• Do the rules apply differently to a certificate or registration holder who does not practise public accounting?
• If the client operates in a neighboring state, whose rules govern the payment?

Firms licensed in more than one state can compare the guides to Pennsylvania CPA referral fee rules and Ohio CPA commission rules.

This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting.

Next step

Screen the company with the company fit checker, finish the LCD screen, and then register as a partner. The page on referral opportunities for accountants covers which clients in a typical book are worth a closer look.