It's not a rebate if you never paid anything in the first place. In Illinois, you got money even if you paid no income tax.  So how can they call it a refund?  And why did they put it on the 1099-G?  They should have called California, the FTB would have told them to use the 1099-MISC.  

Actually, they both should have called IRS, but IRS figured tax season wouldn't be the same without a little chaos.  

I don't see anything in the Illinois law that links the payments to income tax liability.  If I filed a return showing a balance due of $500 but didn't send a check, I still got my $50, right?  And I still owe $500? 

IRS has promised as many answers as they can determine by the end of this week. See their February 3 announcement here:

https://www.irs.gov/newsroom/important-tax-alerts-and-news#taxabilitystatepay

My view is that this is excluded under the "general welfare" rules. I also doubt that the major tax preparation companies have been holding up returns while waiting for an answer.  In California, they have been adding the payments to income, then subtracting them as an adjustment.  In Illinois, it may be easier to bury the amounts under the "tax benefit" rules for actual refunds.  

If Paul Powell were alive today, he'd have the answer in one of his shoeboxes.