Is it illegal for an insurance agent to share his/her commission with client upon purchasing a policy?

If it is used to entice you to purchase, it is.

The basis of financial product purchase has to be factual, and not based on enticement. Unless there are ongoing rebates given directly from the insurer as part of a promotional campaign. They will list it as a "campaign promotional discount" instead of commission rebates.

Its not illegal in the FAA, but tied Agency compliance will flag it out as compliance issue,

So do you think its illegal for tied agents to share commission?

No one in the right mind will do it as they can lose their license due to the internal compliance issue.