The Blockchain Association and the Crypto Council for Innovation (CCI) have filed a lawsuit against Illinois concerning the state's upcoming 0.2% digital asset tax, which is scheduled to take effect on Jan. 1, 2027. The legal action follows a separate challenge filed a month prior by The Digital Chamber.
The complaint was filed on Aug. 21 in the Circuit Court of the Seventh Judicial Circuit in Sangamon County. The plaintiffs named Illinois Department of Revenue Director David Harris, Attorney General Kwame Raoul, and Sangamon County State’s Attorney John Milhiser in their official capacities. The lawsuit seeks a declaration that the Digital Asset Tax Act is invalid, alongside preliminary and permanent injunctions to block its implementation and enforcement.
The seven-count complaint alleges preemption under the federal Internet Tax Freedom Act, violations of the Commerce Clause, federal and state due process protections, and breaches of Illinois constitutional rules regarding tax uniformity, delegation, and the legislative process.
Under the enacted statute, covered digital asset business activity is taxed at 0.2% of the value of the asset involved, rather than on capital gains or broker service fees. Brokers making or effectuating the sale are generally required to collect the tax. Covered activity encompasses exchanging, transferring, or storing a digital asset on behalf of a customer for valuable consideration.
For remote brokers headquartered outside of Illinois, a collection nexus applies if gross receipts from covered digital asset sales to Illinois customers reach at least $100,000 over the preceding 12 months, assessed quarterly. Once this threshold is met, the broker must collect, remit, and file returns for one year. If a broker fails to charge the tax on a taxable transaction, the Illinois customer is required to remit it directly by the 20th day of the following month.
While the plaintiffs are seeking injunctions to stop enforcement, the filing of the complaint did not automatically suspend the law. Unless a court grants relief or the legislature acts, the Jan. 1 compliance date remains in effect.
