The Digital Chamber sued to block Illinois' 0.2% crypto tax on transaction value, not profit. The levy applies to exchanges, custodians, and wallet providers. Out-of-state brokers face liability after $100,000 in Illinois receipts.
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Illinois faces a legal challenge over a 0.2% levy on digital asset transactions that charges on gross value, not profit. The Digital Chamber filed suit Tuesday in Sangamon County Circuit Court, asking a judge to block the measure before its January 1, 2027 start date.
The 32-page complaint names Revenue Director David Harris and Attorney General Kwame Raoul. It seeks temporary, preliminary, and permanent injunctions to stop enforcement. Governor JB Pritzker signed Senate Bill 3019 on June 16 as part of the state's 2027 budget package.
The Digital Asset Tax Act applies to exchange, transfer, or storage services for Illinois customers. Unlike capital gains taxes, the 0.2% charge is based on the asset's value during the covered activity, not the customer's gain or loss. A $100,000 transfer could trigger a $200 tax regardless of fees or the customer's cost basis.
Collection duties fall on digital asset brokers – exchanges, custodians, wallet providers, and businesses that facilitate customer transfers. Companies with a physical Illinois presence fall directly under the law. Out-of-state brokers become liable after generating $100,000 in Illinois-related receipts over 12 months. Once covered, firms must register with the state, collect the tax separately, file monthly returns, and retain transaction and customer-location records.
Brokers may determine a customer's location using account details, mailing or billing addresses, IP data, or other indicators of primary use. The law leaves significant uncertainty over asset valuation, transaction sourcing, and whether storage creates a taxable event.
The Digital Chamber argues Illinois cannot impose a separate tax simply because ownership records or transfers rely on blockchain technology. The complaint says economically identical property should receive equal treatment regardless of the settlement system used. The group also cites the federal Internet Tax Freedom Act, which restricts discriminatory state and local taxes on electronic commerce. The filing raises claims under both the U.S. and Illinois constitutions.
CEO Cody Carbone said the measure entered the legislation one night before final consideration, limiting scrutiny of its fairness and compliance requirements. The statute does not specify when volatile digital assets must be valued or which pricing source brokers should use. It does not clarify whether storage creates a single taxable event, a monthly obligation, or another recurring charge. Separate definitions across Illinois tax and digital asset laws may complicate compliance for peer-to-peer and decentralized finance services.
The lawsuit follows Illinois' broader expansion of digital asset oversight. In 2025, the state enacted consumer protection and kiosk legislation that gave financial regulators authority over licensing and consumer safeguards.
Unless the court or lawmakers intervene, brokers must prepare registration, valuation, collection, reporting, and customer-location systems before January 1, 2027.
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