Illinois's 0.2% digital asset tax, set for Jan 1, 2027, faces a second lawsuit from Blockchain Association and Crypto Council, alleging federal preemption and constitutional violations.
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Illinois's 0.2% digital asset tax faced a second legal challenge Friday as two industry groups filed a complaint in Sangamon County circuit court. The Blockchain Association and the Crypto Council for Innovation named state tax and law enforcement officials in their Aug. 21 filing, which seeks to block enforcement of the Digital Asset Tax Act.
The new complaint arrives about a month after The Digital Chamber launched a separate Sangamon County challenge. The groups argue the tax violates federal law, the U.S. Constitution and Illinois's own tax rules. Seven counts allege preemption under the federal Internet Tax Freedom Act, violations of the Commerce Clause and due process protections, and breaches of the state constitution's uniformity and delegation provisions. These are allegations, not findings.
Illinois's enacted statute applies a 0.2% levy on the value of digital assets involved in covered business activity. A broker that makes or effects a sale must collect the tax from the customer. The law covers a single occurrence of exchanging or transferring a digital asset as part of a business or for a customer who agreed to receive those services. Self-custody transfers not involving a broker's service fall outside the taxable event.
For brokers headquartered outside Illinois, collection kicks in when gross receipts from digital asset business sales to Illinois customers reach $100,000 over the preceding 12 months. The state requires the test quarterly. Once a broker exceeds the threshold, it is treated as maintaining a place of business in Illinois and must collect the tax and file returns for one year.
If the broker does not charge the tax, the customer must remit it directly by the 20th day of the following month, using the form prescribed by the Department of Revenue.
Filing the complaint did not suspend the law. The plaintiffs have asked for preliminary and permanent injunctions. Their public materials report no court timetable or injunction order. Unless a court intervenes or the legislature changes the statute, Jan. 1, 2027, remains the operative compliance date.
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