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The Blockchain Association and Crypto Council for Innovation have sued Illinois over its new 0.2% digital asset tax, asking a state court to block the levy before it takes effect on January 1, 2027.
The groups filed their complaint on August 21 in Sangamon County Circuit Court and are seeking preliminary and permanent injunctions. The case follows a separate challenge filed by The Digital Chamber on July 21.
Illinois Tax Covers Exchanges, Transfers, and Storage
The Digital Asset Tax Act imposes a tax equal to 0.2% of the value of digital assets involved when an Illinois customer receives covered business activity, including exchanges, transfers, and storage.
Its transfer definition includes moving assets between accounts or storage locations belonging to the same customer, meaning ownership does not need to change. Brokers generally must collect the tax. If no tax is charged by the broker, the statute can require the customer to self-assess and remit the amount directly to the Illinois Department of Revenue.
$100,000 Threshold Forms Part of Groups’ Vagueness Challenge
The statute defines certain out-of-state brokers as maintaining a place of business in Illinois when their gross receipts from digital asset business activity involving Illinois customers reach $100,000 over the previous 12 months.
The plaintiffs argue the law is unclear because other provisions governing registration, collection, remittance and recordkeeping do not consistently use that same threshold. Their complaint says one section appears to require collection without any gross-receipts limitation.
The groups also allege violations of the federal Internet Tax Freedom Act, dormant Commerce Clause, federal and state due process protections and several provisions of the Illinois Constitution.
Second Lawsuit Lands Four Months Before January 2027 Start
Governor JB Pritzker signed Senate Bill 3019 on June 16 after lawmakers passed it on June 1. The digital asset tax is scheduled to begin January 1.
House Bill 5798, introduced by Republican Representative John Cabello on June 22, would repeal the Digital Asset Tax Act. It has added two co-sponsors but has not advanced beyond its filing stage.
Unless a court grants an injunction or lawmakers repeal the statute, the new tax framework remains scheduled to take effect on January 1, 2027.
