Digital Chamber Files Lawsuit Against Illinois Over Crypto Tax

Legal Challenge Against Illinois' Digital Asset Tax Act

The Digital Chamber, an organization advocating for cryptocurrency interests, has filed a lawsuit against the state of Illinois in response to a recently enacted 0.2% tax on cryptocurrency transactions.

This tax, part of the state budget, targets businesses in Illinois that have gross receipts exceeding $100,000 from digital asset services and is set to take effect in January 2027.

According to the lawsuit, which was filed on Tuesday, the Digital Asset Tax Act violates both state and federal constitutional provisions. The Chamber argues that the tax specifically contravenes the Illinois constitution's uniformity clause and due process rights, as well as the U.S. Constitution's Commerce Clause and the Internet Tax Freedom Act, which prohibits discriminatory taxation on electronic commerce.

The lawsuit contends that the Act unfairly differentiates between traditional financial transactions and those involving blockchain technology, without regard for whether transactions are profitable or unprofitable. It claims that federal law does not distinguish based on the technology used for recording ownership, suggesting that such a tax is unconstitutional.

In its legal action, the Digital Chamber is seeking a federal court ruling to declare the crypto tax unconstitutional, halt its implementation, and recover legal fees incurred during the lawsuit.