The Digital Chamber filed a lawsuit Tuesday in an Illinois circuit court challenging the state's new law imposing a 0.2% tax on digital asset transactions. The complaint accuses Illinois of singling out digital assets by taxing them differently based on the underlying technology. The Digital Asset Tax Act was signed into law by Governor JB Pritzker last month as part of the state's FY2027 budget planning and is scheduled to take effect in January 2027. The crypto industry has widely criticized the measure, with some calling it the most punitive digital asset tax in the country.
TDC Files Legal Challenge Against Illinois Tax Law
The Digital Chamber filed a complaint in a circuit court in Illinois on Tuesday accusing the state of treating digital assets unfairly. "Today we are asking the courts to protect consumers and our members and stop this unfair tax in Illinois," said TDC CEO Cody Carbone in a statement. "Taxes should be carefully considered, not only for the revenue they produce but for the fairness of those being taxed. That was not the case here as the provision slipped into legislation the night before the bill's final consideration."
TDC has more than 250 members globally, including Anchorage Digital, Chainlink Labs and ICE, owner of the New York Stock Exchange. In the 32-page complaint, TDC said it is not looking for special treatment, but wants the "equal treatment of economically identical property regardless of the technology through which ownership is recorded, transferred, or settled."
Industry Concerns Over Tax Implementation and Precedent
Industry groups have raised questions about how the law will be implemented in practice. TDC warned that Illinois' tax could set a precedent affecting other states and areas. "If Illinois may impose a special transaction tax because commerce occurs through blockchain infrastructure, other States could impose similar taxes on commerce conducted through artificial intelligence-enabled settlement systems, cloud-based payment networks, or any future form of electronic commerce, while leaving economically identical transactions conducted through older technologies untaxed," TDC said in its complaint.
At the federal level, Commodity Futures Trading Commission Commissioner Michael Selig has criticized Illinois over its new tax, adding that lawmakers there have "slammed the brakes on technological progress."
TDC Seeks Court Declaration of Unconstitutionality
TDC is asking the court to declare the new Illinois law "void and unenforceable" because it violates the U.S. Constitution and to grant relief. The organization argues that the tax discriminates against digital assets based solely on the technology used for ownership recording, transfer, or settlement.
FAQ
What did The Digital Chamber file against Illinois on Tuesday?
The Digital Chamber filed a lawsuit in an Illinois circuit court on Tuesday challenging the state's new law that imposes a 0.2% tax on digital asset transactions. The complaint accuses Illinois of discriminating against digital assets by taxing them differently based on the underlying technology.
When does Illinois' digital asset transaction tax take effect?
The Digital Asset Tax Act is scheduled to take effect in January 2027. The law was signed by Governor JB Pritzker last month as part of the state's FY2027 budget planning.
