Blockchain Association and the Crypto Council for Innovation want an Illinois court to strike down the state's 0.2% Digital Asset Tax Act for good. The tax would apply to the value of digital assets, not gains, and a temporary delay already pushes enforcement to July 1, 2027.
Blockchain Association and the Crypto Council for Innovation asked an Illinois state court on Nov. 4 to strike down the state's 0.2% Digital Asset Tax Act and permanently bar enforcement. The request moves beyond a temporary delay toward a final judgment.
The groups filed a motion for summary judgment in Sangamon County Circuit Court, asking the judge to rule as a matter of law, without a trial. The law would tax the value of digital assets in covered exchanges, transfers and custody, not investment gains or a broker's fee.
How the tax would work
Covered brokers would collect the levy from Illinois customers and remit it to the state, and they would stay liable even if they fail to collect. Customers would pay the state directly when the tax is not charged.
The statute also reaches out-of-state brokers with at least $100,000 in gross receipts from digital-asset business activity sold to Illinois customers over the preceding 12 months.
Federal and state claims
The associations argue that the federal Internet Tax Freedom Act preempts the levy because it singles out electronic commerce. Blockchain Association said in its announcement: "It shouldn’t single out crypto".
The motion also invokes the dormant Commerce Clause. The groups argue that overlapping home-address and IP-address tests could expose customers to double taxation if other states adopted identical laws. A separate due-process claim says unclear definitions leave brokers and customers unable to determine their obligations.
Under the Illinois Constitution, the groups challenge the unequal treatment of digital and non-digital assets. They acknowledge that the enrolled-bill doctrine prevents the trial court from granting relief on the three-readings argument, which they preserve for appeal.
Delay does not settle validity
The tax originally was scheduled to begin Jan. 1, 2027. The filing says the court entered an agreed preliminary injunction on Oct. 7 delaying its effectiveness and enforcement until July 1, 2027.
However, Illinois officials disputed the alleged constitutional and federal-law defects in the related Digital Chamber lawsuit's October agreement, which expressly reserved the parties' claims and defenses.
Source: The Defiant
Trading involves risk.
Risk Disclaimer
