Illinois Crypto Tax Law Faces Another Industry Complaint

The Digital Asset Tax Act in Illinois is facing another industry complaint as brokers prepare for a levy tied to the value of customer assets rather than their gains or service fees. The Blockchain Association and the Crypto Council for Innovation filed a complaint on August 21 in the Circuit Court of the Seventh Judicial Circuit in Sangamon County, naming Illinois Department of Revenue Director David Harris, Attorney General Kwame Raoul, and Sangamon County State's Attorney John Milhiser in their official capacities.

The new tax rules require brokers to collect 0.2% digital asset tax on the value of customer assets involved in a transaction, which would result in monthly tax bills for everyday crypto users if brokers fail to collect it. The plaintiffs seek a declaration that the Digital Asset Tax Act is invalid, plus preliminary and permanent injunctions blocking implementation and enforcement.

The complaint has seven counts, alleging preemption under the federal Internet Tax Freedom Act, violations of the Commerce Clause and federal and state due process protections, and breaches of Illinois constitutional rules on tax uniformity, delegation, and the legislative process.