Cryptocurrency lobbying group TDC files suit in Illinois to block digital asset taxes

A cryptocurrency lobbying group sued the state of Illinois over a final tax provision added to the state budget last month.

The Digital Chamber of Commerce argued that Illinois’ digital asset tax law violates both the U.S. and state constitutions and that federal tax law takes precedence. The lawsuit filed Tuesday asks a federal judge to block Illinois from enforcing the tax.

The tax violates the Uniformity and Due Process Clauses of the Illinois Constitution, the Commerce Clause of the U.S. Constitution, and the Internet Tax Freedom Act by specifying digital asset transactions, the lawsuit said.

The digital asset tax law was passed and approved on short notice last month, just before the Illinois state government concluded its session for the year. The 0.2% tax applies to all entities headquartered in Illinois or providing services with gross receipts exceeding $100,000. The tax takes effect from January.

TDC’s lawsuit said the Internet Tax Freedom Act alone created a rule that “discriminatory state and local taxation does not apply to e-commerce.”