Blockchain Association and Crypto Council sue Illinois over digital asset tax

Aug 21, 2026

The Blockchain Association and the Crypto Council for Innovation filed a lawsuit on August 21, 2026, to block Illinois's upcoming 0.2% digital asset tax, which is scheduled to take effect on January 1, 2027. The tax, estimated to raise up to $60 million, targets the total transaction value of digital assets rather than gains. Industry groups argue the law violates the U.S. Constitution, the Illinois Constitution, and the federal Internet Tax Freedom Act by unfairly targeting digital commerce.

Illinois digital asset tax lawsuit

▪The Blockchain Association and the Crypto Council for Innovation filed a lawsuit against Illinois on August 21, 2026, challenging the state's new 0.2% digital asset tax
▪The lawsuit filed by the Blockchain Association and the Crypto Council for Innovation names Illinois Department of Revenue Director David Harris, Attorney General Kwame Raoul, and Sangamon County State’s Attorney John Milhiser as defendants
▪The Digital Chamber filed a separate legal challenge against the Illinois digital asset tax in Sangamon County in July 2026
▪The Illinois digital asset tax is estimated to potentially raise $60 million for the state budget

Tax structure for brokers

▪Illinois requires remote digital asset brokers to evaluate the $100,000 gross receipts threshold on a quarterly basis
▪A remote digital asset broker headquartered outside Illinois must collect the tax if its gross receipts from covered sales to Illinois customers reach at least $100,000 over the preceding 12 months
▪The Illinois digital asset tax applies a 0.2% levy on the value of covered customer digital-asset activity, rather than on investment gains or broker service fees

Customer remittance obligations

▪If an Illinois customer purchases taxable digital asset business activity and the broker fails to charge the tax, the customer must remit the 0.2% tax directly to the Department of Revenue
▪Illinois customers obligated to self-remit the digital asset tax must do so by the 20th day of the month following the taxable transaction

Constitutional law challenges

▪The lawsuit alleges that the Illinois digital asset tax violates the Commerce Clause, federal and state due process protections, and Illinois constitutional rules on tax uniformity, delegation, and the legislative process
▪The Blockchain Association and the Crypto Council for Innovation argue that the tax unlawfully discriminates against digital commerce by targeting digital assets with no equivalent tax for traditional assets

Federal preemption claims

▪The plaintiffs seek a judicial declaration that the Digital Asset Tax Act is invalid, alongside preliminary and permanent injunctions to block its enforcement
▪The lawsuit filed by the Blockchain Association and the Crypto Council for Innovation alleges that the Illinois digital asset tax is preempted by the federal Internet Tax Freedom Act

January 2027 compliance deadline

▪Filing the lawsuit on August 21, 2026, did not automatically suspend the tax, leaving January 1, 2027, as the active compliance deadline unless a court intervenes
▪The Illinois digital asset tax is scheduled to take effect on January 1, 2027