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Illinois digital asset tax faces new legal challenge over broker collection
The 0.2% levy would be based on customer asset value, with brokers required to collect once a remote broker’s Illinois sales exceed a $100,000 threshold over the prior 12 months.
Illinois’s 0.2% digital asset tax, set to begin Jan. 1, 2027, is drawing another court challenge focused on how brokers would be forced to collect the levy, even though the tax is aimed at customers rather than service fees or gains, CryptoSlate reports.
Blockchain Association and the Crypto Council for Innovation said they filed a complaint on Aug. 21 in Sangamon County Circuit Court seeking a declaration that the Digital Asset Tax Act is invalid, along with preliminary and permanent injunctions to block implementation and enforcement, according to CryptoSlate.
The filing names Illinois Department of Revenue Director David Harris, Attorney General Kwame Raoul, and Sangamon County State’s Attorney John Milhiser in their official capacities. The seven counts allege preemption under the federal Internet Tax Freedom Act, violations of the Commerce Clause, due process concerns, and breaches of Illinois constitutional rules on tax uniformity, delegation, and the legislative process, the outlet noted.
Under the enacted statute described by CryptoSlate, covered activity includes exchanging, transferring, or storing digital assets as part of a business or on a customer’s behalf, and brokers making or effectuating sales must collect the tax. For remote brokers headquartered outside Illinois, the collection requirement would apply when gross receipts from covered digital asset business sales to Illinois customers reach at least $100,000 over the preceding 12 months, and Illinois requires a quarterly test before the one-year collection and filing period begins.