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FollowingDigital Chamber of Commerce sues Illinois to block new digital asset transaction tax
The Digital Chamber filed a lawsuit against Illinois on Tuesday, seeking to block the state's new 0.2% tax on digital asset transactions. This is the first industry group to take the law to court before it took effect.
"Today we filed a lawsuit in Sangamon County, Illinois, seeking to block the Digital Assets Tax Law. No one should be subject to differential taxation based on differences in digital asset ownership records or transfer methods."
The indictment, which has been filed in Sangamon County Circuit Court, lists Illinois Department of Revenue Commissioner David Harris and Attorney General Kwame Raoul as defendants. The complaint states that the state is not taxing a new type of property, but rather old property that is recorded in a new way.
Illinois tax revenue may affect out-of-state users
The clearest argument in the indictment is presented through a hypothetical scenario: A man named Steve Doe lived between Austin and Chicago and used his Chicago mailing address to register a cryptocurrency account. He then used a stablecoin debit card to buy coffee and transferred governance tokens to vote on online agreements-a process that never set foot in Illinois. However, based on the old Chicago address alone, the bill is sufficient to infer that each transaction is within Illinois and requires separate taxation, and violators will constitute a third-degree felony.
Among six charges, the Digital Chamber of Commerce argued that the bill violated Illinois 'Uniform Clauses, the Due Process Protection Provisions of the state and federal constitutions, and the Commerce Provisions, and was completely replaced by the federal Internet Tax Freedom Act. The core argument of the indictment is straightforward: "The bill only distinguishes between traditional financial infrastructure and blockchain infrastructure." In addition to asking the court to prevent the tax from taking effect, the Digital Chamber of Commerce is also asking the state to bear its legal costs.
Cryptocurrency tax hidden in rewritten farm bill
Senate Bill 3019 was not a tax measure at all at first. The complaint alleges that it initially was a narrow amendment to the Illinois Monetary Authority Act, covering agricultural financing; an amendment later replaced it completely and turned it into a comprehensive budget bill that included the tax provision. This operation means that the Digital Assets Tax Law has never been introduced, heard, or debated as a stand-alone bill. Kalshi has previously sued Illinois over another implicit provision in the bill that requires predictive market platforms to hold a state gambling license. That means there have been two lawsuits filed against the same bill in a month.
Litigation warns: blockchain tax may spread beyond cryptocurrencies
There is one sentence in the indictment that deserves vigilance among all groups other than cryptocurrency brokers. According to the Digital Chamber of Commerce, if Illinois has the right to tax blockchain technology because it is a new way of recording, the same logic will provide reasons for other states to tax AI-driven settlements or Cloud Pay. Commodity Futures Trading Commission Chairman Michael Selig previously called the tax a "sin tax" and pointed out that it threatened Chicago's status as a financial center.
The case will now be heard in a Springfield court, which will determine whether Illinois can impose different tax rates on the same property, depending only on which ledger the property is recorded on.
